Stocks closed mostly higher Thursday as investors read into upbeat remarks from technology companies such as National Semiconductor that the worst may be over for the battered sector.
Blue chips inched up, overcoming a decline in shares of Philip Morris after a Los Angeles court slapped the cigarette maker with a record $3 billion in damages.
The technology-laden Nasdaq composite index was the day's star, gaining 46.27 points, or 2.1%, to 2,264.
The Dow Jones industrials added 20.50 points, or 0.2%, to 11,090.74, while the broader Standard & Poor's 500 rose 0.6%.
Despite the gains, breadth was weak, with winners edging losers by 16 to 15 on the New York Stock Exchange and 21 to 16 on Nasdaq. Volume was moderate.
Computer chip-related shares had a banner day after National Semi said it saw improving orders in May. After markets closed, fellow chip maker Intel said it sees a seasonally stronger second half. Intel shares rose to $32.92 in after-hours activity. The stock had risen $1.32 to $31.14 in regular trading.
"Even though the earnings that are going to come out in this next quarter are pretty weak, there's a sense that maybe tech land is bottoming out," said Michelle Clayman, chief investment officer at New Amsterdam Partners.
Analysts expect profit for tech firms to improve steadily from the forecast decline of 55% in the second quarter, according to research firm First Call/Thomson Financial. Profit for techs is forecast to surge 50% in 2002, which would blow away the S&P; 500's 18.7% earnings growth forecast for next year.
National Semi surged $3.07 to $31.04. The chip maker reported a loss on lower sales as the company contends with an industrywide inventory glut, but said there may be signs a recovery is on the horizon.
Semiconductor stocks also got a boost after a trade group, the Semiconductor Industry Assn., said the industry will rebound in the second half of this year, grow 20% in 2002 and advance 25% in 2003. The SOX semiconductor index jumped 7.7%.
"There's a sense that the group has been beaten down enough and investors are picking the stocks that did well the first time around," said John Niedenberger, a money manager at Advanced Investment Management.
Philip Morris weighed on the Dow average and was the most-active stock on the NYSE, dropping $1.48 to $48.52. A jury in Los Angeles this week awarded a smoker with incurable cancer record damages and ruled the tobacco giant did not properly warn him of the risks of smoking. Philip Morris said it was optimistic the verdict would be overturned on appeal.
Among initial public stock offerings, two deals were priced Thursday: United Surgical Partners sold 9 million shares at $14 a share. Alliance Data Systems sold 13 million shares at $12 each. Both stocks will begin trading today under the ticker symbols USPI and ADS, respectively.
Some investors saw clouds on the horizon in the latest economic data Thursday. Weekly U.S. jobless claims rose to 432,000 in the week ended June 2, their highest level since September 1992.
The data left the door open for further interest rate cuts by the Federal Reserve, which has cut short-term rates 2.5 percentage points so far this year. The Fed meets next on June 26-27.
But the bond market suffered profit taking Thursday. Long-term yields rose after sliding in recent sessions. The 10-year Treasury note closed at 5.32%, up from 5.26% Wednesday.
Market Roundup, C6, C7