Week's End Stops a Nasdaq Toboggan Ride

The tech slide ceases -- for now -- with the Comp down 5.3% for the week, while commodity stocks surge.
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Stocks were up early, then down hard, and investors spent most of the session trying to get the (bullish) feeling again. Blue-chips made it through the rain under the cover of resurgent commodity names, while technology stocks got drenched again. Still, there were some signs the worst of the storm has passed.

Flood waters continue to rise in the bond market, however, which fell again after the

Labor Department

reported nonfarm payrolls grew by 245,000 in January, significantly exceeding expectations for a rise of 135,000. The unemployment rate was unchanged at 4.3%, a 28-year low. The price of the 30-year Treasury bond fell 26/32, to 98 18/32, its yield rising ever higher to 5.34%.

The

Nasdaq Composite Index

fell as low as 2346.82 at midday and losses in big-cap tech names were no doubt giving some investors heart palpitations. But losses moderated in the afternoon for most bellwethers and the index closed down "just" 36.45, or 1.5%, to 2373.62.

Still, it was hardly a day of celebration in techland as nearly all tech standards faltered in both over-the-counter and listed trading. The

Morgan Stanley High-Tech 35

slid 2.7% and the

Nasdaq 100

shed 1.9%.

Chip and equipment makers were battered again by worries about price gouging and a profit warning from

Advanced Micro Devices

(AMD) - Get Report

, which fell 11.2%. Elsewhere in the group,

Intel

(INTC) - Get Report

slid 1.9%,

Micron Technology

(MU) - Get Report

lost 7.1% and

Novellus Systems

(NVLS)

declined 3%. The

Philadelphia Stock Exchange Semiconductor Index

lost 2.8%.

Elsewhere,

Electronic Data Systems

(EDS)

slid 7.5% after reporting fourth-quarter earnings down 50% from a year ago. The results were in line with expectations and

Lehman Brothers

upgraded its recommendation, but investors were unimpressed. Additionally,

Sterling Commerce

(SE) - Get Report

tumbled 23.4% and

SCI Systems

(SCI) - Get Report

lost 17.8% after each posted disappointing earnings.

Internet stocks also struggled despite reports

General Electric's

(GE) - Get Report

NBC

is considering buying a large stake in

Lycos

(LCOS)

and rumblings about other similar combinations.

TheStreet.com Internet Sector

index fell 5.93, or 1.1%, to 532.52.

Not everyone was scared off by the action, however.

"The pros are so focused on what's happening right now they turn bullish at the top and bearish at the bottom. I am buying today, to put it mildly," said Brian Gilmartin, portfolio manager at

Trinity Asset Management

in Chicago. "I think what's going on is very natural. This happens every six or eight months: There's nothing for people to pin their hopes on, no fresh tech news to drive valuations higher."

Gilmartin said the tech sector could struggle until the next major event, the earnings report by

Dell

(DELL) - Get Report

on Feb. 16, which is Trinity's largest holding. "Depending on what

Michael Dell

says in the conference call we might see another leg up at the end of the quarter," he said. "I am buying here in anticipation of what happens at end of February and early March."

The fund manager is more concerned about the second half of the year, however, given reports "so much business is being pulled into the first quarter because of Y2K," he said.

Today, Gilmartin was buying both Micron and

Applied Materials

(AMAT) - Get Report

, believing the "downturn

in memory chips that's been going on really since 1995 is almost over. The stock prices have incorporated a lot of that but the next leg up is going to be much longer. When I can get 'em at prices like today, I'll buy 'em."

The fund manager was undeterred by concerns about the impact rising interest rates are having on tech valuations. "We're going to have the largest budget surplus in history -- interest rates are not going up for a long period of time," he said. "Valuations on tech stocks are going to continue to be compelling."

Commodities Rise from the Dead

Meanwhile, blue-chip proxies sustained relatively modest declines, thanks to another strong performance by heretofore unpopular groups such as energy, paper, chemicals and utilities.

The

Dow Jones Industrial Average

closed down 0.26 to 9304.24, well up from its nadir of 9247.34 thanks largely to strength in

Alcoa

(AA) - Get Report

,

Allied Signal

(ALD)

and

Chevron

(CHV)

.

The

S&P 500

slid 9.09, or 0.7%, to 1239.40 but off its low of 1232.33, supported largely by energy stocks such as

Anadarko Petroleum

(APC) - Get Report

and

Texaco

(TX) - Get Report

, which was upgraded by

Schroder

. The

American Stock Exchange Oil Index

rose 3.1%

The

Russell 2000

lost 5.07, or 1.2%, to 412.72.

"I have felt all week this was just part of the nervousness that's gone on because of the bond market and what's going on around the world," said Ned Collins, executive vice president of U.S. stocks at

Daiwa Securities America

. "Unfortunately the media is always looking for some underlying reason to cause this huge move and maybe it's just normal rotation, correction or consolidation."

