Stock prices ended mixed as a profit warning from Xerox rattled the market but failed to discourage technology investors, who pulled the Nasdaq composite index further into record-high territory.
In a fitful session, the Dow Jones industrial average fell 32.11 to close at 11,192.59.
Broader stock indicators were mixed. The Standard & Poor's 500 fell 1.82, to 1415.22, and the Nasdaq composite index rose 37.91, to 3658.15, its 23rd record close since Oct. 29.
The Nasdaq, dominated by technology stocks, is now up 66.8 percent for 1999. The Dow is up 21.9 percent.
"The technology stocks continue to pull in money, and they're pulling it away from the rest of the market," said Eugene G. Mintz, financial markets analyst at Brown Brothers Harriman in New York. "There doesn't seem to be any other sector that's grabbing attention."
Despite the modest movements of market averages, trading was fairly volatile after a profit warning from Xerox late Friday. Citing a shortfall in sales due to year 2000 computer concerns, Xerox said it expects fourth-quarter earnings to come in 40 percent below analysts' expectations.
The warning from Xerox rattled investors who are counting on strong corporate profit growth in the fourth quarter. With market averages at or near record levels, investors are demanding strong earnings growth to justify the high prices of many stocks.
Xerox itself rose 1 1/4, to 21 1/8, as of 5:45 p.m. The company's shares fell to a 52-week low in Friday's late trading session, dipping to 19 7/8 and prompting some bargain hunting today, traders said.
Also, many investors determined that Xerox's woes may not extend to other technology companies, and returned to the market in search of some high-tech favorites. IBM rose 1-1/16, to 110-1/16; Microsoft gained 2 3/4, to 96 5/8; and Qualcomm soared 26-1/16, to 417-9/16.
Even Wal-Mart benefited from the technology frenzy, rising 5, to 68 1/4, on speculation that it will soon announce an alliance with America Online.
Technology has dramatically outperformed the rest of the market this year, leaving some analysts concerned that the sector's strength is masking weakness in the broad market.
Financial stocks, which led the market on Friday, were mostly lower today. American Express lost 1-7/16, to 166-5/16, and Citigroup fell 11/16, to 55-7/16.
Analysts said those shares were slipping in advance of Tuesday's report on the consumer price index. The report, the government's most closely watched inflation gauge, is expected to be benign. But Wall Street remains wary of inflation, which could prompt the Federal Reserve to raise interest rates some time in the next few months.
Financial stocks are typically the first to respond to changes in the interest-rate backdrop. Higher rates reduce the value of their holdings, and may hurt profits by cutting into lending volume.
In after-hours trading, Bloomberg News reported, AutoNation slumped after announcing it would take a fourth-quarter charge of up to $490 million to close stores and cut jobs. The largest U.S. auto retailer's stock fell 15/16, to 8 1/2, in after-hours trading. During the regular session, shares fell 1/2, to 9-7/16.