U.S. technology stocks were mostly lower at midday Thursday, with fiber optic and computer component shares hit by a warning from Corning, Inc. (NYSE: GLW) that sales for the first half of the year will be slower than previously thought.
Stocks were not helped by remarks from U.S. Federal Reserve chairman Alan Greenspan, who gave no hint about interest rates in congressional testimony Thursday morning.
Greenspan reportedly told the Senate Budget Committee that tax cuts could benefit the economy in the event of a downturn, but left investors without an indication of the Fed’s next move. Lower interest rates would help boost technology stocks, because companies would have easier access to capital to invest in hardware and software.
However, while Greenspan’s testimony provided no specific clue on rates, reports said that the Fedchief, when asked whether the economy is in a recession, responded thatgrowth is likely “very close to zero,” with inflation pressures undercontrol.
Those reports helped steady stocks by providing support for theargument that the Fed may deliver a big rate cut after its policymakingcommittee finishes a two-day meeting next Wednesday.
Investors See Hurdles
Corning, which reported fourth-quarter results that topped analyst estimates, said the outlook for the first quarter ending in March may not be so bright. The company lowered its outlook for sales and earnings, citing expected weakness in the telecommunications market.
The tech-heavy Nasdaq Composite Index was down 57.24 at 2801.91 in early afternoon trading, led by declines in Oracle (Nasdaq: ORCL), Cisco Systems (Nasdaq: CSCO) and JDS Uniphase (Nasdaq: JDSU). The Nasdaq was riding a three-day winning streak through Wednesday.
JDS Uniphase, a supplier of optical networking products, was hit by reports of a Salomon Smith Barney downgrade and by the delay of a planned shareholder vote on the acquisition of optical communications firm SDL, Inc. (Nasdaq: SDLI).
The E-Commerce Times Index was down 2.54 percent, as declines in Amazon.com (Nasdaq: AMZN) and eBay (Nasdaq: EBAY) offset gains in E*Trade (Nasdaq: EGRP) and Webvan (Nasdaq: WBVN).
E*Trade benefited from a better-than-expected quarterly earnings report, as the online brokerage reported a profit from ongoing operations for the first quarter of fiscal 2001, beating analyst estimates by a penny per share.
Online grocer Webvan was higher after the company said it will “dramatically reduce” costs in order to conserve cash. The company said it will delay expansion into several cities, and may cut additional jobs.
Tech stocks received a boost earlier this month when the Fed cut key interest rate targets. Some investors are hoping for further rate cuts to help spur the economy and increase companies’ capital spending.