- The Washington Times - Wednesday, January 18, 2006

NEW YORK (AP) — Disappointing tech sector earnings set off a second day of selling on Wall Street, though the markets showed strength in the face of a major sell-off in Japan. The tech-dominated Nasdaq Composite Index bore the brunt of investors’ concerns.

Wall Street remained focused on earnings from Intel and Yahoo, anxious that shortcomings there foretold disappointments at other major companies.

Yet despite the tech sector’s losses, other stocks generally held firm, resisting a broader sell-off after the Labor Department reported better-than-expected retail inflation data.

“The selling you’re seeing is nearly all on the tech side, and you’re seeing resilience in other parts of the market,” said Russ Koesterich, senior portfolio manager at Barclays Global Investments. “This tells me that people aren’t panicking over Japan or anything else.”

The tech-focused Nasdaq Composite Index fell 23.05, or 1 percent, to 2,279.64.

The other major stock indicators also fell, though not as much. The Dow Jones Industrial Average dropped 41.46, or 0.38 percent, to 10,854.86, and the Standard & Poor’s 500 Index lost 5.00, or 0.39 percent, to 1,277.93.

Bonds edged lower, with the yield on the 10-year Treasury note rising to 4.34 percent from 4.33 percent late Tuesday. The dollar was mixed against major currencies, while gold prices dropped.

Crude-oil futures fell below $66 per barrel as traders took profits after a recent surge prompted by escalating tensions in the Middle East. A barrel of light crude settled at $65.73, down 58 cents, in New York.

The government’s inflation data helped keep Wall Street’s losses confined to the technology sector. The Consumer Price Index, which measures the price of retail goods and services, fell 0.1 percent, better than the 0.2 percent rise expected on Wall Street. So-called “core” CPI, with food and fuel prices removed, rose 0.2 percent, in line with economists’ forecasts.

Yet investors remained concerned that the disappointments in the tech sector could foreshadow lower-than-expected earnings across the board. With the run-up in stocks since the beginning of the year, investors may be skittish about holding on to those gains, and could sell off heavily if earnings continue to fall below expectations.

“The consensus is looking for 13 percent earnings growth in Q4, which is a pretty high hurdle,” said Brian Gendreau, investment strategist for ING Investment Management.

Declining issues outnumbered advancers by 6 to 5 on the New York Stock Exchange, where preliminary consolidated volume came to 2.34 billion shares, compared with 2.23 billion traded on Tuesday.

The Russell 2000 Index of smaller companies rose 0.16, or 0.02 percent, to 703.78.

Overseas, Britain’s FTSE 100 was down 0.62 percent.

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