Markets flat on anthrax report, chip notes

The markets were treading water Monday after analysts gave pessimistic views about the state of the semiconductor market and after a report of anthrax was announced on Capitol Hill.

The Nasdaq composite index fell 7.09 points to close at 1,696.31, and the Dow Jones industrial average gained 3.46 points, closing at 9,347.62.

U.S. Senate Majority Leader Tom Daschle on Monday announced that his office received and opened a letter that has tested positive for anthrax. The office has been quarantined and closed, staffers were being examined and treated, and an investigation has been launched.

On Wall Street, analysts took a swipe at the semiconductor sector, sending stocks down. J.P. Morgan downgraded a slew of stocks, including Altera, Xilinx, Applied Micro Circuits and Vitesse, saying that order flow remains weak for the companies, visibility is still poor, and revenue decline is likely in the foreseeable future.

The CNET Semiconductor index fell around 4 percent, and the Semiconductor Capital Equipment index slipped almost 6 percent.

Lehman Brothers also downgraded semiconductor capital equipment stocks, including Applied Materials, Cymer, KLA-Tencor, Novellus and Teradyne, saying a recovery continues to be pushed farther back. With the exception of KLA-Tencor, the brokerage house no longer recommends purchasing shares of U.S. companies in the chip-equipment sector.

SBC Communications said it is talking to Prodigy Communications about the possibility of upping the price it would offer for shares of the company. SBC made a bid to buy 58 percent of the Internet service provider for $5.45 a share, or $384 million, but SBC said it may increase the offer price to the $6-to-$6.25 range. SBC shares were off 28 cents to $43.87, and Prodigy's were up 6 cents at $6.28.

Oracle executives said Monday that they hope license revenues will recover after the middle of 2002 and that they expected Asia-Pacific sales to continue growing in the current fiscal quarter. Oracle shares fell 50 cents to $14.44.

Among other heavily traded tech issues, Intel lost 64 cents to $24.38, Sun Microsystems was off 36 cents to $9.68, Microsoft gained $1.68 to $58.06, and Cisco Systems fell 74 cents to $16.21.

Amazon.com was up 81 cents to $8.88, and AOL Time Warner rose 30 cents to $33.50.

Staff and Reuters contributed to this report.