Markets drop as investors shift back to blue chips

As expected, shares in Microsoft dropped sharply on news that the software conglomerate likely won’t settle with the U.S. Department of Justice without breaking up various divisions of the company. Microsoft closed down more than US$15 to $91 1/8.

The Microsoft news comes on the heels of a bad week for Nasdaq, when tech shares were already seeing some serious corrections. Intel and Cisco followed Microsofts lead, and the Nasdaq lost more than 8%, or 349.06, to 4,223.77, bringing it’s one-month loss to near 17%.

Poor tech performance weighed on the Dow as well, but the flood into “old economy” stocks, like DuPont, Phillip Morris, Walmart and a host of financial services stocks, led the index upwards. It closed up nearly 300 points, to 11,221.62. Charles Scwab and J.P. Morgan fared particularly well.

It was the same story in Canada. The TSE dropped another 87.66, to 9,374.73. BCE lost C$7.50 to $173.50. Nortel Networks slipped by $9.55 to $172.55. JDS Uniphase gave up another C$11.95 to $161.05.

The transfer of value into financial services helped cap TSE 300 losses though. The Royal Bank of Canada edged up by C$2.40 to $70.70. The Bank of Montreal gathered $2 to $53, while TD, something of a tech-play itself, lost 65 cents to $37.60.

The CDNX also tumbled, losing 75.01, to 4,237.33. The tech portion of the index lost 3%, led by losses in Unique Broadband, a penny broadband tech stock, which lost more than 6%, to $7.50.