Markets: Stocks Give Back Tuesday's Gains

N E W  Y O R K, June 6, 2001 -- Stocks fell today, aschilling forecasts from two of the market's biggest blue-chipnames, including computing giant Hewlett-Packard, idled buyers in an early June rally.

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HP warned the slowdown in information technology was goingglobal, while banking powerhouse J.P. Morgan Chase, a fellow component of the Dow average, said it expects lower trading revenues in the quarters ahead.

The Dow Jones industrial average fell 105.60 points,or 0.94 percent, to 11,070.24, according to the latest data.The Nasdaq composite index shed 15.93 points, or 0.71percent, to 2,217.73. The benchmark Standard & Poor's 500 index

lost 13.54 points, or 1.05 percent, to 1,270.03.

HP shares fell $1.34, or 4.46 percent, to $28.71, whileJ.P. Morgan Chase gave up $1.66, or 3.42 percent, to $46.84.Combined, the declines in these two stocks accounted for almost20 percent of the Dow's drop. Before today, the market hadrisen for four days in a row.

Corporate News

"Earnings concerns are going to continue to bedevil themarket," said Jack Shaughnessy, chief investment strategist atAdvest. "Companies in the middle of June begin to makeannouncements about second-quarter earnings, and thoseannouncements may not be very positive."

Elsewhere, investors were particularly on edge withcomputer chip giant Intel scheduled to give apreliminary report on its quarter ending June 30, Thursday.Intel rose 9 cents to $29.82.

Oil shares fell in line with crude oil prices, which fellafter inventory data soothed worries that Iraq's halt ofexports would cause a supply crunch in the U.S. market. Oilservices giant Exxon Mobil fell $2.15 to $89.40.

Network computer maker Sun Microsystems Inc. wasthe Nasdaq's most heavily traded share, up $1.07 at $18.09.Traders cited a research note from Goldman Sachs, which saidthat while the pain caused by "externally induced slowing,amplified by some internal miscues" is not behind the company,the worst of it is.

Last week, Sun cut its current quarter profit forecast andsaid sales would be 10 percent or more below Wall Streetestimates because of economic weakness in Europe.

"The feeling among market participants is that the economy,if it hasn't turned yet, is about to turn, that the Fed's magicis working," said Peter Coolidge, managing director of equitytrading at Brean Murray & Co., referring to the FederalReserve's recent interest-rate cuts.

Still, traders are cautious.

"Obviously, everyone is going to keep an eye out for whatpre-warnings we might get, so there's a caveat with thisrally," Coolidge said.

On the rate-watch front, Federal Reserve Bank of RichmondPresident Alfred Broaddus said late Tuesday the central bankdoes not have much more room to help the flagging U.S. economywith interest-rate cuts because rates are already low. Headded, though, that the economy may not have hit bottom yet.

The Fed's aggressive rate cuts — 2-1/2 percentage pointsso far this year — have helped underpin the stock market inrecent months by raising hopes such action can re-energize thesagging U.S. economy. The Federal Open Market Committee, theFed's policy-making body, next meets to determine the directionof interest rates on June 26-27.

Wall Street will be tuned in for a speech by Fed BoardGovernor Laurence Meyer this afternoon when he is scheduled totalk about "What happens to the New Economy" before the NewYork Association for Business Economics.

Tuesday’s Recap

On Tuesday, stocks climbed after upbeat reports from techfirms Lucent Technologies and Xilinx bolstered expectations that the worst of the economic slump maybe over.

The Nasdaq composite index gained for the fourthday, its longest rally since a seven-day stretch in mid-May,according to market research firm MarketHistory.com. The Nasdaqbolted up 77.73 points, or 3.61 percent, to 2,233.66.

The broader Standard & Poor's 500 Index rose 16.46points, or 1.3 percent, to 1,283.57, buoyed by software makerComverse Technology Inc. , which was the biggestpercentage gainer and had the largest point rise in the index.

The Dow Jones industrial average rose 114.32 points,or 1.03 percent, to 11,175.84, buoyed by high-tech heavyweightslike International Business Machines and Microsoft.