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Wall Street wavers
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May 31, 2000: 5:11 p.m. ET
Economic woes rekindled; Nasdaq, Dow led lower by cautious selling
By Staff Writer Catherine Tymkiw
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NEW YORK (CNNfn) - If investors were looking for a gambler's paradise, they found it in the U.S. stock markets Wednesday as both major indexes showed strength before closing lower.
Both the Nasdaq composite index and Dow Jones industrial average danced on either side of the breakeven point as investors attempted to decide whether or not to hold on to their cash. 
Renewed concern about the pace of economic growth laid the groundwork for the day's jittery action.
Analysts said most investors were waiting for a key employment report at the end of the week, which is expected to give some indication of whether or not interest rate hikes are ending.
"It's been all over the place today," said Barry Hyman, chief market strategist at Ehrenkrantz King Nussbaum. "Even though it's not really rallying, it's not selling off either."
The Nasdaq shed 58.49 points, or 1.69 percent, to 3,400.99. Meanwhile, the Dow fell 4.80 points to 10,522.33. The broader S&P 500 slid 1.85 to 1,420.60.
But analysts were not discouraged by the lower close, saying the markets could still be poised for a short-term rally.
"Investor sentiment is shifting and volume levels are starting to pick up," said Art Hogan, chief market analyst at Jefferies & Co. "Investors were just taking advantage of yesterday's one-day record advance to take some cash off the table."
Market breadth was mixed and volume was moderate. Advancing issues on the New York Stock Exchange beat declining ones 1,716 to 1,273 as volume hit 943 million shares. Nasdaq losers topped winners by a narrow 2,096 to 1,950 margin, as more than 1.5 billion shares changed hands.
In currency markets, the dollar fell against the euro but strengthened versus the yen. Treasury securities rose.
Economic data gains attention
In economic indicators released Wednesday morning, new home sales fell 5.8 percent in April to an annual rate of 909,000 from the revised 965,000 annual rate in March, according to the Commerce Department. The Conference Board's Leading Indicators Index fell 0.1 percent in April, compared with expectations of a slight rise.
"Fear, greed, loathing aside, (the question is) does the economy slow down before inflation shows up," said John Manley, investment strategist with Salomon Smith Barney. "The trick is to watch these things continuing."
Investors are watching all economic data this week with the hope that the news will continue to show some slowdown that could signal an end to interest rate hikes. The week will be capped by the Labor Department's employment report for May, scheduled for release before the markets open on Friday.
"Anything that shows the economy is slowing will be taken very well by the market," said Hyman. "But the Fed is still out there and I don't think we should get used to the (idea) the Fed going to stop (raising rates) in June."
Techs lead the action
Technology stocks gained attention from buyers and sellers amid investor skittishness about whether or not an economic slowdown may be starting.
"It just reflects Wall Street's manic-depressive mood," said Alan Skrainka, chief market strategist at Edward Jones. "In the meantime, you have some selective cautious buying, but I think people are much more cautious and not just jumping in on any dip."
And Mark Minervini, chief investment strategist at Quantech Research Group, told CNNfn's market coverage that investors thinking the rally may have started Tuesday -- when the Nasdaq posted a record one-day percentage gain -- could be in for a nasty surprise in the short term. (206K WAV) (206K AIFF)
 Many of the big tech stocks fell. Cisco Systems (CSCO: Research, Estimates) shed 2-7/8 to 57, Oracle (ORCL: Research, Estimates) fell 2-5/16 to 71-7/8, and Dell (DELL: Research, Estimates) slipped 7/8 to 43-1/8.
And the selling spilled into other tech issues. Intel (INTC: Research, Estimates lost 1-1/8 to 124-5/8 and Sun Microsystems (SUNW: Research, Estimates) dropped 3-3/8 to 76-5/8.
Tech investors are keenly watching the fate of Microsoft (MSFT: Research, Estimates), which was due to file a response late Wednesday to the U.S. Justice Department's revised breakup plan. The judge in the software maker's antitrust case was expected to consider the response before issuing his final ruling -- possibly as early as this week -- on the company's penalty.
Microsoft fell 1-3/16 to 62-9/16.
The Dow was buoyed by financial stocks, which are interest rate sensitive. J.P. Morgan (JPM: Research, Estimates) gained 9/16 to 128-3/4, American Express (AXP: Research, Estimates) rose 3-3/16 to 53-13/16, and Citigroup (C: Research, Estimates) jumped 1-7/8 to 62-3/16.
Stocks in the news
Lucent Technologies (LU: Research, Estimates), the world's largest telecommunications equipment maker, fell 3/8 to 57-3/8 after confirming that it is acquiring the 93 percent of privately held optical networking equipment maker Chromatis Networks that it does not already own for about $4.5 billion in stock.
 Motorola (MOT: Research, Estimates) fell 1-13/16 to 94-5/8 after saying it plans to turn over more than $30 billion worth of production of mobile phones and other consumer products to Flextronics International (FLEX: Research, Estimates) during the next five years. Flextronics surged 4-3/8 to 54-7/16. 
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