US stocks ended mixed Wednesday as declines in technology issues such as Microsoft and Yahoo were offset by gains in blue chip manufacturers like General Motors.
"I think we are seeing a continuation of last week and this week with some of the euphoria over the tech sector dissipating," said Michelle Clayman of New Amsterdam Partners. "Many tech stocks have high valuations and there is some profit taking."
Based on early and unofficial data, the technology-rich Nasdaq Composite Index finished down 71.29 points, or 1.82 percent, at 3,849.90. The blue chip Dow Jones industrial average rose 40.02 points, or 0.35 percent, to 11,551.10.
The Standard & Poor's 500 index closed down 6.31 points, or 0.44 percent to 1,432.25.
Microsoft (MSFT) dropped 3 9/16 to 105 13/16 as people familiar with mediation talks said the US government favors breaking up the company to settle its landmark antitrust case. A Justice Department spokeswoman said a USA Today report earlier Wednesday that gave details of the way Microsoft would be restructured was inaccurate, but did not elaborate.
Yahoo (YHOO) declined 39 13/16 to 357 9/16 despite reporting a four-fold increase in profits, and a two-for-one stock split, late on Tuesday. The company's warning that its future rise in revenues would be more modest concerned investors.
Those concerns and a rise in treasury bond yields to their highest levels in about two-and-a-half years amid expectations the Federal Reserve will push up interest rates this year triggered much of the weakness in the Nasdaq, analysts said.
"You have the double-edged sword of rising interest rates and high valuations in the technology sector and that brings on some selling pressure," said Joseph Barthel, chief investment strategist at Fahnestock & Co. "I think for the first quarter of this year, you are going to see the Nasdaq underperforming."
General Motors (GM) gained 3 1/8 to 76 1/16 following reports that Boeing (BA) plans to buy Hughes Electronics' satellite-manufacturing business from the world's largest automaker.
