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Nasdaq tops 4,000, buoyed by earnings outlook

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CIOL Bureau
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Eric Wahlgren

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NEW YORK: The Nasdaq composite index closed above the 4,000 mark for the

first time since April on Tuesday, leaving blue-chip stocks in the dust as

investors bet that technology companies will deliver good results despite a

slowing economy.

"It is a two-tiered market–tech and everything else, said Cantor

Fitzgerald chief market analyst Bill Meehan. "People are worried that the

slowing economy will hurt earnings and that you are not going to get the same

performance out of non-tech stocks, even if there is no slowdown."

The blue-chip Dow Jones industrial average lost 122.68 points, or 1.16 per

cent, at 10,435.16, with Honeywell International Inc., the diversified

conglomerate, again largely to blame. The damage to Honeywell's stock from a

profit warning on Monday continued, with Honeywell falling 3-7/8 to 36.

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Besides Honeywell, other old-line stocks were pressured by similar concerns

about the outlook in a slowing economy, including Minnesota Mining &

Manufacturing, another conglomerate, down 1-1/8 at 82-3/8. Car colossus General

Motors Corp. was off 2-1/4 at 62-3/16.

But the tech-stacked Nasdaq composite index posted its fourth higher close in

a row, climbing 23.53 points, or 0.59 per cent, to 4,013.36. It was the index's

highest finish since April 11, when it settled at 4,055.90. It is now off 1.37

per cent for the year.

The familiar cast of technology companies led the way with Intel Corp., the

world's largest computer chip maker, adding 1-13/16 to 138-5/16.

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The semiconductor sector grabbed onto its coattails, sending the Philadelphia

Stock Exchange semiconductor index up by 2.42 per cent.

Business software company Oracle Corp. gained 3/64 to 86-3/64 ahead of its

earnings report, which came after the close.

Broader measures of the market headed lower. The Standard & Poor's 500

index fell 9.72 points, or 0.65 per cent, to 1,476.28, while the Wilshire 5000

index declined 38.68 points, or 0.28 per cent, to 13,818.11.

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Oil stocks slipped ahead of a key meeting on Wednesday in Vienna of the

Organization of Petroleum Exporting Countries, which will decide how much

additional production is needed to bring down high oil prices. Standard &

Poor's international oil index was off 0.74 per cent.

In general, the shares of auto manufacturers, heavy machinery companies and

other old economy companies sagged, while software companies, semiconductor

makers and entertainment groups rose.

"It looks like the Nasdaq has a little further to go in its rally,"

said Rutherford Brown and Catherwood managing director Thom Brown. "I think

we've been seeing this dichotomy in the market almost all year. It is kind of

just business as usual."

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Early in the session, US trade figures for April showed that consumer demand

for imports remains strong but the trade deficit narrowed a bit from the

previous month's record high. The central bank is worried that strong consumer

demand will fuel inflation.

But Federal Reserve Governor Edward Gramlich said on Tuesday that unit labor

costs in the economy are reasonably stable and the trade-off between employment

and inflation rates is now better than it was in the past.

Wall Street will hear from Federal Reserve Chairman Alan Greenspan on

Wednesday, which will be exactly one week before the central bank is expected to

announce whether it will raise interest rates again. The Fed has boosted rates

six times since last June.

On Wednesday, Greenspan will testify before the Senate Banking and

Agriculture committees on the Commodity Futures Modernization Act at 1400 GMT.

(C) Reuters Limited 2000.

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