Technology Shares Lead Market Rise
Buying in technology shares lifted the stock market Thursday as investors bet that the beleaguered sector’s prospects for recovery are improving.
“Technology ... is still a place that people want to be in, that they believe in,” said Rafael Tamargo, director of equity research at Wilmington Trust. “People are expecting that is where the growth is going to come from when the market recovers.”
The Dow Jones industrial average closed up 43.17 points, or 0.4%, at 10,131.31. Broader stock indicators also were slightly higher. The tech-laden Nasdaq composite index gained 15.72 points, or 0.8%, to 1,976.42. The Standard & Poor’s 500 index advanced 7.76 points, or 0.7%, to 1,157.13.
Advancing issues led decliners by 2 to 1 on the New York Stock Exchange and by about 3 to 2 on Nasdaq. Volume was light.
Tech stocks rose for a second day in a continuing reaction to holiday sales reports Wednesday that weren’t as bad as the market had feared. The market interpreted the numbers as proof that consumers still are willing to spend--good news for technology companies that sell products used in the retail market.
IBM rose $1.10 to $123.50, Texas Instruments climbed 70 cents to $28.75 and Apple Computer advanced 58 cents to $22.07.
Retailers were mixed, however. Discounter Target rose $1.19 to $39.65 while AnnTaylor gave back some of Wednesday’s gains, falling 28 cents to $34.22.
Wall Street also focused on energy stocks as the Organization of the Petroleum Exporting Countries is expected to approve a reduction in output starting Jan. 1, a move that is expected to help stabilize flagging oil prices. ExxonMobil rose 19 cents to $39.79.
Investors also were monitoring the political situation in India and Pakistan amid concerns about a possible war between the nuclear powers. And the videotape of Osama bin Laden that emerged Wednesday continued to remind Wall Street that the risk still is significant for another terrorist attack or political event that could upset the market.
Stocks have rebounded significantly from the precipitous sell-off that followed the Sept. 11 attacks. But since achieving pre-attack levels, the market’s progress has become slower and more choppy.
Analysts have attributed the market’s post-attack bounce largely to indications from a wide array of companies that business will improve next year. But the market has traded close to the levels it held before Sept. 11; investors want to be sure the economy is indeed recovering before they make larger commitments to stocks and are wary of getting overly enthusiastic.
“We have corporations with a lot clearer vision about the future than they did a year ago.... It is nice that the market has rebounded, but you want to make sure you have earnings growth ahead,” said Thomas Lydon Jr., president of Global Trends Investments in Newport Beach.
It’s also common for issues to move higher between Christmas and New Year’s Day in what’s known as a Santa Claus rally, although it’s doubtful the indexes will break even for the year.
In other market highlights Thursday:
* The yen extended its year-end slide, tumbling to a three-year low as Tokyo’s tacit approval of a weak currency drove traders to keep selling yen despite a rising outcry from Japan’s trading partners. The yen weakened to 131.63 to the dollar from 130.84 on Wednesday.
* Bond yields fell on stronger-than-expected demand for the government’s record $23-billion sale of two-year Treasury notes, which were sold at an average yield of 3.3%. The yield on the benchmark 10-year note fell to 5.07% from 5.20% on Wednesday.
* Adolph Coors shares fell for a third straight session as Wall Street continued to question the brewer’s plan to buy Carling and other assets from Interbrew. Coors slid 94 cents to $53.95.
