- The Washington Times - Monday, February 23, 2004

NEW YORK (AP) — Technology shares sank yesterday on disappointing news from Intel, briefly pushing the Nasdaq Composite Index into negative territory for the year despite a brighter forecast from wireless equipment maker Qualcomm. Blue chips also slumped after the U.S. Army canceled a helicopter program, sending Boeing and United Technologies lower.

A multibillion-dollar acquisition by Citigroup and strong sales at Wal-Mart gave those stocks a boost, but failed to energize the markets. Federal Reserve Chairman Alan Greenspan’s remarks to a credit union conference that American consumers are in “good shape” following a wave of mortgage refinancings also had little positive effect.

The fourth straight day of declines reflects lingering concerns over valuations and rising questions about whether the economic recovery will hold, said Stephen Massocca, president of Pacific Growth Equities.

There are also growing worries on Wall Street about the upcoming presidential election, he said.

“Nothing in the headlines today was able to allay those concerns,” Mr. Massocca said. “We’ve also not seen a significant correction since March, and a lot of people are concerned that we’re due for one, and they’re pulling back while they can.”

The Nasdaq shed 30.41, or 1.5 percent, to 2,007.52, after falling 0.8 percent last week. The technology-heavy index was up just 0.2 percent for the year, having closed 2003 at 2003.37.

The other major indexes were narrowly lower. The Dow Jones Industrial Average gave up 9.41, or 0.1 percent, to finish at 10,609.62, after a weekly decline of 0.1 percent. The Standard & Poor’s 500 index lost 3.12, or 0.3 percent, to 1,140.99, following a 0.2 percent drop last week.

The Nasdaq’s weakness is “obviously part of a larger picture of market correction,” said Richard E. Cripps, chief market strategist for Legg Mason of Baltimore. But the economy’s underlying strength and the prospect of continued corporate earnings growth are likely to mitigate the long-term effect, he said.

“It’s a consequence of how far, how fast and how widespread the gains have been for the last 10 weeks,” Mr. Cripps said. “I’d say we’re going through a sentimental correction, not one precipitated by fundamentals.”

Intel Corp. dropped $1 to $29 after the chip maker reported in federal filings that the Internal Revenue Service was examining its tax returns for 2001 and 2002. The Dow component said it did not believe the outcome of the audits would hurt its bottom line, but its losses still added to selling pressure on the Nasdaq market.

Also contributing to the Dow’s decline was the U.S. Army’s decision to cancel its Comanche helicopter program, which sent shares of defense contractors tumbling. Boeing Co. fell 72 cents to $43.62, and United Technologies Corp. shed $2.82 to $93.80.

Qualcomm Inc. stood out as one of the day’s biggest winners, surging $3.03, or 5.1 percent, to $62.43 after raising profit estimates for the second quarter because of increased demand for its mobile-phone chips.

Citigroup gained 43 cents to $49.32 after saying it had agreed to buy KorAm Bank for up to $2.73 billion, marking continued consolidation in the financial sector. The acquisition of KorAm, South Korea’s sixth-largest lender, would be the largest foreign investment yet in that country’s banking industry.

Wal-Mart Stores Inc. rose 62 cents to $60.05 after reporting that February sales are tracking near the high end of its estimates. The world’s largest retailer said spring clothing sales were particularly encouraging last week.

Decliners included Lowe’s Cos. Inc., which lost $1.71 to $56.67, despite beating forecasts with strong fourth-quarter earnings. The world’s second-largest home-improvement retailer offered outlooks for the current quarter and fiscal year that were lower than what Wall Street anticipated. Lowe’s top competitor, Home Depot, ended the day down 32 cents at $35.38, ahead of its earnings report expected today.

Decliners outnumbered advancers about 9 to 5 on the New York Stock Exchange. Consolidated volume was light, with 1.81 billion shares traded, compared with 1.91 billion shares Friday.

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