NEW YORK, (Reuters):
U.S. TECHNOLOGY stocks fell sharply late yesterday after the Nasdaq briefly broke through the 2,000 barrier for the first time in more than 22 months as investors took the cue to sell shares at long-time highs.
The blue-chip Dow held on to slight gains, while the broader Standard & Poor's 500 ended close to unchanged, after both indexes hit new 18-month highs earlier in the session, driven higher by some broadly positive economic data.
"Every time we have a run to the upside, people use it to take out money, as opposed to that real rush to try to push things higher," said Peter Dunay, chief markets strategist at brokerage Wall Street Access. "The broad strength that's brought us up seems to have a little trouble following through."
The technology-focused Nasdaq Composite Index closed down 19.82 points, or 1 per cent, at 1,960.25. The Nasdaq briefly rose to a 22-month high at 2,000.92 shortly after midday, but later sank as short-term traders took the opportunity to sell shares at a profit.
"It's what I would call a 'nostalgia' target for the individual investor," said Frederic Dickson, market strategist at fund firm D.A. Davidson & Co., referring to the Nasdaq's 2,000 mark. "It's a natural place to take some profits," for hedge funds and other short-term traders, he added.
The Nasdaq hit its all-time high of 5,132 in March 2000 when Internet and telecommunications companies were flying high. The index sank as low as 1,108 in October 2002 after the technology bubble burst and has been steadily rising since. It is up about 54 percent since closing lows in mid-March this year.
The Dow Jones industrial average closed up 19.78 points, or 0.2 percent, at 9,873.42 after hitting its highest level since June 3, 2002, earlier in the session. The Standard & Poor's 500 Index closed down 1.89 points, or 0.18 percent, at 1,064.73 after earlier hitting its highest mark since May 31, 2002.
The Nasdaq's early gains were powered by ADC Telecommunications Inc., which sells gear to local telephone companies, after the company posted its first quarterly profit in almost two years.
Belief that telecom and technology spending will recover next year buoyed some of Nasdaq's biggest stocks, including Cisco Systems Inc., the biggest maker of network gear, and Oracle Corp., a major software supplier.
ADC shares ended up 36 cents, or 14.75 percent, at $2.80. Cisco shares ended up 19 cents at $23.30 after hitting a 52-week high at $23.795, and Oracle shares closed up 50 cents, or 4 percent, at $12.90.
The Dow's slim gains were driven early in the session by economic data that buoyed hopes for a continued economic recovery. The latest non-manufacturing data hinted the labour market may be stabilising and another report showed the productivity of U.S. workers climbed at the fastest pace in 20 years.
General Motors was the Dow's biggest percentage gainer, rising $2.26, or 5.2 percent, to $45.54 after brokerage Goldman Sachs said in a research note that the automaker's heavily burdened pension plan is recovering, which could bolster 2004 earnings.
Trading volume was about average for the past month on the New York Stock Exchange with about 1.42 billion shares changing hands. Trading was heavy on Nasdaq with about 2.25 billion shares traded, well above the 1.8 billion daily average for November. Decliners outpaced advancers 8 to 7 on the NYSE and 9 to 5 on Nasdaq.
