US market runs out of steam with tech stocks

Stocks cut their losses but were stuck in negative ground in yesterday afternoon after Nokia, the world's number one mobile phone maker, sent a shock wave across the globe with a warning of weak profit and sales growth.

Finland's Nokia, joining a growing list of high-tech names to warn investors of disappointing results, cited weaker market conditions and predicted only "very modest" market growth for the full year. It fell about 20 per cent in US trade.

"This market, from the market low on April 4th, was building a fair amount of steam and what happened here is that technology leadership has run out of gas - it's rolled over," said Richard Cripps, chief market strategist at Legg Mason Wood Walker. "Some believe that this market can only be led higher by technology - I disagree with that."

By last night the Nasdaq Composite Index lost 19.85 78 points to 2,170. Web gear maker Cisco Systems and chip giant Intel pushed the tech-packed index down, but it was off its low of 2,105.26.

The blue-chip Dow Jones Industrial Average rose 26.29 points to 10,948.38. This was up from its low of 10,788.58. The broader Standard & Poor's 500 Index rose 1.43 points to 1,255.82. Earlier in the session it hit a low of 1,235.75.

In the afternoon Nokia, the most active stock on the New York Stock Exchange, fell $5.58 to $23.13. Swedish rival Ericsson, one of the most actively traded issue on Nasdaq, fell 26 cents to $5.24, while US-based Motorola lost $1.10 to $13.76. The North American telecom index shed 0.77 per cent.

The downbeat comments also put a damper on the shares of semiconductor makers that supply the mobile phone firms, including Texas Instruments, down $2.88 to $33.93.

Dow component General Electric reversed early losses and gained 96 cents to $48.36, while merger partner Honeywell International dropped $1.75 to $43.50. A source said European antitrust regulators have considered asking GE to sell a large part of Honeywell's aerospace operations, the very business that made Honeywell attractive, in order to approve the $42 billion deal.