New York Market: Investors seek safety in cheaper stocks

THE slump in high-flying computer stocks presents a quandary for "growth" investors: where to turn when old reliables like Dell Computer Corporation disappoint.

The answer for many investors is to shift money into stocks with fast earnings growth that aren't as richly priced. That will mean gains for drug, retail and financial shares in coming days. "We're searching for a little bit of safety - cheaper growth stocks," said Courtney Smith, of Orbitex Management.

The performance of the major market indexes last week reflected the slump in computer stocks. The computer-dominated Nasdaq Composite Index lost 1.6 per cent, while the broader Standard & Poor's 500 and the Dow Jones Industrial Average gained about 0.7 per cent.

Software and computer makers were among the biggest losers in the S&P 500, while casino and hotel and motel stocks gained the most. Dell's fourth- quarter earnings on Tuesday matched forecasts though its revenue growth of 38 per cent fell short of expectations. The stock slumped 11 per cent for the week to 80.125, after losing 12 per cent the previous Friday in anticipation.

Microsoft fell 6.3 per cent, software maker Oracle dropped 4.4 per cent and number one online bookseller Amazon.com lost 2.5 per cent. Insurer Transamerica gained 33 per cent after agreeing to sell itself to Aegon NV for $10.8bn (pounds 6.55bn) and casino operator Mirage Resorts jumped 22 per cent on optimism that new casinos in Las Vegas will lure more gamblers.

The Nasdaq Composite set a record on 1 February at 2510.09, giving it a 14 per cent gain for the year. Since then, the index has slid 9 per cent. The prospect of higher interest rates also is weighing on stocks with high price/earnings ratios. On Tuesday, Federal Reserve Chairman, Alan Greenspan, presents his semi-annual testimony on the economy to the Senate Banking Committee, with a repeat performance before the House panel on Wednesday.

Investors will be listening for clues that the central bank is leaning toward raising interest rates amid signs that the economy is growing more quickly than expected. A report on Friday that the US trade gap narrowed in December shows the US may boost its estimate of fourth-quarter economic growth when it updates the figure next Friday. Richard Yamarone, an economist at Argus Research, said growth may be revised up to 6.1 per cent at an annual rate, from 5.6 per cent, the estimated at the end of January.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Software Development Manager

£40000 - £50000 per annum: Recruitment Genius: This is an exciting opportunity...

Ashdown Group: Product Manager - (Product Marketing, Financial Services)

£30000 - £35000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

Recruitment Genius: Compliance Assistant

£13000 per annum: Recruitment Genius: This Pension Specialist was established ...

Ashdown Group: Market Research Executive

£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

Day In a Page

Isis hostage crisis: The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power

Isis hostage crisis

The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power, says Robert Fisk
Missing salvage expert who found $50m of sunken treasure before disappearing, tracked down at last

The runaway buccaneers and the ship full of gold

Salvage expert Tommy Thompson found sunken treasure worth millions. Then he vanished... until now
Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Maverick artist Grayson Perry backs our campaign
Assisted Dying Bill: I want to be able to decide about my own death - I want to have control of my life

Assisted Dying Bill: 'I want control of my life'

This week the Assisted Dying Bill is debated in the Lords. Virginia Ironside, who has already made plans for her own self-deliverance, argues that it's time we allowed people a humane, compassionate death
Move over, kale - cabbage is the new rising star

Cabbage is king again

Sophie Morris banishes thoughts of soggy school dinners and turns over a new leaf
11 best winter skin treats

Give your moisturiser a helping hand: 11 best winter skin treats

Get an extra boost of nourishment from one of these hard-working products
Paul Scholes column: The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him

Paul Scholes column

The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him
Frank Warren column: No cigar, but pots of money: here come the Cubans

Frank Warren's Ringside

No cigar, but pots of money: here come the Cubans
Isis hostage crisis: Militant group stands strong as its numerous enemies fail to find a common plan to defeat it

Isis stands strong as its numerous enemies fail to find a common plan to defeat it

The jihadis are being squeezed militarily and economically, but there is no sign of an implosion, says Patrick Cockburn
Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action

Virtual reality: Seeing is believing

Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action
Homeless Veterans appeal: MP says Coalition ‘not doing enough’

Homeless Veterans appeal

MP says Coalition ‘not doing enough’ to help
Larry David, Steve Coogan and other comedians share stories of depression in new documentary

Comedians share stories of depression

The director of the new documentary, Kevin Pollak, tells Jessica Barrett how he got them to talk
Has The Archers lost the plot with it's spicy storylines?

Has The Archers lost the plot?

A growing number of listeners are voicing their discontent over the rural soap's spicy storylines; so loudly that even the BBC's director-general seems worried, says Simon Kelner
English Heritage adds 14 post-war office buildings to its protected lists

14 office buildings added to protected lists

Christopher Beanland explores the underrated appeal of these palaces of pen-pushing
Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Scientists unearthed the cranial fragments from Manot Cave in West Galilee