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Markets & Stocks
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Blue chips recover
Dow, S&P 500 erase deep morning losses to close flat amid al Qaeda news. But techs still troubled.
March 18, 2004: 5:39 PM EST

NEW YORK (CNN/Money) - Blue chips recovered from a steep morning slide to close barely below the unchanged line Thursday, helped by news that a senior al Qaeda official, possibly the organization's second in command, had been surrounded by Pakistani troops.

However, technology stocks couldn't muster the same recovery. Profit taking after two sessions of strong gains, concerns about the resurgence of inflation and a large fine looming over Microsoft in Europe all played a role in setting the tone of the market throughout the day.

The Dow Jones industrial average (down 4.52 to 10295.78, Charts) and the Standard & Poor's 500 (down 1.43 to 1122.32, Charts) index both closed within a few points of the unchanged line, having sported losses of about 0.6 percent in the morning. The Nasdaq composite (down 14.32 to 1962.44, Charts) lost about 0.7 percent, bouncing up from losses of more than 1 percent.

The market began to recover from its morning lows after CNN reported that Pakistani President Pervez Musharraf said troops have surrounded al Qaeda fighters protecting what he called a high-value target. Later, Pakistani officials told CNN they believe the surrounded al Qaeda figure to be Ayman al-Zawahiri, the second in command after Osama bin Laden. (For more coverage of this breaking news, go to CNN.com)

Stocks surged Tuesday and Wednesday, as investors jumped back into the market following a week-long selloff. But the action remained jittery ahead of Friday's quadruple options expiration date and ahead of the start of the reporting period for first-quarter earnings.

"I was very impressed with the last couple days' performance, in particular with the Dow, which rallied nicely," said Michael Carty, principal at New Millennium Advisors. "But we're in this pre-announcement period and although there haven't been too many negative comments, there's some hesitation on the part of investors because of that."

"My sense is that the market is going to continue to turn in a lackluster, sloppy performance through the end of the month and early April as we wait for confirmations on the earnings," he added.

After the close of trade, athletic shoe and sportswear retailer Nike (NKE: up $0.67 to $76.82, Research, Estimates) reported earnings of 74 cents per share, a penny more than analysts were expecting and up from 47 cents a year earlier.

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There are no S&P 500 earnings reports scheduled for Friday. There are also no economic reports on tap.

Friday is a quadruple witching day, when stock index options and futures and individual stock options and futures all expire simultaneously. This can sometimes create volatility, although that often occurs in the sessions leading up to the expirations, rather than the day of.

The movers

On the corporate front, Microsoft (MSFT: down $0.24 to $24.89, Research, Estimates) fell 1 percent and was the Nasdaq's most-actively traded issue after the company and the European Union failed to reach a settlement over antitrust issues, meaning that the EU is now likely to impose a fine amounting to several hundred million euros as part of a legal ruling against Microsoft.

Dow component United Technologies (UTX: down $0.97 to $87.83, Research, Estimates) fell 1.1 percent after the company reaffirmed its 2004 guidance, but did not raise it, as some on Wall Street had hoped. The company said earnings for the fiscal year would be $5 to $5.30 per share. Current estimates from Wall Street analysts are for $5.21 per share.

A variety of big-cap technology shares that had rallied in the last few sessions sold off, including Intel (INTC: down $0.59 to $27.20, Research, Estimates) and Oracle (ORCL: down $0.24 to $11.61, Research, Estimates), which each lost 2 percent.

On a positive note, brokerage Morgan Stanley (MWD: down $0.55 to $59.91, Research, Estimates) reported quarterly earnings of $1.11 per share, up from 82 cents a year earlier and higher than what analysts were expecting. The company is the third Wall Street bank this week to report strong quarterly results. Still, the stock traded lower.

On the New York Stock Exchange, where 1.35 billion shares traded, decliners outnumbered advancers by nine to seven. On the Nasdaq, the ratio of losers to gainers was about three to two as 1.66 billion shares traded.

Signs of inflation, including a jump in the long-delayed January producer price index report and the continued spike in oil prices, also created some unease among investors. NYMEX light sweet crude oil futures pulled back a bit, falling 23 cents to settle at $37.39 a barrel. OPEC indicated it was not going to back away from output cuts that are supposed to kick in April 1, despite its concern over the rising cost of crude.

"The oil prices are creating a few problems," Carty said. "Prices are impacting the PPI report and also consumer prices and are also hurting our trade balance, what with the weaker dollar, because we have to pay more to import oil. However, there aren't a lot of inflationary pressures here beyond that."

Investors paid little attention to the day's other economic news -- the weekly jobless claims report, which showed new claims for unemployment last week fell to a three-year low.

Treasury prices fell. The 10-year note lost 15/32 of a point in price, its yield rising to 3.76 percent from 3.70 percent late Wednesday. The dollar lost ground versus the yen and edged lower versus the dollar.

COMEX gold rallied $4.20 to $411. 30 an ounce.  Top of page




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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.