Bargain Hunting Halts Tech Slump; Yields Fall
Bargain hunters jumped into the stock market Thursday, halting the tech sector’s plunge and lifting most key indexes modestly.
Wall Street was helped by a sharp drop in bond yields, as bad news about the economy once again proved good for bonds.
The Nasdaq composite index gained 25.99 points, or 1.3%, to 2,110.49, its first advance in a week. The index had fallen 167 points during the previous two sessions.
The Dow Jones industrials added 39.30 points, or 0.4%, to 10,911.94. The Standard & Poor’s 500 index rose 0.6%.
Led by Nasdaq, stocks have slumped during the last week amid renewed concerns corporate sales and earnings won’t soon rebound.
Those concerns intensified this week amid a profit warning from tech giant Sun Microsystems and news of deeper job cuts at EMC, another former tech star.
But investors stepped up to buy beaten-down tech shares Thursday. Sun added 22 cents to $16.47, and EMC gained 65 cents to $31.60.
Overall, winners topped losers by 23 to 16 on Nasdaq and by 3 to 2 on the New York Stock Exchange.
Even so, the rally faded by day’s end. Nasdaq had been up as much as 2.7%.
Some investors might have been encouraged by falling bond yields. Longer-term Treasury yields, which earlier this week hit six-month highs, dived after the government said the number of Americans lining up for ongoing unemployment coverage spiked to a 7 1/2-year high.
That report suggested today’s government report on May employment trends could be weaker than expected--which in turn could pave the way for more interest rate cuts by the Federal Reserve.
The 10-year T-note yield slid to 5.39% on Thursday from 5.51% on Wednesday. The five-year T-note yield fell to 4.91% from 5.05%.
But weak economic data also could mean that corporate earnings will remain depressed for the foreseeable future, analysts warn.
“The visibility for what’s ahead for technology is still very poor and until you see some improvement there, there’s not going to be much of a catalyst in the Nasdaq,” said Rafael Tamargo, director of equity research at Wilmington Trust.
Among Thursday’s highlights:
* Tech shares rebounding included Intel, up 41 cents to $27.01; Oracle, up 79 cents to $15.30; Juniper Networks, up $2.32 to $42.53; Amazon.com, up $1.03 to $16.69; and Qlogic, up $2.73 to $51.01.
But IBM eased 85 cents to $111.80, FileNet lost 95 cents to $12.26 and Qualcomm fell $1.08 to $60.74.
* Health maintenance organization stocks were strong, despite weakness in California giant PacifiCare, which fell 78 cents to $17.72 after an earnings warning.
Winners included Wellpoint Health, up $2.29 to $86.80; Oxford Health, up $1.20 to $27.44; and UnitedHealth, up $2.28 to $57.50.
* Biotech shares also gained. Genzyme jumped $3.52 to $106.94, Cephalon rose $2.07 to $60.58 and Protein Design Labs rose $2.06 to $74.21.
* Home builders’ shares continued to rebound. Ryland rose $1.10 to $45.30, and Lennar gained 40 cents to $37.
* Among heavy-industry issues, railroads had a strong day. Norfolk Southern rose 70 cents to $22.17, and CSX jumped $1.21 to $37.20.
* In currency trading, the euro fell to a six-month low against the dollar as comments by Wim Duisenberg, head of the European Central Bank, dashed expectations that the central bank would buy the currency to support it any time soon.
The euro fell to 84.6 cents in New York, down from 85.7 cents Wednesday.
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Market Roundup: C6-7
