Stocks closed mostly lower in thin trading Monday, as the Nasdaq composite index extended its losing streak to seven days.
Technology and telecommunications stocks took the brunt of the selling.
Communications network builder Level 3 Communications sank $1.65, or 21 percent, to $5.97. The company plans to cut 24 percent of its work force and scale back its operations in light of weak demand.
The Dow Jones industrial average added 21.74 points, to 10,645.38. Among the 30 Dow industrials, gains by General Motors, United Technologies and Honeywell International offset losses by Microsoft and Philip Morris.
United Technologies forecast 15 percent profit growth in the second quarter and full year and disclosed a $400 million aircraft engine maintenance contract with United Airlines. Shares rose $3.06, to $77.81.
General Motors added $2.16, to $61.51, after a favorable article in the latest Barron’s financial weekly.
Meanwhile, retailing stocks rallied on reports that warmer weather finally is prompting sales of seasonal apparel. Sears Roebuck added 55 cents, to $39.25; Wal-Mart Stores gained 37 cents, to $48.52.
New York Stock Exchange volume totaled 1.11 billion shares, as losing stocks outnumbered winners by a 3-to-2 margin among NYSE-listed stocks. The Standard & Poor’s 500 index fell 5.93, to 1208.43.
The Nasdaq composite index dropped 39.80, or 2.0 percent, to 1988.63, the first close below 2000 since April 17. Losers topped winners by more than 2-1 among Nasdaq stocks. Nasdaq volume reached 1.56 billion shares.
In after-hours Nasdaq trading, business software developer Oracle advanced after the company posted slightly better-than-expected quarterly earnings and issued a fairly upbeat outlook.
Shorter-term Treasury securities advanced as stocks slid and investors became more optimistic about chances for a sixth straight half-point cut in short-term interest rates by the Federal Reserve. The Fed’s interest rate policy committee meets June 26 and 27.
Cost of cowardice: Venture capitalists, who raise private money for early-stage investments in entrepreneurial companies, took heat for pushing dubious young companies onto the public stock market in the late 1990s.
According to many critics, ordinary investors were exposed to highly risky stocks, while venture capital investors cashed in on the market euphoria.
Now, a leading venture capitalist says his industry is at it again.
Matt Ocko, a partner in California-based VantagePoint Venture Partners, told the Society of American Business Editors and Writers, meeting in Research Triangle Park in North Carolina last week, that cowardice runs a close second to cutthroat competition in his business.
Both instincts stand in the way of a recovery in technology equity prices, he said.
Simply put, new venture capital funds, which don’t have losses on their books from previous investments gone sour, are being established to hunt for bargains, he said.
New funds are cherry-picking fledgling companies strapped for cash in the current depressed high-tech environment, Ocko said. Often the new investors impose what Ocko termed abusive restrictions on entrepreneurs running the businesses.
In the meantime, more seasoned venture funds with stakes in worthy but troubled companies stand at a competitive disadvantage to the newcomers in raising capital and surviving the tech downturn, Ocko said.
“Collectively, venture capitalists are eating their seed corn,” Ocko said. “A bargain-hunting environment doesn’t work.”
Citing J.P. Morgan’s move to rescue the U.S. economy during a financial panic in 1907, Okco said a “cost of cowardice” is imposed on all when investors refuse to underwrite a recovery and seek instead to profit from a downturn.
Treasury auction: Interest rates fell at the Treasury’s weekly auction of 3- and 6-month bills.
The discount rate for 3-month bills was 3.43 percent, down from 3.51 percent last week. The rate for 6-month bills was 3.38 percent, down from 3.51 percent last week.
The coupon-equivalent rates at Monday’s auction were 3.51 percent for 3-month bills and 3.49 percent for 6-month bills.
