Chips, Microsoft Push Up Markets
A possible settlement in the Microsoft Corp. antitrust case and a positive outlook for the semiconductor industry gave the stock market a lift Thursday, outweighing rising layoffs and drops in manufacturing activity and consumer spending.
“Investors are pinning their hopes on an economic recovery in 2002 and taking anything negative they hear with a grain of salt. Expectations are so low that when there is any good news stocks will rally,” said strategist Jeff Kleintop of PNC Financial Services Group.
The Dow Jones industrial average closed up 188.76 points, or 2.1%, at 9,263.90, getting its biggest boost from Microsoft, which rose $3.69 to $61.84.
Nasdaq rose 56.10 points, or 3.3%, to 1,746.30, and the Standard & Poor’s 500 index advanced 24.32 points, or 2.3%, to 1,084.10.
Advancers led decliners by almost 11 to 4 on the New York Stock Exchange and by 4 to 3 on Nasdaq in active trading.
Analysts attributed Wall Street’s success Thursday to investors being willing to place bets on a brighter business picture in 2002. Others cautioned that in the near term, market upturns could be short-lived, given the protracted economic slump, the political uneasiness after the Sept. 11 terrorist attacks and the spread of anthrax.
“With the uncertainty of what is going on ... it is very difficult to pinpoint how investors are going to react in the coming weeks, much less the next hour,” said Thomas F. Lydon Jr., president of Global Trends Investments in Newport Beach.
The tech sector posted the biggest gains, benefiting from news that Microsoft and the Justice Department have reached a tentative agreement to settle the antitrust case. Dell Computer rose 57 cents to $24.55; Oracle advanced 61 cents to $14.17. The S&P; software index rose 5.9%, reflecting gains in software makers such as PeopleSoft, up $2.09 at $31.86, and Veritas Software, up $3.10 at $31.48.
Semiconductor makers benefited from a positive sales forecast. Although worldwide chip sales fell 44.6% to $10.2 billion in September compared with a year ago, there are signs of improvement in the fourth quarter and for next year, according to the Semiconductor Industry Assn.
Intel rose $1.52 to $25.94 on the news, and Advanced Micro Devices gained $1.66 to $11.50.
The positive outlook for the chip industry and the Microsoft development helped stocks withstand bad news about manufacturing and consumer spending.
Manufacturing activity declined for the 15th consecutive month in October, pushed lower by the Sept.11 attacks.
Also, consumer spending dropped 1.8% in September, the largest decline since January 1987, according to the Commerce Department. But many consumer and manufacturing stocks rose. DaimlerChrysler gained $1.40 to $36, Target rose $1.04 to $32.19 and 3M advanced $1.89 to $106.27.
Gains were so widespread that the Dow had just two losing stocks: AT&T;, off 21 cents at $15.04, and United Technologies, which slipped 19 cents to $53.70.
Investors will be closely watching today’s key report on unemployment in October.
Thursday, the government reported that jobless benefits claims rose by 55,000 to 3.7 million for the week ended Oct. 20. That was the highest level since 3.7 million claims were recorded for the week ended May 21, 1983, and the number probably sets the stage for a grim October report.
In other market highlights:
* Bloomberg’s homebuilder index rose 4% as the continued slide in long-term interest rates fanned hopes of a surge in home buying. Among the winners: Clayton Homes, up 70 cents to $14.70; Pulte Homes, up $2.30 to $34.80; and Centex, up $1.64 to $39.90.
* Food giant General Mills jumped $1.08 to $47 after it completed the acquisition of Pillsbury foods from Diageo for $10.4 billion.
* UAL Corp. rose 38 cents to $13.10 and Delta Air Lines Inc. gained 80 cents to $23.66. The second-and third-largest U.S. airlines posted combined net losses of $1.42billion but still managed to beat Wall Street’s forecasts.
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Market Roundup: C5, C6
