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Biotech stumbles; can IT take up the slack?

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US President Clinton and British Prime Minister Tony Blair initiated a sell-off among biotech stocks by announcing Tuesday that the human genome "should be made freely available to scientists everywhere." The tech-heavy NASDAQ, which fuels IT and dot-com growth, relies heavily on the biotech sector for much of its dazzling performance. The NASDAQ composite closed Tuesday at 4,706.63, down 200.61 points or nearly four percent, and marking its second-largest point loss on the news. Some US genomics companies, which hope to make a killing off the genome project by using it to develop new drugs and medical treatments, fell by as much as twenty percent. In Europe, Cambridge Antibody fell 22 percent, and Proteome slid 8.18 percent. French outfit Transgene fell 57 percent on the Nouveau Marche. "We're taking some of the air out of the speculative nature of some of these stocks," Salomon Smith Barney analyst Marshall Acuff noted. But the announcement has been anticipated for a decade; and regardless of the genome's public nature, individual genes can still be patented, Acuff pointed out. Broader indexes, predictably, followed the trend. The S&P slipped 24.47 points to 1,359.15 for a 1.8 percent drop; and the Dow fell 135.89 points to 9,811.24 for a 1.4 percent loss. An international consortium led by the US National Institutes of Health (NIH) and the Wellcome Trust of London, has been posting its findings on the Web. This is only marginally antagonistic to US genomics outfit Celera, a major genome stakeholder, which plans to operate a private database, charging fees for use of the programs that search for and analyze its information. The question now is whether the NASDAQ's IT sector can take up the slack and stand on its own legs, so to speak, now that the index's biotech backbone is showing weakness. One glimmer of hope came from Oracle, which posted better-than-expected gains after the close of trading yesterday, handily beating the Street in spite of closing marginally down. Hopeful eyes will focus on IT today; but tech, media and telecoms shares were sagging in Europe this morning, with "new economy" Titan Nokia sliding 4.5 percent, leaving US investors with further disappointments to ponder as they prepare for Wednesday's opening. ®

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