Tech shares finished lower on Tuesday, amid reduced first quarter forecasts from telecom companies, including bellwethers Lucent (LU) and Nokia (NOK). Blue chips, meanwhile, struggled for much of the session but managed to end modestly higher.
A big part of the negative sentiment came from telecommunications equipment maker Lucent, which said quarterly revenues would be lower than expected -- and its return to profitability would be further delayed -- because communications carriers are still scaling back their capital spending, according to wire reports. Lucent shares shed more than 10%.
Meanwhile, mobile-phone maker Nokia said it may top its quarterly profit target, but added sales were weaker than anticipated, with network sales expected to drop 25%. Nokia stock was off 6%.
Adding to the gloom in the technology sector, both Qwest Communications (Q) and WorldCom (WCOM) said the Securities and Exchange Commission has launched inquiries into their accounting practices, according to news reports. Qwest said the agency is focusing on how the telecom company booked revenue for 2000 and 2001. WorldCom said the SEC has requested information on a broad range of items. Shares of Qwest lost more than 5%, while WorldCom stock dropped more than 11%.
Plus, shares of Microsoft (MSFT) lost more than 2% after Goldman Sachs said it expects "conservative" fiscal 2003 guidance from the software giant.
Under the weight of all these negative developments, the tech-heavy Nasdaq composite index lost 32.37 points, or 1.68%, to 1,897.12.
But the blue-chip Dow Jones industrial average finished up 21.11 points, or 0.20%, to 10,632.35. The biggest gainers were IBM (IBM) and Procter & Gamble (PG). The broader Standard & Poor's 500 index was off 2.68 points, or 0.23% to 1,165.58.
Gold futures, meanwhile, posted gains in a flight to safety, and the dollar was higher against the Japanese yen. And in energy, oil futures were lower before industry reports on crude oil inventories.
U.S. Treasuries closed mixed, as equities gained some momentum into the final hour of trading. And with no major economic data due Tuesday, the focus was squarely on stocks. Looking ahead, the market will keep an eye on Wednesday's retail sales report for more evidence on how the economy is faring.
In corporate news, General Electric (GE) said it plans to sell $6 billion of global bonds this week in the largest U.S. corporate bond sale of the year, according to wire reports. GE wants to raise cash before interest rates rise.
European markets finished lower. In London, the Financial Times-Stock Exchange 100 index slipped 6.40 points, or 0.12%, to 5,252.50, as U.K. industry production fell 0.5% in January, according to a new economic report. In France, the CAC 40 was lower by 36.10 points, or 0.79%, to 4,550.65. In Germany, the DAX Index was down 49.20 points, or 0.92%, to 5,291.47, taking a cue from Tokyo's slide.
In Asia, the markets ended with losses. The Nikkei plunged 311.97 points, or 2.62%, to 11,607.33, ending a four-day rally as investors consolidated recent gains. In Hong Kong, the market was down 45.01 points, or 0.40%, to 11,273.86.