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U.S. stocks slip in late trade after chip rally melts

By Emma-Kate Symons

NEW YORK - U.S. technology stocks headed sharply lower in late afternoon trading Wednesday, failing to sustain an earlier recovery from session lows spurred by a rally in semiconductor shares and a decline in oil prices.

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Worries about corporate profits and forecasts of weaker revenue growth worried skittish investors after Lucent Technologies Inc., the world's No. 1 telecom equipment maker, and Motorola Inc., the world's No. 2 cell phone maker, warned 2001 may bring lower-than-expected earnings growth.

"There is fear that there's going to be a slowdown in spending,'' said Peter Doyle, chief investment strategist at the Internet Fund, with $750 million in assets.

"For all I know,'' the Nasdaq market "could end positive but the greater risk is to the downside.''

The technology-heavy Nasdaq Composite Index dropped 68 points, or 2.11 percent, to 3,172, after tumbling to 3,103 earlier. The Dow Jones industrial averagelost 150 points, or 1.43 percent, to 10,373. The broader Standard & Poor's 500 Index was down 27 points, or 2.01 percent, at 1,359.

The Philadelphia Semiconductor Index was up 0.44 percent, clinging to its reversal of early losses and recovering from a steep sell-off on Tuesday. Chip makers Altera Corp., up 15/16 to $30-3/4, and Xilinx Inc., up $1-7/8 to $64-5/16, rebounded after investment downgrades on Tuesday.

Cisco Systems Inc., the world's largest maker of computer networking equipment, jumped to an intraday high of $53-3/8, helping to boost the Nasdaq. Cisco, the second most active stock on Nasdaq, last was up 7/8 to $52.

But International Business Machines Corp. was down 2.5 percent to $111-15/16 amid a rumor the world's No. 1 computer maker was having trouble supplying Cisco with computer chips. Microsoft Corp. was up 3.32 percent to $56-3/8. The U.S. Court of Appeals on Wednesday gave the company until Nov. 27 to file written briefs in its antitrust case.

Wall Street has suffered almost session after session of declines amid worries that high oil prices, Europe's weak single currency and a slowing U.S. economy would depress corporate earnings.

But Motorola Inc. skidded 20 percent, or $5-5/16, to $21-1/16, on the New York Stock Exchange. The mobile phone maker reported quarterly earnings figures that matched expectations. Motorola, however, cut its earnings expectations through 2001 -- citing weaker growth in mobile phone sales.

Yahoo! Inc. stock shed more than 19 percent, or $16-1/2, to $66-3/16, on the Nasdaq. The online media giant posted results that beat expectations but showed a decline in advertisers on its Web site. Yahoo! lost about $9.5 billion in market value and helped to push the American Stock Exchange Internet Index down 4.09 percent.

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