20000128Dow ends up 3, Nasdaq off 97; money exits techs

NEW YORK: US stocks ended mixed on Wednesday as investors piled money into financial services shares from more volatile technology issues after Qualcomm and other big Nasdaq names warned about their future prospects.

Comments by Federal Reserve Chairman Alan Greenspan that the US Federal Reserve is concerned about the sharp rise in margin debt, or the money borrowed from brokers to buy stocks, appeared to rattle Wall Street at the session's end.

"The fact that margin debt has expanded rapidly is obviously of concern to the Fed because they have to wonder whether the liquidity that the Fed is providing is boosting the stock market, which is boosting consumer spending," said Pierre Ellis of Primark Decision Economics.

Strong financial services stocks led the Dow Jones industrial average up 3.1 points, or 0.03 percent, to end at 11,032.99.

The broader Standard & Poor's 500 Index slipped 5.94 points, or 0.42 percent, to 1,404.09.

The technology-laced Nasdaq Composite Index fell 97.50 points, or 2.34 percent, to 4,069.91.

Financial stocks climbed after the benchmark 30-year US Treasury bond strengthened 21/32, pushing the yield down to 6.59 percent from Tuesday's close of 6.64 percent.

American Express rose 1-1/8 to 159-1/2 and J.P. Morgan & Co Inc. added 7-3/16 to 123-3/8.

The Dow also got a lift from Minnesota Mining & Manufacturing Co., or 3M, which jumped 4-15/16 to 96-5/16 after the diversified conglomerate posted stronger-than-expected earnings and a forecast for worldwide sales growth of 6 percent to 7 percent in 2000.

Technology stocks were in the red after some disappointing news from some market leaders, including cell phone technology leader and "wonderstock" Qualcomm Inc., biotechnology company Amgen Inc., and personal computer maker Compaq Computer Corp.

Qualcomm slid 24-3/8 to 124-5/8 after saying its first-quarter earnings beat forecasts but warning that its second-quarter product shipments could fall. The company, which makes a technology for wireless phones that has become the industry standard in the United States, said the drop-off was seasonal and temporary.

"Qualcomm kind of upset some people with their forward-looking statement but that was really an excuse to sell some of the technology shares down," said Guy Truicko, portfolio manager of Unity Management, Garden City, N.Y. "The earnings in general have been stellar so I don't see this as a major shift. Some of the money right now is going into financials."

Compaq, the most active issue on the New York Stock Exchange, fell 2-15/16 to 29-5/16, and Amgen, among the most actively traded Nasdaq stocks on Wednesday, lost 5-1/4 to 64-1/8 after both companies posted earnings that at least matched Wall Street forecasts but warned of potentially slower growth ahead.

"Generally the money in technology names is very skittish and any time there's bad news, they just look for something else to go to," said Peter Gottlieb, the vice president and portfolio manager at First Albany Asset Management in Chicago.

Greenspan, appearing before the Senate Banking Committee, which is considering his reappointment as chairman, made no reference to the immediate outlook for interest rates.

But Greenspan, whose comments are closely watched for clues on the direction of interest rates, said the Fed's challenge remained to avoid potential inflationary imbalances. He also said the central bank is concerned about margin debt but that the Fed did not consider raising its margin requirements -- now at 50 percent -- an effective way to address the problem.

Investors are increasingly betting on a 25-basis-point increase in borrowing costs when the Fed's interest-rate-setting committee meets next week.

The Labour Department said the key fourth-quarter employment cost index (ECI), which was due out on Thursday, would not be released until Friday due to problems in the aftermath of a huge snowstorm in the Washington area.

Semiconductor, computer hardware and biotechnology sectors were down, along with gold, speciality retailers, steel, power producers and restaurants.

Support was offered by the banking, advertising, publishing and electronic defence industries.

On the New York Stock Exchange, advancers beat decliners 17 to 13 with 1.1 billion shares changing hands.

Among stocks in the news, DuPont Co., the No. 1 US chemical company and a Dow component, slipped 9/16 to 60-15/16. The company's quarterly earnings matched expectations although they fell more than 14 percent from the year-ago quarter on higher raw materials costs, notably higher oil costs.

Coca-Cola Co. slipped 2-13/16 to 63-1/16 after the world's No. 1 soft drink maker said it will cut 6,000 jobs in a global reorganization. The soft drink giant said fourth-quarter earnings topped Wall Street's per share forecasts by a penny before an $813 million writedown of foreign assets.

The world's biggest tobacco company, Philip Morris Cos Inc., was down 9/16 at 21-1/16 after it reported lower-than-expected earnings due to a decline in cigarette consumption.

Elsewhere, Merck & Co. Inc., the No. 1 US pharmaceutical company, rose 2-1/8 to 72-13/16 after it said quarterly profits rose 12 percent, matching expectations.

The Dow's technology components were down, with Hewlett- Packard Co. off 4-3/16 at 108-3/4, and International Business Machines Corp. down 2-5/8 at 116-7/8. -Reuters