NEW YORK (CNNfn) - Wall Street's most turbulent week so far this year ended with a retreat Friday, as rising bond yields and retreating tech stocks woke up the bears in the market.
Valuation worries about technology stocks once again loomed large in investors' minds as many on Wall Street rushed to cash in on the previous day's strong gains ahead of the three-day holiday weekend.
Once again, the biggest move occurred in the Nasdaq Composite. The technology-heavy index, which suffered its third-largest one-day point loss Tuesday, and had its biggest one-day rally in history Thursday, tumbled 83.66 points, or 3.48 percent Friday to end the week at 2,321.89. The index shed 2.18 percent this week and trimmed its gain for the year to 5.89 percent.
The Dow Jones industrial average lost 88.57 points to close at 9,274.89. The blue-chip index ended the week with a loss of 0.32 percent and is now up 1.02 percent on the year.
The S&P 500 index fell 23.91, or 1.91 percent, to 1,230.13. It lost 0.75 percent this week and is up a mere 0.07 percent on the year.
Declines sharply outnumbered advances 2,233 to 805 as 687 million shares changed hands on the New York Stock Exchange.
Alan Hoffman, stock market strategist with Value Line Asset Management, said investors' desire to get into hot technology issues one day and then cash in on the next, together with a sharp increase in bond yields Friday contributed to the heavy volatility in the market. (225K WAV) or (225K AIFF)
Hoffman, who is bullish on stocks long term, expects the wide gyrations in the market to persist in the near future.
Much of the stock market's losses were caused by a severe sell-off among bonds. The benchmark 30-year Treasury bond skidded 1-27/32 points in price, raising the yield to 5.43 percent as investors showed their disappointment with an overnight short-term interest-rate cut in Japan and the market struggled to absorb $35 billion in new bonds sold in this week's three Treasury Department quarterly refunding auctions.
The dollar moved slightly lower against the yen and the euro, settling within a trading range after a wild swing up and down against the yen overnight.
Financial markets paid little attention to news the Senate acquitted President Clinton of charges of perjury and obstruction of justice, which could have resulted in Clinton's removal from office.
The bond market closed early Friday and all U.S. financial markets will be closed Monday for the Presidents Day holiday.
Up again, then down again
A day after rallying sharply, technology stocks hit the steep slope again Friday as investors once again reconsidered valuations in the sector and opted to cash in on the gains of the previous day's rally.
Shares of Dell Computer (DELL) were especially hard hit, tumbling 12, or nearly 12 percent, to 89-7/8 after several prominent analysts made lukewarm comments about the company. Dell is scheduled to report its latest earnings Tuesday, and while analysts are saying the company will meet expectations, they are noting that stiff competition will make it hard for Dell to exceed Wall Street's predictions, especially when it comes to revenue growth. With over 66 million shares traded, Dell was by far the most active Nasdaq issue.
Most other high-tech blue chips also headed south. Dell competitor Gateway (GTW), which also makes and sells PCs to order, tumbled 5-3/4 to 70-1/4.
Among the Dow components, IBM (IBM) shed 5-3/4 to 172-3/4, but Hewlett Packard (HWP) gained 1-3/16 to 76-7/16 after Soundview Technology raised its rating of the company to "buy" from "hold," set a price target of $88 a share and raised its earnings estimates for the company.
On the Nasdaq, Microsoft (MSFT) fell 5 to 157-3/4, Intel (INTC) dropped 6-3/4 to 126-1/2, and Cisco Systems (CSCO) declined 5-13/16 to 99-1/16.
Shares of Lycos (LCOS), which have been on a roller-coaster ride over the past three days since USA Networks (USAI) announced plans to take over the Web portal in a stock swap, fell 3-3/4 to 99-1/2. After shedding more than a quarter of its value Tuesday and Wednesday, then rallying sharply Thursday, the stock inched down Friday after Lycos' biggest shareholder, CMGI (CMGI), said it approved of the USA Networks deal in general, but was concerned about the price USA put on Lycos' stock.
CMGI's shares fell 8 to 104 and USA's stock dropped 2 to 38.
In the day's other news, shares of Boston Scientific (BSX) gained 13/16 to 26-13/16. Late Thursday the medical-device maker said it would take a $26 million charge against fourth-quarter earnings and lay off 2,000 workers, or about 16 percent of its workforce, as it tries to streamline operations.
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-- by staff writer Malina Poshtova Zang
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