US blue-chip stocks rose on Monday as investors anticipated strong first-quarter profits, but technology stocks hovered close to unchanged, dogged by concerns over the high price of some tech shares.
Eastman Kodak weighed on the Dow after saying a German acquisition would hurt earnings this year. Intel Corp, the world's No 1 computer chipmaker, led technology shares down a touch after an industry group forecast modest growth rates in chip sales over the next five years.
First-quarter earnings for companies in the Standard & Poor's 500 index are expected to rise 15 percent over last year, according to data from Reuters Research, a unit of Reuters Group Plc. But the relatively high prices of shares after a year of gains is starting to worry investors.
"Everyone is focused on valuations," said Joseph Battipaglia, chief investment officer at Ryan Beck & Co "Valuations are relatively rich and there is no new catalyst coming in to push us in any direction."
Traders said investors were rotating out of the technology sector, which led the market's gains in 2003, into safer equity sectors such as consumer goods, financial and health-care.
By midday, the Dow Jones industrial average was up 24.44 points, or 0.23 percent, at 10,619.99. The Standard & Poor's 500 Index was up 0.38 point, or 0.03 percent, at 1,157.24. The technology-focused Nasdaq Composite Index was down 2.88 points, or 0.14 percent, at 2,044.75.
Eastman Kodak lost ground after the company said its acquisition of Nexpress Solutions and Heidelberg Digital from Heidelberger Druckmaschinen AG would hurt its 2004 earnings per share while adding to revenue. Its shares fell 82 cents, or 2.9 percent, to $26.96.
Intel shares fell 49 cents to $28.45, leading the Nasdaq slightly lower. Near stagnant spending on desktop computers will hold annual growth rates in microchip sales to single-digit figures through 2008, according to a forecast released on Monday by technology research firm IDC.
Shares of Martha Stewart's namesake company extended their losses. Martha Stewart Living Omnimedia, a media and merchandising company, slid 74 cents, or 6.8 percent, to $10.12, following a sharp drop on Friday.
Telecoms company BellSouth Corp fell 15 cents to $28.68. It plans to sell its Latin American assets to Spain's Telefonica for $5.85 billion.
Food company J.M. Smucker Co fell after it set plans to buy International Multifoods Corp for about $500 million. Smucker shares slipped $2.26, or 4.3 percent, to $49.68. International Multifoods jumped $5.08, or 24.7 percent, to $24.71.
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