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Stocks Waver in Tech Gloom, Economy Hopes

Friday, July 25, 2003 12:34 p.m. ET

By Vivian Chu

NEW YORK (Reuters) - U.S. stocks vacillated around the unchanged mark in choppy late morning trade on Friday, as investors weighed a surprisingly strong report on durable goods orders against disappointing forecasts from several technology companies.

Markets rose earlier in the session after a government report showed new orders for costly manufactured goods shot up in June at the fastest rate in five months. Orders for durable goods climbed 2.1 percent, beating forecasts for a 1.0 percent increase, and fueled optimism an economic recovery is forming.

But sentiment was dampened by tepid forecasts from several tech companies including JDS Uniphase Corp. <JDSU.O><JDU.TO>, the world's largest supplier of parts that boost the speed and capacity of fiber optic networks, and KLA-Tencor Corp. <KLAC.O>, a leading maker of semiconductor production gear.

"I can't say we saw big conviction on the buy side. We're starting to see people lighten up before the weekend," said Nick Angilletta, head of Nasdaq trade at Salomon Smith Barney.

The Dow Jones industrial average <.DJI> rose 10.65 points, or 0.12 percent, at 9,123.16. The broader Standard & Poor's 500 Index <.SPX> crept up 0.47 points, or 0.05 percent, at 982.07. The technology-laced Nasdaq Composite Index <.IXIC> was off 6.34 points, or 0.37 percent, at 1,695.08.

Investors were also reacting to the market approaching technically significant levels. "The Nasdaq below 1,700 gets people spooked. There are some technical reasons at work," Angilletta said.

Aside from the economic data, Wall Street was focused on more quarterly earnings from corporate America.

JDS shares fell a day after it forecast falling sales. The company reported a much smaller fourth-quarter loss, but said sales weakened amid continued slow demand in the communications industry. Its shares sank 14 percent, or 44 cents, to $2.71.

KLA-Tencor reported lower fourth-quarter net income and revenue but forecast that first-quarter results would rise 5 percent. Wall Street had hoped for a forecast of a larger increase, an analyst said. The company's shares fell 91 cents, or 1.8 percent, to $51.22.

Pfizer Inc. <PFE.N>, the world's largest drugmaker, reported a net loss in the second quarter versus a profit last year as costs from its acquisition in April of Pharmacia Corp. weighed on results. Pfizer shares rose 5 cents to $32.60.

In other economic readings, sales of existing U.S. homes edged down 0.3 percent in June, while inventories jumped to the highest level in nearly 12 years, the National Association of Realtors said.

Existing home sales fell to a seasonally adjusted annual rate of 5.83 million units from a revised 5.85 million rate in May, shy of forecasts of a rate of 6.0 million homes.



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