Dow Surges on Chip, Job Reports
A promising profit forecast for Applied Materials and a sign of possible improvement in the job market incited another round of bargain hunting on Wall Street on Monday, lifting technology stocks and propelling the Dow Jones industrials nearly 170 points higher.
It was the second triple-digit gain for the Dow in four sessions, but analysts were skeptical that the momentum would last. The advance followed a losing week for the major indexes, suggesting that the market was merely rebounding as investors searched for good deals, rather than shaking off the malaise that has weighed on trading for more than a month.
The Dow rose 169.74 points, or 1.7%, to close at 10,109.66. Broader indicators fared even better. The tech-focused Nasdaq composite index rose 51.69 points, or 3.2%, to 1,652.54. The Standard & Poor’s 500 index gained 19.57 points, or 1.9%, to 1,074.56.
Even with the big advance, market breadth was less than eye- popping, with winners outnumbering losers by 3 to 2 on Nasdaq and the New York Stock Exchange. Also, volume was light, an indication that many investors were staying away.
Wall Street got a lift from a survey by Manpower, the nation’s largest staffing company, showing that businesses expect to hire more employees in the third quarter, particularly in manufacturing.
Top chip-manufacturing equipment maker Applied Materials, scheduled to report its quarterly results after the closing bell today, rose $1.88, or 7.9%, to $25.58 after Goldman Sachs raised its earnings estimates for the company. Several chip equipment makers followed Applied Materials higher. Novellus Systems rallied $3.10 to $49.40; KLA-Tencor rose $3.07 to $57.47.
Monday’s buying spread across the tech sector. Microsoft climbed $2.64 to $52.69, while Intel advanced $1.51 to $28.52, Dell Computer gained $1.48 to $25.36, and IBM, working its way back from last week’s 3 1/2-year low, added $2.51 to $82.19.
Investors are hoping that technology companies, including Dell, will unveil quarterly earnings this week that top analysts’ estimates. A positive earnings report from tech bellwether Cisco Systems last week sparked the market’s biggest one-day showing since September, but the rally faded by week’s end as some investors decided not to risk their gains and cashed out.
“We are still working off what is technically an oversold market, and a good-news story can cause a decent rally,” said Barry Hyman, chief investment strategist at Ehrenkrantz King Nussbaum. “As far as sustainability, though, we’ll have to see.”
Financial stocks also fared well. American Express advanced $1.50 to $43, while Citigroup rose 94cents to $44.24 despite a published report questioning its finances.
Lands’ End surged $10.71, or 21%, to $61.73 on word that Sears, Roebuck & Co. was buying the catalog retailer for about $1.9 billion. Sears rose 19 cents to $52.
Wall Street is waiting for today’s Commerce Department report on April retail sales.
Stores released their own figures last week, and many were disappointing.
Bond yields rose as money moved from fixed-income investments to stocks.
In other market news:
* Shares of power companies tumbled again as questions mounted about the firms’ energy-trading practices. Michigan utility owner CMS Energy slumped $3.24 to $16.05. Energy trader Dynegy fell for a ninth day, losing 57 cents to $9.31. Williams, another energy trader, fell 94 cents to $15.55.
Reliant Resources plunged $2.06, or 17%, to $9.94 after Friday’s 17% loss. Parent Reliant Energy fell $3.86, or 18%, to $17.59 and was the biggest drag on the S&P; 500.
Crude oil prices hit an eight-month high, rising 39 cents to $28.38 a barrel in New York trading, pulling oil stocks higher. Exxon Mobil added $1.05 to $40.01, ChevronTexaco climbed $2.15 to $90.10, and oil-field services giant Schlumberger rose $1.04 to $56.54.
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Market Roundup, C8-9
