Tech Shares Bounce Back; Dow Inches Up
Technology stocks rallied Wednesday after sliding for two straight sessions, and the broader market also closed higher.
Meanwhile, longer-term Treasury bond yields rose to two-week highs in the wake of weak demand for new securities and in advance of Federal Reserve Chairman Alan Greenspan’s testimony before Congress today.
The Japanese yen reached a three-year low against the dollar.
On Wall Street, the Nasdaq composite index gained 39.85 points, or 2.1%, to 1,922.38, recouping about 40% of its losses from the previous two sessions.
The Dow industrials inched up 17.16 points, or 0.2%, to 9,730.96.
Winners topped losers by 20 to 11 on the New York Stock Exchange and by 22 to 14 on Nasdaq.
Stocks have been under pressure in recent sessions as investors have focused on a still-weak outlook for corporate earnings despite more signs that the economy may be poised to recover in the first half of the year.
Concerns about accounting practices--and the accuracy of corporate earnings reports--also have weighed on the market in the aftermath of the Enron debacle.
“The market is really in a digestive phase more than anything else,” said Marc Klee, portfolio manager for the John Hancock Technology Fund. “It’s had such a sharp move off the bottom [since Sept. 21], and there’s skepticism about where we go from here.”
The Nasdaq composite index, up 30.1% in the fourth quarter, is down 6.7% since Jan. 4.
But on Wednesday, investors were buying in such sectors as semiconductors, biotech, banking and retailing.
“What you’re seeing is a little bit of money being put back to work as the market tries to grind away through earnings season,” said Charles White, portfolio manager at Avatar Associates.
More insight on the economy is expected today from Greenspan, who will testify before the Senate Budget Committee.
Many analysts believe that Greenspan will sound more optimistic than he did in a speech Jan. 11.
The bond market was sensing as much Wednesday: The 10-year T-note yield rose to 5.02% from 4.91% on Tuesday, in part reflecting doubts that the Fed will feel compelled to cut interest rates again when it meets Jan. 29 and 30.
Bonds also suffered from relatively poor demand at the Treasury’s auction of a record $25 billion of new two-year notes, analysts said. The yield on the notes was 3.04%.
In currency trading, the yen barreled through the 134-per-dollar level, ending at 134.27 in New York, a three-year low, despite Treasury Secretary Paul H. O’Neill’s attempts in a speech in Tokyo to sound upbeat about the Japanese economy.
Japanese officials have encouraged the yen’s slide in recent months in an attempt to make the country’s exports cheaper for foreign buyers. The yen has fallen from a level of 122 per dollar in late October.
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Among Wednesday’s highlights:
* Retail stocks rallied in the wake of Kmart’s bankruptcy filing, as investors bet the move may be good for the battered chain’s rivals. Wal-Mart rose $1.85 to a 52-week high of $59.86, Target gained 84 cents to $42.66, and Ross Stores added $1.51 to $34.20. Kmart added 20 cents to 89 cents.
* Tech shares that rebounded included Apple Computer, up $1.20 to $23.02; Intel, up 75 cents to $32.45; Cisco Systems, up 87 cents to $18.93; and Siebel Systems, up $2.18 to $34.80. But IBM slid $2.60 to $107.90.
* Trucking stocks rallied. The industry would be a prime beneficiary of a stronger economy. Roadway jumped $2.68 to $39.35 after reporting a smaller-than-expected earnings decline in the fourth quarter. CNF gained $1.65 to $33.86.