Collins said he's not terribly worried about the downturn in technology stocks, either. "

IBM

(IBM) - Get Report

,

Motorola

(MOT)

and

AT&T

(T) - Get Report

are all under pressure, but they've also had great moves," he said. "I don't know if it's anything to be all concerned about."

Moveover, the Dow's ability to hold above 9275 could be a key technical victory, the trader observed. "One area for concern is the lousy advance/decline, therefore maybe we haven't seen the end of it yet. But I think we may be OK here. I still think it's a liquidity driven market and the

Fed

has indicated they're going to be friendly."

In

New York Stock Exchange

action, 872.3 million shares traded while declining stocks led advancers 1,775 to 1,158. In

Nasdaq Stock Market

activity, losers led 2,445 to 1,599 on 1.020 billion shares. New 52-week lows led new highs 61 to 24 on the Big Board and by 73 to 42 in over-the-counter trading, the first time new lows have exceeded news highs in OTC action since

Dec. 17.

Among other indices, the

Dow Jones Transportation Average

rose 0.52 to 3247.66; the

Dow Jones Utility Average

gained 2.31, or 0.8%, to 293.60; and the

American Stock Exchange Composite Index

fell 0.86, or 0.1%, to 706.26.

For the week, the Dow industrials fell 54.59, or 0.6%; the S&P 500 shed 40.24, or 3.1%; the Nasdaq Comp dipped 132.58, or 5.3%; the Russell 2000 slid 14.49, or 3.4%; TheStreet.com Internet index lost 25, or 4.5%; the Dow transports lost 45.16, or 1.4%; the Dow utilities shed 9.20, or 3%; and the Amex Composite fell 8.60, or 1.2%.

Elsewhere in North American equities today, the

Toronto Stock Exchange 300

lost 27.73 to 6633.37. The

Mexican Stock Exchange

was closed for the Anniversary of the Constitution. For the week, the TSE 300 fell 95.68, or 1.4%, and the

Mexican Stock Exchange IPC Index

rose 55.62, or 1.4%.

Friday's Company Report

By Heather Moore
Staff Reporter

(

Earnings estimates from First Call; new highs and lows on a closing basis unless otherwise specified. Earnings reported on a diluted basis unless otherwise specified.

)

Pacific Internet

(PCNTF:Nasdaq) soared 30 1/2, or 179.4%, to 48 after Lehman Brothers priced its 3 million-share IPO

last night in-range at $17 a share. The company provides Internet access services primarily in the Asia-Pacific region.

Elsewhere in new offerings priced last night,

Delphi Automotive Systems

(DPH:NYSE) jumped 1 7/16, or 8.5%, to 18 7/16 after

Morgan Stanley Dean Witter

priced its whopping 100 million-share IPO in-range at $17 a share. The company is a spinoff of

General Motors

(GM) - Get Report

, which lost 1 1/8 to 85 15/16. And

Del Monte Foods

(DLM:NYSE) lifted 5/8 to 15 5/8 after Morgan Stanley Dean Witter priced the 20 million-share offering at $15 a share.

E*Trade

(EGRP)

sliced off 4 3/8, or 8.2%, to 48 15/16 after a third day of technical difficulties. A partial interruption of online trading occurred from 12:20 p.m. to 12:50 p.m. EST and only affected a small percentage of customers, according to a company spokeswoman. Over the past three days, she said, only about 5% of E*Trade's customers have been affected.

Profit-taking after several days of monster gains contributed to the decline of some other online brokers.

Ameritrade

(AMTD) - Get Report

fell 15 3/16, or 13.7%, to 95 1/2;

National Discount Brokers

(NDB)

fell 2, or 6.9%, to 27; and

Siebert Financial

(SIEB) - Get Report

fell 8 3/16, or 18.9%, to 35 1/8.

Mergers, acquisitions and joint ventures

America West Holdings

(AWA)

hopped 13/16 to 21 15/16 after its chairman, William Franke, said the company's largest shareholder would support a proposed acquisition of the company only if it would result in the acquisition of all its Class A and Class B shares.

Lycos took in 7 7/8, or 6.1%, to 137 after

The Industry Standard

reported that

General Electric's

(GE) - Get Report

NBC

network may be close to buying a 35% stake in the company.

Snap!

-- the

CNet

(CNET) - Get Report

-run portal 60% owned by NBC -- would probably merge with Lycos, the

Standard

said. GE lowered 2 1/8 to 98.

St. Jude Medical

(STJ)

brought in 1 7/8, or 7.2%, to 27 15/16 after agreeing to acquire

Tyco's

(TYC)

Angio-Seal

business for $167 million. Tyco fell 2 1/2 to 75 3/8.

