Markets trade flat; tech shares mixed

Markets trade flat; tech shares mixed

One day after a bargain-hunting rally snapped a week of consecutive losses, US markets traded relatively flat Tuesday, as mercurial investors awaited more clues as to where the economy was headed.

The Dow Jones Industrial Average closed up 56.11 points, or 0.65 per cent, to 8,659.97, while the Nasdaq exchange ended the day up 2.24 points, or 0.15 per cent, to 1,501.64.

Major tech shares were mixed, with some hardware makers posting slight gains in the morning and then sliding in the afternoon.

Dell Computer (DELL) jumped 3.01 per cent to close at US$19.16. Oracle (ORCL) slid 2.16 per cent to end at $12.25 and Intel (INTC) traded up 1.74 per cent to $21.68, while IBM (IBM) lost 0.37 per cent to end the day at $94.45.

Hewlett-Packard (HWP) and Compaq Computer (CPQ) traded down 0.56 per cent to $16.01 and up 3.63 per cent to $8.85, respectively.

PC makers may have a rough road ahead of them for a while, according to a recent Salomon Smith Barney research report, which warns that a sharp decline in consumer spending could lead to corporate cutbacks on information technology.

Chip makers are also feeling the pain of lowered consumer demand. Advanced Micro Devices (AMD) announced Tuesday that it will close two of its plants and cut 15 per cent of its workforce, or 2,300 jobs. Consequently, shares of AMD dropped 7.75 per cent to $9.05.

Microsoft (MSFT) lost 1.37 per cent to trade at $51.30, as broadening antitrust concerns and a product delay continued to damper share prices. Yahoo (YHOO), however, gained 0.32 per cent to close at $9.28, while AOL Time Warner (AOL) traded up 0.92 per cent to end at $32.80, despite the fact that the company revised its financial estimates downward yesterday, citing revenue losses related to the terrorist attacks Biometrics firms, riding a newfound interest in security-related shares, continued to rally Tuesday, albeit not as sharply as they have in recent days. Facial and retina-scanning technologies maker Visionics (VSNX) jumped 6.28 per cent to $13.91, while digital identification systems maker Viisage Technology (VISG) climbed 4.50 per cent to $8.36.

Tuesday's mixed-market activity followed a much-needed rally Monday in which the Dow closed up 367.63 points, or 4.46 per cent to 8,603.44, while the Nasdaq surged 75.94 points, or 5.33 per cent to end the day at 1,499.13.

US markets had been suffering since deadly terrorist attacks in the US two weeks ago today shook global confidence in the US economy and incited fears that the country would be unable to avoid a crippling recession in the face of war. The lack of a US retaliation so far and widespread government efforts to prop up the economy shored up some faith in the markets this week, prompting investors to scoop up undervalued shares.

However, a consumer confidence report released Tuesday morning by New York-based business research group The Conference Board caused the markets to retreat after an early morning upswing. According to the report, consumer confidence fell from 114.0 in August to 97.6 in September, greater than the decline to 105.1 that Wall Street economists predicted. September's consumer confidence rating was the lowest since early 1996 and the largest one-month drop since October 1990, during the Gulf War.

In addition, investment services company The Goldman Sachs Group slashed its forecast Tuesday for US gross domestic product in 2002, from 2 per cent down to.5 per cent.

Still, European markets traded slightly up Tuesday on anticipation that Wall Street would stretch the Monday rally into a second day. The London FTSE 100 index gained 35.5 points, or 0.77 per cent to 4,649.4 while the Frankfurt DAX 30 index rose 76.44 points, or 1.89 per cent to 4,115.13. The Paris CAC 40 index jumped 41.66 points, or 1.08 per cent to 3,902.85, while the Amsterdam AEX 25 index rose 10.19 points, or 2.43 per cent to 429.23.

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