NEW YORK (AP) â€” The Nasdaq composite index flirted with the 4,000 mark Tuesday but gave up some early gains as some technology companies announced that their earnings will miss expectations.
In morning trading, the index had pushed past 4,000 for the first time since April, continuing its gradual recovery from the steep selloff that knocked it as much as 37 percent below its record high.
In midday trading on Wall Street, the technology-focused Nasdaq composite was down 0.12 at 3,989.71. Earlier in the session, the index had risen as much as 60 points.
The index remains 21 percent below the all-time high of 5,048.62 set March 10.
The Dow Jones industrial average was down 124.80 at 10,433.04 and the Standard & Poor's 500 index was off 13.38 at 1,472.62.
Investors who had grown leery of technology stocks are now seeking out some of the biggest names in the sector on the expectation that those companies will show the strongest profit growth.
Many technology stocks remain very highly priced relative to their earnings. But now that rising interest rates have begun forcing a modest economic slowdown, threatening corporate profits, investors are focusing on companies whose earnings are growing rapidly.
Tuesday, Intel rose 81.25 cents to $137.313 and PMC-Sierra, a semiconductor component maker, rose $6.875 to $199.875. Yahoo! rose $5.188 to $144.25.
Yet a handful of Nasdaq components sustained sharp losses after warning that their earnings in the current quarter will miss analysts' expectations. Gadzoox Networks Inc., a maker of hardware and software for storage area networks, fell $6.563 to $13.75, a 32 percent drop.
``We're settling into a two-tiered market,'' said William Meehan, chief market analyst at Cantor Fitzgerald. ``Technology will do very well, but look out for any disappointments.''
Meehan added that many of the younger, less-proven companies on the Nasdaq have not recovered from the springtime selloff, and aren't likely to do so as investors apply tougher standards to the technology sector.
``The selloff showed us that there are some junk companies, and they are pretty much remaining junk,'' he said.
Dow component Honeywell International continued paying a price for its announcement Monday that second-quarter earnings will miss analysts' expectations. Honeywell said it is struggling with high interest rates and higher-than-expected raw material prices in its performance materials unit.
Tuesday, its shares fell $3.75 to $36.50.
Seagram fell $4.375 to $59.375 after French utilities and media conglomerate Vivendi said it will buy the company for $34 billion.
Declining issues outnumbered advancers by a 4-to-3 margin on the New York Stock Exchange, where volume came to 450.97 million shares at midday, ahead of Monday's quiet pace.
The Russell 2000 index of smaller companies fell 1.07 to 521.72.