Techs Dodge Blue Chip Downdraft

Blue chip stocks fell Tuesday on slowdown fears and jitters ahead of the Federal Reserve’s decision on interest rates.

Blue chip stocks were underwater all day as traders fretted that the Fed might not cut rates at all on Wednesday after a Wall Street Journal article raised doubts, but the selling accelerated late in the day after weakness in shipping stocks raised slowdown fears. Falling consumer confidence and home prices and weak results from Procter & Gamble and U.S. Steel also weighed on stocks.

But strength in Microsoft and Google kept the Nasdaq unchanged on the day. Microsoft gained nearly 3%, adding to its gains after last week’s blow-out results, and Google approached $700 a share on a WSJ report that the company will soon announce plans for a cell phone.

Atheros Communications, Actuate and SonicWall jumped on their results, while Qwest and On Semi tumbled after missing estimates. Powerwave lost 11% on a weak outlook.

FormFactor rose 6.7% on a Citigroup upgrade, and chip stocks showed some rare strength, led by gains in Micron and Nvidia.

The Nasdaq slipped less than a point to 2816, the S&P fell 10 to 1531, and the Dow lost 77 to 13,792. Volume rose to 3.18 billion shares on the NYSE, and 2.2 billion on the Nasdaq. Decliners led by a 20-12 margin on the NYSE, and 18-11 on the Nasdaq. Downside volume was 69% on the NYSE, and 55% on the Nasdaq. New highs-new lows were 118-97 on the NYSE, and 142-138 on the Nasdaq.