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US stocks edge off lows

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CIOL Bureau
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By Elizabeth Lazarowitz



NEW YORK: Stocks struggled to pare their steep losses in late trading on Friday after warnings on earnings of two big names battered the technology sector, stirring up worries about the corporate profit picture.



Swedish telecoms giant Ericsson's and testing and measuring equipment maker Agilent Technologies Inc. both announced their third-quarter earnings would fall short of Wall Street's expectations.



The warnings spurred investors to cash out after the market climbed steeply on Thursday on optimistic remarks by Federal Reserve Chairman Alan Greenspan. "The market has quickly forgotten Thursday's good commentary from Mr Greenspan and has focused on a quality-of-earnings issue," said Barry Hyman, market strategist for Ehrenkrantz, King, Nussbaum Inc. No longer satisfied with higher earnings numbers, investors are dissecting corporate scorecards, scanning them for any signs that the results are not as sunny as they seem. "It's almost like investors are looking for a reason to sell," Hyman added.



The Dow Jones industrial average .DJI) lost 101.12 points, or 0.93 per cent at 10742.75, after climbing 148 points on Thursday to its highest close since mid-May. Pressure on the Dow came from Hewlett-Packard Co., the computer maker which spun off Agilent completely in June. HP was down 7-1/16 to 124-1/4. Agilent fell 24-13/16 to 48-3/16, and was the New York Stock Exchange's biggest loser in percentage terms.



The market rallied Thursday after Greenspan tempered his usual warnings about inflation with upbeat talk on productivity growth. Some Wall Street pros took Greenspan's balanced tone on inflation as a sign that the Fed may not raise interest rates again this year. But on Friday, Wall Street's mood had soured despite the flow of largely forecast-topping earnings results, analysts said.



"We're looking at these earnings numbers, and we're spending more time looking at the part of the glass that's one-eighth empty and ignoring that it's seven-eighths full," said David Sowerby, market strategist for Loomis Sayles in Detroit. Losses in Dow's high-tech heavyweights dragged down the blue-chip gauge, with computer maker International Business Machines Corporation off 2-9/16 at 114-7/16, chip maker Intel Corporation off 2-11/16 at 140 and Microsoft Corporation, the software giant, down 2-8/16 at 72-5/16. The broader Standard & Poor's 500 Index .SPX) was down 14.07 points, or 0.94 per cent, at 1,481.4. Meanwhile, the technology-laced Nasdaq Composite Index .IXIC) was off 66.69 points, or 1.59 per cent, at 4,117.87.



Ericsson, the Nasdaq's most heavily traded share, fell 2-10/16 to 19-15/16 after saying parts shortages in the mobile phone unit would bite into its profits in the third quarter. The American Stock Exchange's North American telecom index .XTC) was off 1.22 percent. Semiconductor shares took a beating despite strong earnings reports, and the Philadelphia Stock Exchange's Semiconductor index .SOXX) tumbled 5.1 per cent.



On the rise was Sun Microsystems Inc., the largest maker of computers that serve up Web pages, which gained 6-10/16 to 104-11/16 after its profits trounced analyst forecasts. Greenspan is scheduled to speak again next Tuesday in the second tranche of his Congressional testimony, this time before a House committee. "Yesterday's run-up was a little bit excessive and not as broad as I'd like to see," said Larry Rice, chief investment officer at Josephthal Lyon & Ross. "If it was a run-up after Greenspan, the jury is still out over whether Greenspan is going to raise interest rates."



Oil company shares fell after crude oil futures traded on the New York Mercantile Exchange dropped on signs that Saudi Arabia has increased output in keeping with its pledge to bring down high oil prices. Exxon Mobil Corp., the No. 1 U.S. oil company, was off 1-1/8 at 77.

(C) Reuters Limited 2000.

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