Smaller indices suffer as tech stocks lose favour

The big switch out of new economy stocks and into old economy stocks continued apace yesterday, ravaging the Techmark 100 index and leaving the junior FTSE indices sharply lower for the second consecutive session.

The pain being experienced by the new stocks was in stark contrast to the revitalisation of the shares in the recently unfashionable areas of the market. A glance at the indices tables demonstrated the momentum behind the switching operations that took place. Market-makers noted a series of programme trades executed during the morning.

The FTSE 100, celebrating the latest rally in the old economy areas of the stock market, rallied 110.2 to 6,557.2, having risen to 6,618.2, up 171 shortly after Wall Street opened.

But there was gloom across the rest of the stock market with the FTSE 250 and SmallCap indices, heavily loaded with the suddenly unfashionable hi-tech/Internet stocks, both suffering badly.

The FTSE 250 index finished 62.3 lower at 6,517.4, after a session low of 6,482.9, extending the loss over the two sessions to 195.7, or 3.9 per cent.

The FTSE SmallCap fell 65.4, or 1.9 per cent, to 3,375.8 for a two-session decline of 130.37, or 3.7 per cent.

But by far the worst performing of the indices was the Techmark 100, which followed up Wednesday's near 8 per cent fall with a further 5.7 per cent retreat, finishing 288.5 off at 4,783.33.

There was some good news for the market as retail sales in February came in weaker than expected, easing the pressure for another rise in British interest rates.

As ever, it was events in the US that were behind the latest shifts in market trends. The Dow Jones Industrial Average staged a remarkable rally on Wednesday evening, eventually finishing 320 points higher, while the Nasdaq Composite followed up Tuesday's 200-point decline with a further 124-point fall.

The US market turned in another remarkable showing yesterday, the Dow kicking on a further 300-points-plus as London traders closed their books, and posting an even more remarkable 400-point gain later in the session.

Turnover in equities, boosted by the big programme trade business, reached 2.36 billion shares by the 6 p.m. count.