Technology stocks fell as Level 3 Communications became the latest company to blindside investors with a profit warning, driving the Nasdaq composite index to a losing streak unseen in six months.
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The Nasdaq fell 39.79 points, or 1.96 percent, to 1,988.64, based on the latest data, its first close below 2,000 since April 17 and the seventh-straight down session, a losing streak unseen since December, 2000, according to MarketHistory.com.
But the Dow Jones industrial average rose 21.74 points, or 0.20 percent, to 10,645.38, on the strength of General Motors Corp. and United Technologies while the benchmark Standard & Poor's 500 fell 5.93 points, or 0.49 percent, to 1,208.43.
"The earnings news seems to be more negative than positive, and there are still some other looming issues," said Peter Gottlieb, portfolio manager at First Albany Asset Management. "There still doesn't seem to be a compelling reason to buy."
Level 3, which provides high-speed communications services to businesses, cut its financial targets through 2002 and plans to eliminate 1,400 jobs, or 24 percent of its work force, due to the slowing U.S. economy and delayed purchases by customers. The shares fell nearly 22 percent, or $1.65, to $5.97.
General Motors climbed $2.16 to $61.51 — a gain that accounted for almost two-thirds of the Dow's rise — after an interview with top management published in the latest issue of financial newspaper Barron's boosted hopes the automaker can reverse decades of falling market share with better cars and trucks, and more emphasis on productivity.
Investors were eagerly awaiting the release of Oracle Corp.'s earnings, expected after the close. The report will be scrutinized for hints of how the high-tech sector is faring amid the U.S. economic slump, traders said.
Eyes on Oracle
Other telecommunications-related shares also took a hit, like top optic-fiber supplier JDS Uniphase Corp., which fell $1.16 to $11.28. JDS warned last week it would suffer lower-than-expected revenues.
Oracle slipped 8 cents to $14.92, paring a gain of as much as 30 cents. Some traders said Oracle's decision not to issue guidance ahead of its results might mean Oracle could come up with a positive surprise. Others were not so sure.
"Investors are getting themselves flat ahead of Oracle," said Robert Arancio, head of Nasdaq trading at Lehman Brothers. "There's concern about guidance and today is going to be choppy."
Still, semiconductor-equipment shares bucked the trend after positive comments by Salomon Smith Barney. Lam Research Corp., among others, boosted their price targets on the sector's stocks, saying orders in the second quarter were likely to improve from the first quarter.
Electronic components maker Lam jumped $1.14 to $29.58.
"There are a plethora of things both negative and positive today — Oracle is to report, semis are on the positive side, and then there are preannouncements on the downside," said Art Hogan, chief market analyst at Jefferies & Co. "With all this to deal with, it's very difficult to determine a direction."
Proposed buyouts had some stocks jumping on hopes the companies would be acquired for more than their current share price.
No. 1 U.S. beef producer IBP Inc. surged $5.33 to $23.60 after a Delaware court said Friday that poultry producer Tyson Foods must stand by its agreement to buy IBP.
Tyson in March dropped its $3.2 billion bid for IBP, citing breaches of IBP's merger agreement but the court found that Tyson had all the information it needed to make an informed decision about buying IBP. Tyson slumped $2.17 to $9.21.
Car reservations systems supplier Galileo International Inc. rose $1.35 to $31.15. Cendant Corp., which owns the Avis rental car and Century 21 real estate broker brands, said it would buy Galileo for $33 a share. Cendant gained 52 cents to $18.97.