Midday Report: Nasdaq Down as Tech Rally Stalls

Technology stocks risked ending a two-day runup on Wednesday, sending the NasdaqComposite Index down 13.81 to 2,102.43 by midday, after a trade group reportshowed that manufacturing last month was not as strong as some had hoped.

Acautionary note from Merrill Lynch on Dell Computer (Nasdaq: DELL) added to the gloom.

Leading the Nasdaq lower were Oracle (Nasdaq: ORCL), down 45 U.S. cents at$15.71, Cisco (Nasdaq: CSCO), down 27 cents at $16.71, and Dell, down $1.24 at $25.

Merrill Lynch reportedly lowered estimates and raised its riskrating on Dell, saying the company faces a “challenging”couple of quarters.

Microsoft (Nasdaq: MSFT), meanwhile, rose 99 cents to $69 after announcingplans to buyprivately held software company NCompass for a reported $36 million.

Manufacturing Higher

The National Association of Purchasing Management (NAPM) said its April index ofmanufacturing activity edged up to 43.2 from 43.1 in March. Economists were reportedly looking for a bigger increase.

Overall, however, the report showed the economy might be slowly picking up.

“The manufacturing sector continued to contract in April,” said Norbert Ore, headof the NAPM committee that compiles the report. “As the sector is strugglingto gain a foothold that will reverse the decline, it is encouraging thatpricing pressures appear to be moderating and inventory liquidation hasaccelerated.”

Other Indexes Rise

Blue chips, meanwhile, were higher at midday. The Dow Jones IndustrialAverage was up 77.81 at 10,812.78. The broader Standard & Poor’s 500 stockindex was up 1.10 at 1,250.56.

The E-Commerce TimesIndex was up 3.78 percent at midday, as eBay (Nasdaq: EBAY) rose $1.86to $52.34, Amazon.com (Nasdaq: AMZN) gained 15 cents to $15.93, andTravelocity (Nasdaq: TVLY) advanced $3.30 to $33.25.

Optimism on Priceline

Elsewhere in the e-tail sector, Priceline (Nasdaq: PCLN) rose $1.16 to $6.01after Goldman Sachs upgraded the stock to market outperform from marketperform.

Goldman Sachs analyst Anthony Noto said that management is putting Priceline on track for aturnaround, and that the stock is attractive when the company is viewed as anonline travel agency.

Priceline’s first-quarter report, due out after theclose of trading Tuesday, could be the company’s last quarterly report to show a loss before special charges, Noto said.

Expedia in the Black

Online travel service Expedia (Nasdaq: EXPE) rose $1.86 to $27.87 after turning itsfirst-ever profit in the latest fiscal quarter, more than a year aheadof schedule.

The company, which is backed by Microsoft (Nasdaq: MSFT), said it earned 9cents per share before non-cash charges in the fiscal third quarter,compared with a loss of 50 cents a year earlier.