One day after a bargain-hunting rally snapped a week of consecutive losses, U.S. 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 percent, to 8,659.97, while the Nasdaq exchange ended the day up 2.24 points, or 0.15 percent, 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 Corp. (DELL) jumped 3.01 percent to close at US$19.16. Oracle Corp. (ORCL) slid 2.16 percent to end at $12.25 and Intel Corp. (INTC) traded up 1.74 percent to $21.68, while IBM Corp. (IBM) lost 0.37 percent to end the day at $94.45.
Hewlett-Packard Co. (HWP) and Compaq Computer Corp. (CPQ) traded down 0.56 percent to $16.01 and up 3.63 percent to $8.85, respectively.
PC makers may have a rough road ahead of them for a while, according to a recent Salomon Smith Barney Inc. 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 Inc. (AMD) announced Tuesday that it will close two of its plants and cut 15 percent of its workforce, or 2,300 jobs. Consequently, shares of AMD dropped 7.75 percent to $9.05.
Microsoft Corp. (MSFT) lost 1.37 percent to trade at $51.30, as broadening antitrust concerns and a product delay continued to damper share prices. Yahoo Inc. (YHOO), however, gained 0.32 percent to close at $9.28, while AOL Time Warner Inc. (AOL) traded up 0.92 percent 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 [See "AOL Time Warner cuts profit estimate for year" Sept. 24].
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 Corp. (VSNX) jumped 6.28 percent to $13.91, while digital identification systems maker Viisage Technology Inc. (VISG) climbed 4.50 percent 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 percent to 8,603.44, while the Nasdaq surged 75.94 points, or 5.33 percent to end the day at 1,499.13 [See "UPDATE - RECOVERY - Bargain-hunting fuels markets, IT shares jump" Sept. 24].
U.S. markets had been suffering since deadly terrorist attacks in the U.S. two weeks ago today shook global confidence in the U.S. economy and incited fears that the country would be unable to avoid a crippling recession in the face of war. The lack of a U.S. 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 Inc. 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 Oct. 1990, during the Gulf War.
In addition, investment services company The Goldman Sachs Group Inc. slashed its forecast Tuesday for U.S. gross domestic product in 2002, from 2 percent down to.5 percent.
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 percent to 4,649.4 while the Frankfurt DAX 30 index rose 76.44 points, or 1.89 percent to 4,115.13. The Paris CAC 40 index jumped 41.66 points, or 1.08 percent to 3,902.85, while the Amsterdam AEX 25 index rose 10.19 points, or 2.43 percent to 429.23.