U.S. stocks retreated Friday amid a slump in technology and financial issues one day after market indexes set record highs.
Personal-computer stocks recoiled from warnings by Silicon Graphics about future growth, semiconductor issues were hurt by a slide in LSI Logic and financial shares tumbled after Federal Reserve Chairman Alan Greenspan suggested interest rates might not be cut soon.
Greenspan said in Chicago Thursday night that small wage increases that had helped curb inflation may give way to larger, more inflationary settlements.
“You’re probably not going to get an easing” in rates, said Steve Mindnich, trader at Jefferies & Co. in Short Hills, N.J. “Look at the bonds. The Federal Reserve is preparing people.”
The Dow Jones industrial average fell 7.59 points, to 4794.86, as yields on benchmark 30-year Treasury bonds rose to 6.35 percent from 6.30 percent Thursday.
For the week, the Dow eked out a gain of 1.08 points. On Thursday, it had closed at 4802.45, its 50th record of the year.
Bigger losses were felt elsewhere Friday. The S&P 500, for example, fell 3.19, to 587.46, after reaching record highs in the previous three sessions. On the Nasdaq market, the composite index dropped 7.44, to 1039.53.
However, the Dow Jones utility average showed strength, surging 1.58, to 218.82, its highest since February 1994.
Some 13 stocks fell for every 9 that rose on the New York Stock Exchange, where volume totaled 388.1 million shares.
“There’s a little concern, or cautiousness, that the market only limped to a record yesterday on poor breadth,” said Joseph DeMarco, head trader at HSBC Asset management, a unit of Hongkong & Shanghai Bank.
Computer stocks slid after Silicon Graphics said fiscal first-quarter net income grew to 33 cents a share, higher than last year’s earnings of 26 cents but lower than analysts’ estimate of 34 cents.
Silicon Graphics also warned that slowing sales in the U.S. will lead to lower-than-expected growth in the fiscal year ending June 30. The company’s stock fell $1.75, to $32.25.
Among other computer-makers, Hewlett-Packard dropped $4, to $88.75; IBM slipped $2.87, to $95.37; Digital Equipment dropped $3.12, to $51.75; and Sun Microsystems declined $1.75, to $70.25.
Semiconductor shares reacted to a 10 percent decline in LSI Logic, which tumbled $5.50, to $49.50.
Investors grew concerned that the computer-chip company’s growth is slowing, even after it posted unexpectedly strong third-quarter profits of 50 cents a share, up from 36 cents in the year-earlier period and 4 cents above analysts’ estimates.
The stock fell after Soundview Financial Group lowered earnings estimates, citing chances for increased supplies and lower chip prices.
Among chip stocks, Texas Instruments dropped $3.50, to $69.75; Intel eased 87 cents, to $67.12; Applied Materials fell $2.12, to $47.62; and Micron Technology sank $3.87, to $69.
Health-care stocks fell after biotechnology company Amgen reported lower-than-expected third-quarter sales of its best-selling Neupogen, a drug that helps cancer patients undergoing chemotherapy. Amgen shares fell $4.25, to $46.12, in trading of 16.5 million shares.
The weak bond market hurt financial stocks. Merrill Lynch dropped $2.12, to $57.37; Morgan Stanley slid $4.12, to $87.87; and Dean Witter Discover fell $1.87, to $52.
