Tech Sector Leads Broad Stock Gains

A rally in technology stocks Tuesday drove the Nasdaq composite index to its biggest gain in a month and lifted the broader market as many investors bet that the advance has more room to run.

Led by semiconductor and computer-networking stocks, the Nasdaq index surged 58.20 points, or 3.1%, to 1,963.10, the largest one-day gain since Nov. 1. Nasdaq is at its highest level since Aug. 14 and is threatening to jump above the 2,000 mark for the first time since Aug. 7.

Other market gauges posted smaller gains Tuesday, but the bulls were definitely in charge again after a recent spate of profit-taking. The Dow Jones industrial average rose 129.88 points, or 1.3%, to 9,893.84, and the Standard & Poor’s 500 rose 1.2% to 1,144.80.

Winners topped losers 22 to 9 on the New York Stock Exchange and 23 to 13 on Nasdaq.

Semiconductor-related stocks got a lift from upbeat comments by UBS Warburg analyst Byron Walker, who said the chip industry downturn is in the process of bottoming. He upgraded to “buy” several companies that produce chip-making equipment, including Applied Materials, which jumped $3.16 to $42.43, and Novellus Systems, which gained $4.24 to $41.70.

The computer-networking sector was helped by Cisco Systems Chief Executive John Chambers, who told analysts that November orders met expectations, although he also implied the company’s outlook hasn’t changed. Cisco shares rose 66 cents to $20.52.

“If you really believe we’re going to have a strong snapback in [corporate] earnings next year, you want to own the stocks that are going to have the fastest profit growth, and a lot of people believe those are in technology,” Bruce Simon, who manages $17 billion at Glenmede Trust Co. in Philadelphia, told Bloomberg News.

Concern about energy giant Enron’s bankruptcy filing seemed to wane Tuesday after riling the market Monday, analysts said.

The Dow utility stock index rebounded 1.5%, and most major bank stocks, including those with loans outstanding to Enron, gained ground. J.P. Morgan Chase rose 67 cents to $37.22 and Citigroup added 92 cents to $47.83.

In the bond market, long-term Treasury yields continued to ease ahead of Tuesday’s Federal Reserve meeting. Policymakers are expected to cut their benchmark short-term rate, now 2%, to at least 1.75% or possibly 1.5%.

The 10-year T-note yield slipped to 4.66% from 4.69% Monday.

The Treasury market also is benefiting from turmoil abroad, some analysts say.

“With the Argentina situation still an unknown and more trouble brewing in the Middle East, investors figure the safest place to be is in Treasuries as they close the year out,” Brian Cothran, who helps manage $15 billion in fixed income assets at Fifth Third Bank in Cincinnati, told Bloomberg News.

In Argentina, stocks pulled back modestly Tuesday after rallying Monday, following the government’s decision to limit bank withdrawals. The government is trying to avert a banking collapse.

Among Tuesday’s highlights:

* Semiconductor stocks that rose sharply included Intel, up 82 cents to $32.86; Micron Technology, up $1.93 to $30.49; and Broadcom, up $3.70 to $46.35.

* In the networking sector, Juniper Networks jumped $2.02 to $25.24, Brocade Communications gained $2.59 to $33.83 and Extreme Networks rose $1.80 to $16.76.

* Among software stocks, Adobe Systems leaped $2.37 to $34.33 and Veritas Software gained $2.66 to $39.57.

* AutoZone rose 32 cents to $66.59, then shot to $71.89 after hours, following the company’s report of a 56% jump in fiscal first-quarter earnings.

* Homebuilding shares continued their recent rally. Ryland jumped $2.62 to $63.90 and Centex shot up $2.01 to $47.01.

* On the downside, drug stocks were mostly lower as investors favored more aggressive bets, such as technology. Merck lost 87 cents to $67.63 and Johnson & Johnson was off $1.08 to $57.23.