Wall Street Technology shares close sharply lower on weak payrolls, Motorola
SAN FRANCISCO (AFX) - Technology shares closed sharply lower, with investor confidence dented by an unexpectedly weak labour market report and a steep decline in the valuation of sector bellwether Motorola, dealers said. The Nasdaq composite fell 64.61 points, or 3.6 pct, to close at 1,720.39. Volume came in at 1.72 bln shares, with 1,210 issues closing higher, 2,430 declining, and 594 remaining unchanged. The Nasdaq 100 lost 70.81 points to 1,448.24 and the Philadelphia semiconductor index (SOX) lost 35.16 to 487.53. In the broader market, the DJIA dropped 126.96 points to 9,791.09, with the S&P 500 shedding 23.01 to 1,128.43. Before the opening bell, the U.S. Labour Department reported a 86,000 fall in March non-farm employment, the largest decline Since Nov 1991. Expectations on Wall Street were for a 74,000 rise. Economists said the unexpected decline suggested that the current slump in manufacturing is beginning to spread to the wider economy "The debate now is whether we are on the edge of a 6-9 month decline in payrolls...I think we might be seeing the beginnings of an economy-wide recession," said Ian Morris, a U.S. economist at HSBC in New York. However, the market did not interpret the weakness of the headline payroll number as increasing the chances of an intermeeting interest rate cut. The robust average earnings figures - which rose a stronger-than-expected 0.4 pct month-on-month in March - suggest that inflationary pressures still persist in the labour market, said analysts. Part from concerns about negative news on the economic front, investors were shaken by a near 25 pct fall in value of Motorola, whose earnings next week are widely seen as a barometer for the entire technology sector. The company was hit by speculation - subsequently rebutted by the company - that it is on the verge of a liquidity crisis. Early comments from Credit Suisse First Boston, which predicted that full-year earnings will fall short of consensus estimates due to weakness in the handset, infrastructure, and semiconductor units, did nothing to improve sentiment. Motorola fell 3.45, or 23.1 pct, to 11.50. Elsewhere in the chip sector, Applied Materials slipped 2-14 to 40, after Lehman Brothers said the company's earnings are potentially at risk due to weakness in semiconductor industry spending -- particularly in Japan and Taiwan. Agilent dropped 2.82 to 27.80 after the company yesterday warned that its upcoming second-quarter sales will not meet expectations, and that it will temporarily cut staff pay by 10 pct across the board. Intel lost 2 to 23-5/8 on news it is under investigation by the European Commission over its loyalty rebate practices and its exclusive distribution agreements with PC manufacturers and retailers concerning Windows-capable microprocessors. National Semiconductor declined 2.11 usd to 22.34. The company promoted its former chief financial officer to the newly-created post of chief operations off icer responsible for all the company's product lines. In the PC sector, Hewlett-Packard slid 2.02 to 28.75 after Dresdner Kleinwort Wasserstein cut its earnings estimates on the compnay due to the economic uncertainties. Elsewhere, Juniper Networks slumped 3.36 to 33.80 after SG Cowen cut its price target for the company to 65 usd from 105 usd on fears of further weakness in telecoms carrier spending. AOL Time Warner lost 0.40 to 39.30. The stock was upgraded to 'buy' from 'attractive' "based on a reassessment of the stock's risk/reward at current price levels" by Bear Stearns analysts.
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