Investors Regain Confidence in Tech Stocks
Technology stocks reclaimed their leadership of the stock market Wednesday, driving the Nasdaq composite index higher as investors bought shares of chip makers, Internet companies and beaten-down biotech firms.
Nasdaq jumped 153.07 points, or 3.3%, to 4,864.75.
The Dow Jones industrial average, however, slipped 40.64 points, or 0.4%, to 10,866.70, though it pared a bigger earlier loss.
Strength in tech helped boost the broad Standard & Poor’s 500 to a record. The S&P; 500 rose 6.77 points, or 0.5%, to 1,500.64, capping a steady advance in recent weeks that was often overshadowed by the volatile swings of Nasdaq and the Dow.
The S&P;’s gains rewarded the millions of investors who have sought the diversity of the broad market by pouring money into mutual funds that mirror the index’s performance.
“Money is going back to what has worked before, and these companies do have the best earnings prospects in the market,” said Andy Damm, a portfolio manager for BlackRock Advisors in Philadelphia.
“There is some rotation” to computer stocks, said Robert Streed, manager of the Northern Select Equity Fund, which oversees $1.1 billion. But in this market, he noted, “it can flip back and forth pretty quickly.”
The Russell 2,000 index of smaller companies, which had slumped in recent sessions after reaching records early this month, rallied 18.40 points, or 3.3%, to 571.19.
Advancing issues outnumbered decliners by a 5-4 ratio on the New York Stock Exchange and by a 3-2 ratio on Nasdaq.
In the Treasury market, yields fell slightly.
Among the equity highlights:
* Intel rose $5.63 to $144.06 and Yahoo advanced $5.44 to $197.19 as major tech stocks fueled Nasdaq’s gain. Hewlett-Packard rose $4.31 to $146.19, IBM added 75 cents to $114.25, and America Online climbed $4.63 to $72 after the Internet access provider said it has more than 22 million subscribers.
* The beleaguered biotechnology sector recovered, pushing the Amex biotech index to a 10% gain. Human Genome Sciences rose $13.39 to $105.44, Biogen rose $3.38 to $81.50, and Aclara Biosciences, which went public Tuesday, zipped $22.81 to $54.94.
Elsewhere in the group, Cor Therapeutics gained $9.63 to $79.63, Protein Design Labs climbed $9.38 to $105.69, and Vertex Pharmaceuticals advanced $6.44 to $59.88.
* Veritas Software, which surged $13.69 to $162.25, was among the computer-related companies rebounding from losses last week and Monday, when jitters that higher interest rates would prompt investors to sell high-priced shares caused Nasdaq to tumble.
* Micron Technology, the No. 1 maker of computer memory chips, leaped $21.75 to $141 as a slew of analysts issued “buy” ratings. The shares fell Tuesday after earnings were hurt by a slowdown in personal computer sales.
* The rally in computer companies with fast-growing earnings came at the expense of the stocks that last week propelled the Dow average to its biggest two-day gain since October 1987. 3M fell $4.44 to $86 and International Paper slipped $1.81 to $37.25.
* The Philadelphia oil-service index extended its gains to 11% in the last two sessions. Smith International rose $6.19 to $75.06 to lead the advance after saying it expects to report first-quarter earnings that will top estimates. Schlumberger gained $4.63 to $76.63 and Cooper Cameron climbed $3.69 to $66.19.
* Warner-Lambert fell $1.38 to $93.63 after agreeing to pull its diabetes drug, Rezulin, from the market. The Food and Drug Administration said competing drugs offer the same benefits without Rezulin’s side effects.
* Radio stocks rose on investor optimism that a strong U.S. economy will continue to fuel ad sales. CBS-controlled Infinity Broadcasting rose $5.25 to $37.56, and Clear Channel Communications, which will become the biggest radio company after it buys rival AMFM, rose $4.19 to $73.13. AMFM rose $5.31 to $67.81.
* Metamor Worldwide jumped $17.33 to $33.33 after PSINet, a provider of online access for businesses, agreed to buy the company for about $1.9 billion in stock to offer a range of consulting services to its customers. PSINet dropped $7.94 to $41.56.
* Among new offerings, chip designer InSilicon rose $9.56 to $21.56 in its first day of trading.
* Vodafone AirTouch’s U.S. shares slid $1.94 to $58.69 after Goldman Sachs said Hutchison Whampoa, the company’s biggest shareholder, is selling a third of its 5% stake for $5 billion.
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Market Roundup, C12