Shop at Home

(SATH)

spiked up 3 1/2, or 16.1%, to 25 1/8 after reaching an agreement calling for

EchoStar Communications

(DISH) - Get Report

to carry Shop at Home's shopping network, beginning Feb. 8. EchoStar closed unchanged at 52 3/4.

Earnings/revenue reports and previews

CBS

(CBS) - Get Report

added 5/16 to 36 1/8 after posting fourth-quarter earnings of 2 cents a share, better than both the nine-analyst outlook for flat results and the year-ago loss of a penny. Separately,

The Wall Street Journal

reported that the company is considering a plan to turn its Web holdings into a separate public company, hoping to cash in on the Internet-stock frenzy. The company's Internet assets include a 38% stake in

MarketWatch.com

(MKTW)

, which dropped 3 3/8 to 69 5/8, and a 12.5% stake in

SportsLine USA

(SPLN)

, which shot up 4 3/4, or 12.5%, to 42 3/4.

Advanced Micro Devices continued its fall, shaving off 2 1/8, or 11.2%, to 16 13/16, after yesterday warning of a first-quarter operating loss and suffering at the hands of Merrill Lynch's Thomas Kurlak. Micron Technology sloughed off 5 3/8, or 7.1%, to 70 1/4 on concerns about competition in the DRAM market;

Texas Instruments

(TXN) - Get Report

sloughed off 1 3/8 to 94 5/8.

American Homestar

(HSTR)

lowered 1 13/16, or 18.1%, to an annual low of 8 3/16 after last night warning it expects fiscal third-quarter earnings to be "significantly lower" than the six-analyst estimate of 26 cents a share. A year ago, the company earned 25 cents a share.

American Power Conversion

(APCC)

skidded 5 1/16, or 10.3%, to 44 1/4 even after last night beating fourth-quarter earnings estimates by a penny a share with a profit of 49 cents.

Avid Technology

(AVID) - Get Report

vaulted 4 5/16, or 15.6%, to 32 after last night reporting fourth-quarter diluted earnings of 57 cents a share, excluding amortization of intangible assets related to its acquisition of

Softimage

, vs. the year-ago 37 cents. The six-analyst forecast called for operation earnings of 22 cents. The company said it's not reporting net income until it evaluates whether to adjust a third-quarter pretax charge of $193.7 million from the Softimage acquisition. Today, Morgan Stanley Dean Witter pushed it up to outperform from neutral.

BioReliance

(BREL)

plunged 2 1/8, or 24.3%, to 6 7/8 after last night saying it sees its fourth-quarter results falling below expectations on customer deferrals of certain projects and delays in completing manufacturing projects. The three-analyst prediction called for earnings of 11 cents a share. Today, Morgan Stanley Dean Witter cut it to neutral from outperform.

Central Garden & Pet

(CENT) - Get Report

swelled 2 1/16, or 13.5%, to 17 1/2 after last night posting a first-quarter loss 1 cent narrower than expected.

Electronic Data Systems tanked 3 7/8, or 7.5%, to 48 1/8 despite last night reporting fourth-quarter earnings of 53 cents a share, 1 cent ahead of the 20-analyst outlook but below the year-ago 57 cents. Today, Lehman Brothers raised the stock to buy from outperform.

SCI Systems plummeted 7 5/8, or 17.8%, to 35 5/16 after last night missing second-quarter earnings forecasts by 2 cents a share with a profit of 48 cents. Today, Merrill Lynch downgraded it to long-term accumulate from buy while maintaining its intermediate-term neutral.

Sterling Commerce

(SE) - Get Report

dwindled 9 15/16, or 23.4%, to 32 1/2 after last night posting first-quarter earnings in line with estimates for 33 cents a share. Investors apparently were paying more attention to the company's smaller-than-expected software revenue. Today,

Warburg Dillon Read

slashed the stock to hold from buy.

In other earnings news:

Analyst actions

CD Radio

(CDRD)

declined 7, or 21.9%, to 25 after Lehman Brothers lowered its price target to 55 from 76 a share.

PanAmSat

(SPOT) - Get Report

slid 2 1/8, or 5.7%, to 35 1/8 even after

Prudential Securities

initiated coverage with a strong buy.

Tech Data

(TECD) - Get Report

popped up 1 5/8, or 7.4%, to 23 5/8 after

Credit Suisse First Boston

started coverage with a buy and set a price target of 30 a share.

Miscellany

ICN Pharmaceuticals

(ICN)

lost 3, or 11.4%, to 23 1/4 after saying a Yugoslav government agency claims to have seized majority control of its Yugoslav unit, cutting ICN's stake to 35% from 75% and naming new directors and a managing director.

Henry Schein

(HSIC) - Get Report

slipped 5 1/2, or 13.3%, to 35 7/8 after one of its affiliates expanded a voluntary recall of its dental products, first prompted by a warning from the

Food and Drug Administration

last month.