Techs Help Push Nasdaq Back Above 2,800
Stocks staged a strong rally Tuesday as some healthy earnings reports from the technology sector lured more investors off the sidelines.
The Nasdaq composite index surged 82.48 points, or nearly 3%, to 2,840.39, its first close above 2,800 since Dec. 13.
The gain extended Nasdaq’s year-to-date advance to almost 15%. The index had plunged 39% last year.
The broad market also rose Tuesday, led by smaller and mid-sized stocks. The Standard & Poor’s mid-cap index jumped 2.8% and the S&P; small-cap index was up 2.3%.
Overall, winners topped losers by 2 to 1 on the New York Stock Exchange and by 24 to 15 on Nasdaq.
But gains for blue chips were more moderate: The Dow Jones industrials rose 71.57 points, or 0.7%, to 10,649.81. The Dow still is down 1.3% so far this year.
“The belief that the second half of the year is going to be better than the first half” is fueling stocks’ advance, especially in the case of higher-risk issues, said Rimas Milaitis, manager of the $1.1-billion Strong Growth & Income Fund.
Also, “People are depending on, counting on, the [Federal Reserve] lowering rates” a half-point next week, he said. The Fed meets Jan. 30-31 and is expected to again cut its key short-term rate. That rate was cut from 6.5% to 6% on Jan. 3.
Some analysts worry that if the Fed cuts by a quarter-point instead of a half-point next week, the market could have a bad reaction--especially with the economy expected to weaken further in the first half of this year.
Indeed, Treasury bond yields rose Tuesday for the third straight session, reflecting concerns that the Fed may opt for a quarter-point cut. The five-year T-note yield ended at 4.94%, up from 4.86% on Monday and 4.81% on Friday.
But the stock market paid little attention to bonds. Instead, investors focused on the technology companies that have in recent days surprised Wall Street with strong fourth-quarter earnings and, more important, with relatively upbeat outlooks for 2001.
Vitesse Semiconductor, for example, beat quarterly earnings estimates in results announced late Monday. Though the stock fell to $61 in after-hours trading Monday on concerns about slowing sales growth, it rebounded $8.63 to $75.88 Tuesday.
Other tech stocks advancing Tuesday on earnings reports included Tellabs, up $5.38 to $58.88; and EMC, up $3.06 to $79.56.
Also, Openwave Systems jumped $13 to $66.25. The maker of Internet software for mobile phones reported fiscal second-quarter profit from operations of 9 cents a share, while analysts expected a loss of 3 cents. Sales tripled.
Among Tuesday’s highlights:
* Other tech winners included Intel, up $2 to $35.38; Veritas Software, up $4.31 to $105; Commerce One, up $5.19 to $31.94; and Yahoo, up $4.27 to $38.95.
Networking stocks were strong, led by Sycamore Networks, up $5.25 to $51.38, and ONI Systems, up $8.94 to $49. But Texas Instruments fell $3.56 to $45 in the wake of its earnings report.
* HMO stocks resurged. PacifiCare Health soared $5.94, or 34%, to $23.25 after brokerage Lehman Bros. raised its rating on the stock to “buy” from “market perform,” and its 12-month price target to $35.
Also Tuesday, Southland-based PacifiCare named Gregory W. Scott as its chief financial officer. He had been CFO at Medsite.com.
Among other HMOs, Wellpoint Health jumped $4.81 to $97.69 and Oxford Health rose $2.38 to $34.69.
* Brokerage stocks surged after Merrill Lynch reported strong earnings. Merrill rose $4.88 to a record $80. Also gaining were Lehman, up $3.25 to $81.69, and Bear Stearns, up $2 to $61.
* Retail shares continued their recent rebound. Target gained $1.44 to $36, Best Buy jumped $3.06 to $46.81 and Guitar Center rose $1.19 to $15.94.
Market Roundup: C7-C8
