Technology stocks were dragging the major stock indexes lower again Thursday,as revenue warnings from computer maker Gateway (NYSE: GWY) and 3Com(Nasdaq: COMS) added to already bearish sentiment in the market.
At midday, the Nasdaq Composite Index was down 34.21 at 2,117.62, the Standard& Poor’s 500 stock index was down 8.61 at 1,231.33, and the Dow JonesIndustrial Average was down 65.68 at 10,429.60.
The Nasdaq ended February at its lowest level in two years.
Gateway was down US$1.26 at $15.94 after warning that its first-quarter operatingincome will be near breakeven, rather than the 17 cents per share expectedby analysts. The results will also include a charge of $150 million to $275million as Gateway restructures operations and narrows focus toconcentrate on its core computer manufacturing operations.
Computer networking-equipment maker 3Com, meanwhile, was down $1.88 at $7.25after saying revenue and earnings for the third quarter ending March 2nd will be”substantially lower” thn previously expected. The company said that U.S.economic conditions and a prolonged slump in the telecom industry havereduced demand for products in most of its businesses.
The economic slowdown is also resulting in a shift in demand to lower-marginproducts, lower prices for consumer broadband modem products, and highercosts, 3Com said.
Travelocity, Expedia Lower
E-commerce stocks were also feeling the pain, with the E-Commerce Times Stock Indexregistering a 1.94 percent loss.
Online travel companies Travelocity (Nasdaq: TVLY) and Expedia (Nasdaq:EXPE) were lower after Northwest Airlines and KLM said they would no longerpay commissions for tickets sold over the Web. The news prompted analysts atLegg Mason Wood Walker and CIBC World Markets to downgrade the stocks.
In response to the airlines’ decision to yank commission payments, Travelocity said it will impose a $10 surcharge on every Northwest and KLMticket it sells.
Comments by Federal Reserve Chairman Alan Greenspan helped push stocks loweron Wednesday, as the Fed chief dampened hopes of a big interest-rate cut inthe days ahead. Thursday’s economic news was a mixed bag, showing Fed policyis likely to remain unchanged.
The National Association of Purchasing Management said its index ofmanufacturing activity dropped again in February, remaining at levelsconsistent with economic contraction. However, the industry group said, sixof the nine indexes that make up the overall measure showed slowing rates ofdecline.
Meanwhile, the U.S. Department of Commerce’s monthly report on consumer spending showed a 0.7percent rise in January, reportedly the biggest gain in four months. Thenation’s savings rate, however, fell to what was reportedly its lowest levelever.
For its part, the U.S. Department of Labor said the number of workers filing newclaims for unemployment insurance rose last week to what was reportedly thehighest level so far this year.