Wall Street shares close sharply lower amid rates, technology concerns

NEW YORK (AFX) - Share prices finished sharply lower, after a major selloff in the technology sector prompted by a new earnings warning from Intel and worries about the rates outlook following the release of stronger-than-expected February unemployment data, dealers said. The DJIA closed down 213.6 points at 10,644.6 and the S&P 500 down 31.32 at 1,233.42. The Nasdaq composite finished down 115.9 at 2,052.78 in marked contrast to its close nearly a year earlier on March 10, 2001 at 5,049 points, its historic high. Today's closing level on the Nasdaq was its lowest since 1998. Breadth was decidedly negative, with 1,123 stocks ending higher, 2,200 lower, and 218 unchanged. The 5-3/8 pct 30-year bond closed down 12/32 at 100-21/32 yielding 5.329 pct, and the 5.000 pct 10-year bond down 11/32 at 100-13/32 yielding 4.943 pct, after news that in February U.S. average hourly earnings rose 0.5 pct, a greater increase than had been anticipated. In February, U.S. nonfarm payrolls rose 135,000 from January, contrasting with expectations for a gain of just 49,000. According to market players, last month's hike in wages unsettled investors in both the stock and bond markets because it suggests that the Federal Open Market Committee at its March 20 meeting could either not cut rates or elect to reduce rates by just 25 points. They noted that for many weeks, investors have assumed that the FOMC will drop rates by a full 50 points. Equity dealers said stocks opened lower and continued to trade at depressed levels throughout the day, closing with major losses. Throughout most of the day, there were trading curbs in place on the NYSE and Nasdaq markets to limit the number of trades and make the selloff less chaotic. Dealers said today's renewed concerns about the rates outlook shook an already nervous share market, noting that a warning from Intel late yesterday - its second such warning this quarter - already had severely undermined investor sentiment. Volatility was increased by heavy options trading, ahead of next Friday's "triple-witching" expirations of futures contracts. Ted Weisberg, president of Seaport Securities, suggested that investors today focused too much on the negative developments in the technology group, and ignored the fact that many blue chip stocks have posted strong gains this week. "It has been a difficult day, but for the DJIA it hasn't been that bad a week. If people can shift the focus away from the technology sector, the situation is not as negative as they think," Weisberg said. Intel closed down 3-13/16 at 29-7/16 after late yesterday issuing its second warning for the current quarter, saying that its first-quarter revenues will not meet expectations and that it will cut 5,000 jobs in a cost-savings effort. Motorola closed down 70 cents at 15.55 usd, after a new downgrade from Merrill Lynch. Among bellwether technology stocks, Dell ended down 2-3/4 usd at 23-3/8, Apple down 9/16 at 20-1/4, Sun Microsystems down 2-7/8 at 17-7/16, and Microsoft was down 2-9/16 at 56-11/16. Dealers said that in general old economy stocks outperformed the technology group, including GM, which ended up 50 cents at 58.95 usd after a positive new research note from Goldman Sachs. DaimlerChrysler finished up 43 cents at 52.00 usd despite news that Prudential Securities issued a 'sell' recommendation on the stock. One analyst noted that the new research note had little impact because there had been numerous previous negative notes on the stock from other brokerages. Barrett Resources closed up 1.30 usd at 62.52 after rejecting Shell Oil's unsolicited acquisition proposal. Pharmaceutical stocks were among the market's few strong sectors, lifted by funds rotation as investors liquidate technology holdings, with Merck up 90 cents at 75.69 usd, and Bristol-Myers Squibb up 1.29 usd at 63.20 usd.

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