Dow Dips Despite Rally In High-Tech Sector

A powerful profit report from Dell Computer energized the technology sector, but blue-chip shares pulled back Wednesday as the inflation picture clouded just a day after the Federal Reserve said not to worry.

The Dow Jones industrial average fell 12.77 to 7,290.69, swinging from an early 49-point gain to a 64-point deficit before recovering.

Broader sectors were mixed. The technology-heavy Nasdaq market drew a boost from Dell’s earnings report, which was released after Tuesday’s close.

But blue-chip issues were weighed down by the bond market, which retreated after a report showing a sharp narrowing in the trade gap prompted investors to second-guess the Federal Reserve’s decision on Tuesday not to raise interest rates.

“You can tell the market’s psyche is still very fragile. By not moving (rates), the Fed didn’t answer anybody’s questions,” said Charles White, portfolio manager at Avatar Associates.

Advancing issues outnumbered decliners by more than a 5-to-4 margin on the New York Stock Exchange, where volume totaled 537.04 million shares as of 4 p.m., up sharply from Tuesday’s pace.

Some of the stocks that moved substantially or traded heavily Wednesday:

NYSE

Keystone International, up 10-5/8 at 31-1/8.

The Houston-based manufacturer of valves agreed to be acquired by Tyco International for stock valued at about $1.2 billion, or $34 a share.

Honda, down 6-1/4 at 58.

An article in The Wall Street Journal said a continued rebound in the yen may quickly reverse the fortunes of the Japanese automaker.

US Airways Group, down 3 at 34-7/8.

British Airways sold its remaining 14.6 million shares, or 22.5 percent stake, in US Airways for $499 million, or $34.50 a share.

NASDAQ

Dell Computer, up 7-1/8 at 106-3/4.

Gateway 2000, down 1-7/8 at 69-1/4.

IBM (NYSE), up 1-3/8 at 175-1/8.

Compaq (NYSE), up 5-3/4 at 102-3/4.

Computer maker shares rose after Dell reported that profits for its first quarter ended May 4 more than doubled, soundly beating forecasts.

Quantum, down 3-13/16 at 37-9/16.

Seagate Technology (NYSE), down 2-3/8 at 43.

Western Digital (NYSE), down 4-1/4 at 59.

Disk drive stocks were pounded for the second time this week after Dell Computer indicated to analysts that it expected to get good prices on components such as drives, the Dow Jones News Service reported.

CKS Group, up 3 at 26-1/2.

Goldman Sachs placed CKS on its recommended list, the Dow Jones News Service reported.