Tech Optimism Helps Nasdaq to 129-Point Gain
Tech stocks powered the Nasdaq composite index Monday to its highest close since April 11, but the broad market was only narrowly higher.
The Nasdaq, fueled by biotech and semiconductor shares, jumped 129.27 points, or 3.4%, to 3,989.83, its best close since it was at 4,055.90 on April 11. That was the week of the worst net decline the index had ever suffered.
Also on Monday, the Dow industrials rose 108.54 points, or 1%, to 10,557.84, despite a sharp decline in Honeywell shares after the firm warned of disappointing earnings.
Among other indexes, the Standard & Poor’s index of 400 mid-size stocks hit a record, rising 1.3%.
Overall, however, winners narrowly edged losers on the New York Stock Exchange and on Nasdaq.
Optimism about technology companies’ earnings growth this quarter is helping boost that sector, analysts said.
Also, news in specific sectors, such as semiconductors, is bringing “momentum” investors back into the market.
Shares of Rambus had soared Friday on news that Toshiba will license Rambus’ computer-memory-chip technology. The rally continued Monday, with Rambus up $7.88 to $91.25.
Among other chip companies, Intel zoomed $10.44 to $136.50, accounting for more than half of the Dow’s gain, after the company said it will invest $2 billion in a new plant in Ireland.
Lehman Bros. analyst Dan Niles said Intel’s stock price should reach $175 within 12 months.
Advanced Micro Devices jumped $9.31 to $91.81 after it introduced a new low-cost microprocessor.
“Unit shipments of personal computers are generally expected to do better, which has an effect on Intel and Advanced Micro, and it bodes well for their earnings,” said Dan Cook, a money manager with StoneRidge Investment Partners in Malvern, Pa.
Investors also surged into the biotech sector again. That group has been among the biggest gainers in the rebound since tech stocks’ spring crash.
The Amex biotech index soared 9.4% on Monday.
On the downside, Honeywell’s earnings warning may have held back other “old economy” companies. Honeywell’s shares plunged $8.25 to $40.25.
Meanwhile, Treasury bond yields edged up. Still, many bond traders believe the Federal Reserve won’t raise interest rates when it meets next week.
In any case, the Fed won’t get much new economic data this week on which to base a decision: Few major reports are due this week.
In other trading Monday, the euro fell, as did oil and natural gas prices. Crude oil fell 2% on expectations that OPEC will boost output to ease the economic impact of a 10-week rally.
OPEC president Ali Rodriguez said the group may agree to raise output this week even though “we don’t see a supply problem.”
Among Monday’s highlights:
* In the tech sector, IBM jumped $7.13 to $120.38, Oracle rose $4.13 to $86, Dell gained $2.06 to $49.56 and Sun Microsystems leaped $4.13 to $95.44.
But many Internet-related shares were weak. Yahoo fell $1.88 to $139.06 and EBay lost $1.25 to $59.88.
* Financial stocks bounced back strongly from steep losses on Friday, when investors sold shares amid reports that some banks will have trouble collecting loan payments as the economy slows down. J.P. Morgan rose $2.63 to $120.56, Citigroup rose $1.63 to $64.31 and Wachovia gained $1.06 to $57.50.
* In the biotech sector, Amgen rose $2.38 to $70.38, Chiron gained $3.75 to $47.19 and Immunex soared $7.69 to $52.38.
* Telecom stocks attracted buyers. Tellabs rose $4.19 to $69.50 and Ciena gained $10.75 to $156.
* Progressive rose $1.34 to $83.50 even after the insurance firm warned that current-quarter earnings may fall below expectations. The stock had fallen as low as $74.06 on Monday before rallying back.
* Energy stocks fell. Conoco lost $1.38 to $24.19 after it agreed to buy Norsk Hydro ASA’s assets in Britain’s North Sea waters for $540 million.
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Market Roundup, C12-13
