Nasdaq, on a 2-Day Winning Streak, Rises 2.9%
The battered Nasdaq market on Tuesday scored its biggest gain in six weeks as investors chose to overlook another wave of bad news from the technology sector.
The broader market also advanced, raising hopes that the selling pressure of recent weeks has ebbed enough to make way for at least a short-term rally.
The Nasdaq composite rose 61.51 points, or 2.9%, to 2,204.43, building on Monday’s 25.29-point advance. The index had fallen to a 26-month low Friday.
The Dow Jones industrials inched up just 28.92 points, or 0.3%, to 10,591.22 Tuesday, but broader indexes fared better. The Standard & Poor’s 500 rose 1%.
Significantly, winners outnumbered losers by 23 to 14 on Nasdaq and by 19 to 12 on the New York Stock Exchange, in fairly active trading despite a major storm in the Northeast.
In recent weeks, Nasdaq losers had far outnumbered winners in most trading sessions as tech stocks were hammered mercilessly amid deepening fears about the industry’s growth prospects.
But over the last two sessions, new profit warnings from some tech firms have failed to send their shares lower. That may indicate that investors are beginning to look beyond the dismal results expected for many tech firms in the first half of this year, to a second-half recovery, analysts say.
“The economy is down but not out,” said Michelle Clayman, chief investment officer at New Amsterdam Partners. It will respond to interest rate cuts by the Federal Reserve and the stimulus of a federal income tax cut, leading to better growth later this year, she said.
Investors have been encouraged “by signs that the economy is not getting any worse,” said Michael Kenneally, chief investment officer at Banc of America Capital Management in St. Louis.
Though many analysts caution that Nasdaq has had many brief rallies in its yearlong decline--and that the composite index pulled back from a gain of 101 points Tuesday--the last two sessions have been notable in one respect: This marks the first time since July that Nasdaq was in positive territory all day for two straight days, Bloomberg News calculated.
Today brings another test for tech stocks: After trading ended Tuesday, fiber-optics giant JDS Uniphase cut its first-quarter earnings outlook to 14 cents a share. Analysts had expected 17 cents. The stock fell 31 cents to $28 in regular trading.
Also, Intel Chairman Andrew Grove told analysts on a conference call late in the day that he doesn’t expect demand for semiconductors to “snap back” quickly.
Among Tuesday’s highlights:
* Chip stocks led the tech sector higher, as three firms that warned Monday of sharply weaker near-term financial results continued to rally despite the news: Cypress Semiconductor rose $1.38 to $20.51, LSI Logic gained $1.33 to $18.15 and Vitesse Semiconductor jumped $4.31 to $43.38.
* Other tech winners included Dell Computer, up $2.75 to $26.19; Micron Technology, up $4.86 to $43.86; EMC, up $4.40 to $43; and Veritas Software, up $7.94 to $67.75.
But software firm Siebel Systems slid $4.63 to $29 after some analysts cut their earnings estimates for the firm. Also, Siebel lost a key executive to Vignette, which rose $1.78 to $6.94.
* Gains in tech were somewhat offset by losses in “old-economy” sectors such as food and drugs. In the food sector, H.J. Heinz’s profit warning pushed its stock down $1.19 to $41.90. Other losers included General Mills, down 92 cents to $45.21, and Anheuser-Busch, off $1.51 to $41.50.
Among drug shares, Merck slid $2.08 to $77.45 and Eli Lilly lost $1.50 to $77.96.
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Market Roundup: C9, C10
