Skip to main content

Updated from 4:04 p.m. EDT

The major averages endured a choppy session Tuesday but managed to hold most of the previous session's huge gains, as tentative investors tried to gauge the sustainability of the recent run-up.

The

Dow Jones Industrial Average closed down 32 points, or 0.4%, to 8680. The

Nasdaq gained 9 points, or 0.7%, to 1344, and the

S&P 500 added 4 points, or 0.4%, at 902.

Among the session's strong sectors were utilities, semiconductors, computer hardware, energy and biotech stocks. Food and beverage shares fell as did machinery and oil services companies.

Biotech stocks led the Nasdaq higher as investors bid up

Myriad Genetics

(MYGN) - Get Myriad Genetics, Inc. Report

, which rose 6.1% to $23.08, and

MedImmune

(MEDI)

, up 8.3% to $29.59.

Dow components

General Electric

TheStreet Recommends

(GE) - Get General Electric Company Report

and

IBM

(IBM) - Get International Business Machines Corporation Report

were stronger, tacking on 3.8% and 0.9%, respectively.

Semiconductor shares were also strengthening, led by chip-equipment maker

KLA-Tencor

(KLAC) - Get KLA Corporation Report

, which reported earnings after the close.

The American Stock Exchange Biotech Index rose 4.8% and the Philadelphia Semiconductor Index gained 2.7%.

The Dow finished Monday with a gain of 447.49 points, or 5.4%, to 8711.88, while the Nasdaq added 73.13 points, or 5.8%, to 1335.25, and the S&P 500 added 46.12 points, or 5.4%, at 898.96. It was the third-biggest point gain ever on the Dow and capped a four-session rally that boosted the average by 13% -- its biggest gain over any such stretch since the 1930s.

Weighing on blue-chips was the Conference Board's

consumer confidence index, which came in weaker than expected. The report, covering July, showed a reading of 97.1, compared with 106.3 in June. That was substantially lower than the market consensus of 101.5.

Federal prosecutors are reportedly taking a hard line with former

ImClone Systems

(IMCL)

CEO Sam Waksal, demanding that he serve seven to 10 years in prison as part of any insider-trading plea.

Waksal, who prosecutors allege sold stock and tipped his father and daughter when he learned of a negative

FDA

decision regarding his former company's main drug, is trying to spare his family members from prosecution, according to

The Wall Street Journal

. Shares fell 7.7% to $7.13.

In Washington, President Bush signed a reform bill that imposes more stringent penalties for corporate wrongdoing, establishes a board to oversee the accounting industry and increases funding for the

Securities and Exchange Commission

.

Nasdaq announced that it will delist shares of fallen telco

WorldCom

(WCOEQ)

for failing to comply rules that it remain current in its filings with the SEC.

Cable and telephone operator

AT&T

(T) - Get AT&T Inc. Report

and media giant

AOL Time Warner

(AOL)

said they have agreed to temporarily suspend their plans for a public offering of AT&T's stake in the joint venture Time Warner Entertainment.

One report said AOL wants more time to consider a plan under which it would offer AT&T up to $2 billion in cash and a stake in a publicly traded cable TV business in exchange for AT&T's stake in the venture. AOL traded up 7.1% and AT&T advanced 2.7%.

Meanwhile, networker

Corning

(GLW) - Get Corning Inc Report

plunged 21.6% to $2.47 after Moody's and Standard & Poor's lowered the company's credit ratings to junk status on concerns that a rebound in telecom equipment spending isn't likely to occur before 2003. Morgan Stanley also had negative comments about the company.

On the earnings front, electricity and natural gas provider

Entergy

(ETR) - Get Entergy Corporation Report

reported a slight increase in quarterly earnings due to the strong performance of its nuclear operations. The company posted a second-quarter profit of $241.7 million, or $1.06 a share, compared with $238.9 million, or $1.06 a share, in the year-ago period. Excluding charges, the company earned $1.17 a share, beating analysts' expectations by 3 cents.

Internet service provider

EarthLink

(ELNK)

said its second-quarter loss narrowed as strong subscriber growth boosted revenue. The company posted a loss, excluding certain items such as amortization and depreciation, of 7 cents a share, topping analysts' forecasts by 2 cents. Shares spent most of the day in positive territory by closed down 1.3% to $4.75.

Macrovision

(MVSN)

, which provides copyright protection for film studios, saw its shares drop 2.2% to $11.52 after offering a cautious outlook for its third-quarter and full-year financial results.

Fleming Cos.

(FLM) - Get First Trust Global Engineering and Construction ETF Report

, the nation's No. 2 wholesale grocer, reported a second-quarter profit thanks to extensive cost-cutting measures and increased sales from new contracts. The results were in line with Wall Street's estimates.

In research news, Salomon Smith Barney lowered its investment rating on

CSG Systems

(CSGS) - Get CSG Systems International, Inc. Report

to neutral from outperform, saying it believes the stock will trade in a narrow range until arbitration issues are resolved and fundamentals in the telecom industry improve.

The downgrade followed a second-quarter earnings release in which the company lowered its second-half outlook and said it would shed up to 350 jobs. Shares slid 33.3% to $10.50 on the news.

JDS Uniphase

(JDSU)

saw its shares jump 19.1% to $2.50 after Morgan Stanley raised its investment rating optical networking firm to overweight from equal weight.

Elsewhere, gold stocks were benefiting from a positive research note from Goldman Sachs in which analysts said they believe the metal's price will continue to rise over the next two years due to a weakening dollar, widening government deficits, and the belief that investors will look for alternative assets to diversify their portfolios.

Barrick Gold

(ABX)

rose 3.1% to $15.20.

U.S. Treasury issues were mixed. The 10-year note was down 6/32 at 102 7/32, yielding 4.58%. The bond was up 6/32 to 99 19/32 and yielding 5.40%.

In Europe, London's FTSE 100 was lower by 0.5% at 4181, while Germany's Xetra DAX gained 0.5% at 3879. Japan's Nikkei 225 rose 3.5% to 10,003, and Hong Kong's Hang Seng closed up 1.8% to 10,155.