Tech Rises Again and Bond Yields Up
Technology stocks closed broadly higher Thursday for a second straight session, but waves of profit taking throughout the day left key indexes below their peak levels.
In the bond market, yields jumped ahead of today’s report on July employment trends.
Overseas, the Bank of England surprised British markets with an interest rate cut.
On Wall Street the tech-dominated Nasdaq composite index closed with a gain of 19 points, or 0.9%, to 2,087.38, led once again by semiconductor stocks.
The Dow Jones industrial average rose 41.17 points, or 0.4%, to 10,551.18.
Chip stocks had surged Wednesday after brokerage Merrill Lynch upgraded a dozen of the stocks, saying the industry’s worst days are behind it.
On Thursday, Craig Barrett, chief executive of chip leader Intel, said in Malaysia that he expects chip demand to rebound in this quarter and the fourth quarter, driven by back-to-school and holiday sales of computers.
“The industry has bottomed out,” Barrett said at a news conference.
Barrett’s comments “confirm what everyone seems to be thinking now: Things have stopped getting worse,” Valerie Cazaban-Levy, who helps manage $160 million at Stratege Finance in Paris, told Bloomberg News.
Intel jumped $1.36 to $32.11, its highest close since mid-April.
Among other chip issues, LSI Logic rose $1.06 to $24.81, Texas Instruments gained $1.52 to $38.15 and National Semiconductor rose $1.18 to $34.93.
Other major tech names also rallied, including IBM, up $1.74 to $108.80; Dell Computer, up $1.25 to $28.43; and Juniper Networks, up 43 cents to $27.93.
The Nasdaq composite’s close was its highest since July 3.
Still, winners edged losers by a slim 19 to 18 on Nasdaq, though winners had a 3-2 edge on the New York Stock Exchange.
Investors continued to dump some stocks in the telecom sector, where sales and earnings remain deeply depressed.
Global Crossing, a telecom network firm that lowered expectations Wednesday for sales this year, sank $1.32 to a record low of $5.68.
Other telecom issues falling included Qwest, down $2.11 to $23.10; JDS Uniphase, down 14 cents to $9.50; and Sprint FON, down $1.03 to $22.92.
In the bond market, Treasury yields resurged after a government report showing a decline in weekly jobless claims suggested the economy may rebound without further Federal Reserve interest rate cuts. Bond traders also were nervous ahead of today’s report on July employment trends.
Traders had pushed yields sharply lower in recent weeks, so profit taking was inevitable, analysts said. The yield on the 2-year Treasury note rose to 3.89% from 3.81% Wednesday.
Overseas, Japan’s Nikkei stock average rocketed 3.7% to 12,399, led by tech issues.
European stocks were mixed. Germany’s DAX index fell nearly 1% as the European Central Bank left its key short-term interest rate unchanged.
But Britain’s FTSE-100 index rose 0.7% to 5,584 as the Bank of England cut its key short-term rate a quarter point to 5% in a surprise move. Analysts said they expect the cut to be the bank’s last this year.
In currency trading, the dollar fell against the yen and the euro.
In commodity trading, gasoline futures rose to a five-week high and crude oil gained for a second day on expectations for strong fuel demand from U.S. motorists.
Gasoline for September delivery rose 3.09 cents to 77.6 cents a gallon on the New York Mercantile Exchange, the highest closing price for a contract closest to expiration since June 26.
Crude oil for September delivery rose 94 cents to $27.71 a barrel, the biggest one-day gain since July 20.
Market Roundup, C5-C6
