Tech Shares Lift Market on Upbeat Economic Data
U.S. stocks, led by computer-related shares, gained Thursday on a report showing the economy is accelerating.
Despite the upbeat data, Treasury bond yields fell.
The Nasdaq composite index rose 18.05 points, or 1%, to 1,800.18, the first close above the 1,800 level since April 2002.
The Dow industrials gained 40.42 points, or 0.4%, to 9,374.21, and the Standard & Poor’s 500 added 6.05 points, or 0.6%, to 1,002.84.
Despite weak trading volume this week, the market has continued its winning ways -- surprising some analysts who thought investors might be tempted to sell before September, which historically has been the weakest month for the market.
Rising stocks outnumbered losers 22 to 10 on the New York Stock Exchange and 19 to 12 on Nasdaq.
The Commerce Department said Thursday that gross domestic product, the value of all goods and services produced, grew at a 3.1% annual rate in the second quarter, up from the previous estimate of 2.4%.
Corporate earnings after taxes and adjusted for the value of inventories and capital consumption -- a gauge favored by many economists because it shows profits from current production -- rose 15.9% in the quarter, the biggest increase since the last three months of 2001, the government said.
Also, second-quarter purchases of equipment and software by businesses rose at an 8.2% annual rate, up from the 6.9% originally reported.
That gave more investors confidence in tech shares.
“Technology stocks are cyclical stocks,” which do best when the economy is on an upswing, said Donald Coxe, chief strategist at Harris Investment Management of Chicago, which oversees $18 billion.
“Our recent feedback from industry sources suggests increased software activity, particularly in the U.S. region,” Lehman Bros. analyst Neil Herman said in a research note.
Among major tech shares, Intel gained 28 cents to $28.30, Broadcom jumped $1.50 to $27.45, and Cisco Systems added 18 cents to $19.19.
Other winners included BEA Systems, up 74 cents to $13.37; Black Box, up $1.63 to $47; and FileNet, up 45 cents to $21.
Southland-based Western Digital, whose disk drives are used in Microsoft’s Xbox video game consoles, surged $1.98 to $11.48. Revenue in its first fiscal quarter ending Sept. 26 will be $690 million to $700 million, the company said. It previously forecast $680 million to $700 million.
Among other highlights:
* Cyclical industrial stocks rallied. Alcoa gained 73 cents to $28.35, Georgia-Pacific climbed 66 cents to $23.28, and Eastman Chemical rose 82 cents to $35.71.
* Shares of some retailers advanced after forecasting better-than-expected results. Dollar General jumped $1.60 to $22.52. The discount retailer said this year’s profit, excluding some items, would rise as much as 20%, compared with a previous forecast of as much as 15%.
* Apollo Group gained $3.12 to $63.64. The operator of the largest private U.S. university said revenue for the fiscal year ending Aug. 31, 2004, would be $1.73 billion. Analysts surveyed by Thomson First Call expected an average of $1.68 billion.
University of Phoenix Online, a unit of Apollo, jumped $5.17 to $64.50.
* Walt Disney fell 42 cents to $20.30, the stock’s tenth straight daily loss. A Disney family trust recently announced plans to sell a block of stock over time.
* In the bond market, the 10-year T-note yield fell to 4.42% from 4.54% on Wednesday. Despite stronger economic data, some analysts say low inflation means bond yields could stabilize after soaring since mid-June.
