U.S. blue-chip stocks plunged for a second day in a row Friday, as investors continued to be concerned about a resurgence of inflation and future increases in interest rates. Technology stocks, by contrast, ended flat, support by some better-than-expected earnings reports from companies in the sector.
The Dow Jones industrial average closed down 136.14 points, or 1.26%, to 10,655.15. Strong opening gains on the Nasdaq composite faded later in the day, leaving the technology-heavy index down 1.52 points at 2,638.49. The S&P 500 lost 12.31 to 1,328.72.
Economic data issued Friday, including a 3.1% surge in new home sales in June and a 0.7% climb in average personal income, added to fears that economic expansion and rising wages will cause the Federal Reserve Board to increase interest rates again.
One of the top performers among technology stocks today was BMC Software Inc. (BMCS), which jumped 5-1/2 to 53-7/8 after Morgan Stanley and CS First Boston said they raised their price targets and earnings estimates for the company. After yesterday's close, BMC announced results for its first quarter of fiscal 2000, ended June 30, 1999, which exceeded analysts' estimates. The company said that "very strong growth in both mainframe and distributed systems license revenues as well as strong growth in maintenance and services revenues yielded the eighth consecutive record-breaking quarter."
Total revenues for BMC's first quarter increased 43% to $400.7 million from $279.3 million in the same quarter of fiscal 1999. Net earnings and earnings per share, excluding certain one-time costs, increased 34% to $105.3 million and 31% to 42 cents, respectively.
There were 26 initial public offerings this week, including 10 on Friday alone. The most notable technology IPO today was Web-hosting firm Digex (DIGX), which sold 10 million shares at $17 each. The stock closed today at 22-5/16, up 5-5/16 on its first day of trading.
Other companies that made a debut Friday include N2H2 (NTWO), Aironet Wireless (AIRO), MIIX Group (MHU), Pac Softworks (PASW), Watchguard Technology (WGRD), and Accru Software (ACRU).
Computer hardware stocks were mostly lower today, with Hewlett-Packard (HWP) dropping 1-13/16 to 104-11/16; Dell Computer (DELL), 3/8 to 40-7/8; Sun Microsystems (SUNW), 1/4 to 67-7/8; and Compaq (CPQ), 3/4 to 24. On the other hand, IBM (IBM) and Apple Computer (AAPL) gained, with IBM rising 5/16 to 125-11/16 and Apple increasing 1-13/16 to 55-11/16.
Software giant Microsoft (MSFT) fell 1-1/8 to 85-13/16, after losing 3-1/16 yesterday. The stock of competitor Oracle (ORCL) remained flat at 38-1/16.
The stocks of ERP vendors and networking companies were mostly lower, in response to the overall drop in the markets. SAP (SAP) fell 11/16 to 31-11/16; PeopleSoft (PSFT), 5/16 to 13-5/8; and Lucent (LU), 3/8 to 65-1/16. By contrast, Nortel (NT) rose 5/16 to 88-5/8, and Cisco Systems (CSCO) added 3/8 to 62-1/8.
Internet stocks, which are more volatile than most other securities, dropped again today, with Yahoo (YHOO) losing 9/16 to 136 7/16; eBay (EBAY), 4-9/16 to 97-11/16; and America Online (AOL), 3-3/4 to 95.