Tech stocks lead late selloff

A late-day sellof in technology issues ahead of Hewlett-Packar’s earnings led Wall Street lower today, wiping out an advance attributed to solid earnings and economics news.

The Dow Jones industrial average and Standard & Poor’s 500 index were flirting with 2.5-year highs before heavy selling in the last hour of trading sent prices skidding.

“It could be programmed trades executing when stocks hit those higher levels, or just some profit-taking,” said Kevin Caron, market strategist for Ryan, Beck & Co. ”There’s no real reason for the drop other than that.”

The Dow closed down 7.26, or 0.1%, at 10,664.73. The blue chips had risen more than 70 points earlier, surpassing the 2.5-year high of 10,737.70, set on February 11.

Broader stock indicators also dropped, with smaller stocks and technology shares slumping as investors moved to more defensive positions. The Nasdaq composite index dropped 30.51, or 1.5%, to 2,045.96. The S&P 500 was down 4.76, or 0.4%, at 1,147.06.

Hewlett-Packard, a bellwether for the tech sector, announced its quarterly earnings after the close of trading, meeting analysts’ profit estimates of 35 cents per share. The stock closed up 35 cents at 23.86, but shed 16 cents to 23.70 in after-hours trading.

The day’s economic news was surprisingly good. Unemployment claims fell by a seasonally adjusted 24,000 to 344,000 for the week ending February 14, the lowest level since January 24, giving investors hope that corporate bottom lines were secure enough to prevent more large-scale layoffs.

“This is definitely a welcome sign,” Caron said. “It’s just one week and one data point, but the overall trend is deceleration in jobless claims and a rise in new jobs, and this fits in with that.”

Investors were also cheered by a larger-than-expected rise in the Index of Leading Economic Indicators, the closely watched forecasting gauge. The index rose 0.5% in January, 0.2 percentage points higher than Wall Street estimates.

“I think the theme for the market in February is resiliency,” said Brian Belski, market strategist at Piper Jaffray. “Considering the earnings we had in January and the strong performance we had at the end of the year, more than anything it’s surprising people on the upside.”

Wal-Mart Stores jumped 1.18 to 58.38 after reporting strong fourth-quarter earnings in line with analysts’ expectations. Executives also indicated that the first quarter would be stronger than previously expected. Target Corp also beat Wall Street expectations, but fell 58 cents to 41.71.

Tech issues shed their earlier gains, which were fuelled by strong earnings from Applied Materials, the chip manufacturing equipment maker, and a bright outlook for Broadcom Corp, which makes microchips for digital television boxes and other consumer items.

Applied Materials lost 18 cents to 22.13 after swinging to a profit in the fourth quarter, beating Wall Street estimates by 4 cents a share. Broadcom, which adjusted its quarterly revenue estimates upward after Wednesday’s session, was down 90 cents at 41.56.

Nextel Communications, considered a prime acquisition target in the wireless industry, shed 1.07 to 27.55 despite posting strong fourth-quarter earnings that beat expectations by 8 cents per share. The company said it planned to remain independent, attract more customers and expand its network.

Intuit Inc, makers of personal finance software, dropped 3.95 to 45.24 despite a better-than-expected earnings report as the company revised the current quarter’s outlook downward.

Declining issues barely outpaced advancers by more than 3 to 2 on the New York Stock Exchange, where volume totalled 937.93 million shares, compared with 837.61 million at the same point Wednesday.

The Russell 2000 index of smaller companies dropped 8.89, or 1.5%, to 582.59.