Tech Rally Boosts the Major Indexes
Technology stocks fueled a broad rally Friday on Wall Street, as Cisco Systems sought to reassure investors that its business is stabilizing and a government report showed surprising strength in the housing market.
The Nasdaq composite index, home to Cisco and other bellwether tech issues, soared 73.83 points, or 4%, to 1,916.80.
Other indexes posted more modest gains: The Dow Jones industrial average rose 194.02 points, or 1.9%, to 10.423.17, and the Standard & Poor’s 500 index climbed 22.84 points, or 2%, to 1,184.93.
The rally lifted all three indexes to moderate gains for the week: 2.7% for Nasdaq, 2% for the S&P; 500 and 1.8% for the Dow.
But many investors were not convinced that the market, which has been in a general downtrend since rallying in April and May, is poised to snap out of its funk.
“Cisco’s restructuring plan and the news that its orders have been holding up lately don’t seem like that big a deal,” said Dong Zhang, manager of the Phoenix-Oakhurst Growth & Income fund. “It’s just that people are so starved for any good news.”
More reassuring to him were July sales figures showing a pickup in the housing market after a slight dip had been expected.
“This indicates that the consumer is alive and well, and the consumer is the impetus that will pull the economy forward when the recovery comes,” he said.
“For now, the economy is a waiting game.”
A separate report showing a decline last month in orders for big-ticket durable goods was expected and thus discounted, he said.
Cisco shares gained $1.49 to $18.25. After the market closed Thursday, the company outlined its reorganization plans and said orders for the current quarter are in line with expectations.
The news helped spur the tech sector as IBM rose $3.99 to $106.99 and Lucent Technologies rose 37 cents to $7.02 after saying it expects to become profitable again by next year. Intel rose $1.41 to $29.08, and Rambus gained 81 cents to $5.67, bouncing from Thursday’s 52-week low, as the Philadelphia semiconductor index climbed 6.2%.
Winners topped losers by about 3 to 2 on the New York Stock Exchange and 4 to 3 on Nasdaq. But volume remained light.
Analysts said they will be anxious to see whether the upward momentum can continue next week, as several rallies have sputtered in the last three months.
Among Friday’s other highlights:
* The euro weakened to 91.26 cents from 91.5 on Thursday, posting its first weekly loss against the dollar in seven weeks. A report due Tuesday is expected to show that the money supply in the 12-nation European currency zone rose last month, making an immediate interest rate cut by the European Central Bank less likely, according to Bloomberg News.
The dollar rose to 120.09 Japanese yen from 119.79 on Thursday.
* Treasury yields climbed as the stock market rally drew investors away from government securities. The benchmark 10-year note yield rose to 4.92% from 4.88% on Thursday.
* Elsewhere in the tech sector, Microsoft gained $2.93 to $62.05 after the software giant took a step toward releasing its Windows XP operating system in October and a judge was assigned to decide the company’s punishment for breaking antitrust laws.
Smaller tech names also advanced, including Priceline.com, which gained 54 cents to $5.79, and Electronics Boutique, up $4.75 to $40.68.
* An array of blue chips drew buyers, including Home Depot, which rose $1.95 to $49.94; Alcoa, up $1.22 to $39.25; and General Electric, up 95 cents to $41.99.
* Williams-Sonoma rose $3.61 to $32.21 after the retailer beat Wall Street earnings expectations.
* Earnings warnings and weak profit reports dragged down several stocks, including restaurant chain Dave & Buster’s, off 60 cents to $7.65, and telecom equipment maker Rohn Industries, down 90 cents to $2.80.
* The U.S. rally helped propel foreign markets higher. Major indexes gained 2.6% in Germany, 1.4% in Britain and 2.2% in France. Japan’s Nikkei rose 0.4%, and key indexes gained 2% in Mexico and Brazil.
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Market Roundup, C4-5
