BOSTON (07/21/2000) - So much for the positive mood created among stock market investors on Thursday based on comments from Alan Greenspan, head of the U.S.
Federal Reserve Board suggesting that interest rates will stay put for now.
A market rally after his testimony to a U.S. congressional committee was followed Friday with earning warnings from L.M. Ericsson Telephone Co. and Agilent Technologies Inc. that pulled the market down.
The Dow Jones industrial average closed the day down 110.31 points -- 1.02 percent -- to 10,733.56. On Thursday, the average had risen 148 points, proving yet again that every time Greenspan speaks, the market listens. Friday's downturn was bad news for the technology sector with the Nasdaq composite dropping 90.68 points to 4,093.88.
The end-of-the-week slump followed several days of earnings reports from technology biggies, including Microsoft Corp., IBM Corp., Sun Microsystems Inc., America Online Inc. (AOL), Apple Computer Inc. and Computer Associates International Inc. (CA), the latter previously issued an earnings warning.
Although there was some naysaying among the technology and business media about the results, most either met or topped analyst expectations and officials at the majority of the companies said in news conferences that the results were where they expected them to be.
Both Microsoft and IBM pointed to continued tremors from the year 2000 (Y2K) computer problem as causing lower IT spending into this year, as well as slower consumer PC sales. Overall, though, companies reporting this week seemed more focused on hopes for future growth.
But by Friday, investors seemed to have forgotten such good news. Although Ericsson is a foreign issue and so its earnings warning didn't affect its share price Friday -- we'll have to wait for Monday on that -- Agilent closed down 5.87 percent with a last sale of US$48.12 per share compared to Thursday's close of $54 per share.
Shares of AOL, Qualcomm Inc., Apple, Lucent Technologies Inc. and Sprint Corp. all closed down. Baan Co. NV, which warned Thursday that it expects a second-quarter operating loss, closed down only slightly at $2.31 compared to the previous close of $2.43. Intel Corp., which posted a record second quarter this week, but noted that the company continues to have trouble meeting customer demand for its microprocessors and flash memory, closed down 4.5 percent at $138.18.
One bright spot among tech heavyweights was Sun, which closed up 5.9 percent at $104 compared to Thursday's close of $98.06.