Nasdaq Wraps Up Winning Quarter

Technology stocks overcame a trading halt on Nasdaq to close higher Friday, wrapping up their first winning quarter in more than a year.

Nasdaq extended trading until 2 p.m. PDT after computer glitches paralyzed the nation’s No. 2 stock market for an hour. It was the second straight day of trading woes for the tech-heavy Nasdaq. Before the trading halt, tech stocks had chugged higher as investors bet there may be light at the end of the tunnel for a sector badly bruised by weak U.S. economic growth.

“It’s just generally an increased optimism,” said Jeffrey Kleintop, chief investment strategist at PNC Advisors. Investors, he said, are more confident about a rebound in the economy and in tech company profits starting later this year.

But that same optimism drove bond yields higher Friday.

On Wall Street the Nasdaq composite index finished the session up 35.08 points, or 1.6%, at 2,160.54. Nasdaq posted a 17.5% gain in the second quarter, though it still is down 12.5% year to date.

Many blue-chip stocks struggled Friday. The Dow Jones industrial average finished the session down 63.81 points, or 0.6%, at 10,502.40, hurt by Honeywell. The firm’s shares slumped $3.30 to $34.90 after suitor General Electric rejected its last-ditch bid to save the $40-billion merger deal between the companies.

The Dow index gained 6.3% in the second quarter and is down 2.6% year to date.

The broader Standard & Poor’s 500 index fell 0.2% to 1,224.38 Friday. It rose 5.5% in the quarter and is off 7.3% for the year.

While some major indexes were lower, winners led losers by 2 to 1 on the New York Stock Exchange and by 12 to 7 on Nasdaq. Volume was very heavy--in part because of trading in the extended session, but also because of the usual end-of-quarter maneuvering by institutional money managers.

For the week, Nasdaq surged 6.2%, the S&P; 500 was off 0.1% and the Dow slipped almost 1%.

Growing hopes that the Federal Reserve’s aggressive cuts in short-term interest rates this year will help spur an economic turnaround have helped pull Nasdaq from a 2 1/2-year low hit in early April.

Wall Street also got encouragement Friday from fresh data indicating an economic recovery may be at hand for the recession-plagued manufacturing sector.

Among heavy-industry issues, Potash rose $1.70 to $57.40, Ameron gained $3.63 to $66.75 and DuPont rose $1.07 to $48.24.

Tech stocks leading the market higher included Gateway, up $1.38 to $16.45; Vitesse Semiconductor, up $2.13 to $21.04; PeopleSoft, up $3.17 to $49.23; and Brocade Communications, up $3.07 to $43.99.

Communications chip maker PMC-Sierra jumped $1.92 to $31.07 despite warning of a wider-than-expected loss due to weak demand.

The Nasdaq telecom index, which has fallen by a third this year, soaraed 4.3% as Tellabs climbed $2.03 to $19.38 and Nextel rose $1.70 to $17.50.

But Cisco Systems fell 38 cents to $18.20.

In other trading, yields on U.S. Treasury notes rose to their highest levels in a month, as optimism about an economic revival dashed hopes for lower interest rates.

The yield on the 10-year T-note, a benchmark for mortgage rates, rose to 5.41% from Thursday’s close of 5.33%. The yield was at 4.92% at the start of the second quarter.

Shorter-term yields also edged up Friday.

Market Roundup, C4-5