Tech Shares Edge Up; Broader Market Mixed After Job News
Technology shares inched ahead Friday on hopes for a brighter 2003, while other stocks wobbled after an unexpected drop in jobs spooked investors worried about corporate profits and the economy’s health.
A government report showing that the economy shed 101,000 jobs in December surprised economists who had expected companies to increase hirings. Stock indexes fell after the market opened, but the tech-heavy Nasdaq erased losses and moved higher as investors appeared unwilling to read too much gloom into the data.
“Overall, my feelings are pretty constructive,” said Brian Pears, head of equity trading at Victory Capital Management, referring to the continuing new year’s rally. “The fact that we haven’t given back any of the gains is good.”
Tech stocks continued a strong rally sparked a day earlier by several strong earnings outlooks. Web equipment giant Cisco Systems rose 27 cents to $15.22 and chip maker Intel rose 36 cents to $17.42 to lead the way.
On the day, the Nasdaq composite index gained 9.26 points, or 0.7%, to 1,447.72; it finished the week 4.4% higher.
The Dow Jones industrial average edged up 8.71 points, or 0.1%, to 8,784.89, and the broader Standard & Poor’s 500 closed down 0.01 point to 927.57. Both indexes gained 2.1% on the week.
Rising shares slightly outnumbered declining shares on the New York Stock Exchange, and gainers outnumbered decliners by almost 6 to 5 on Nasdaq. Trading was light.
The new year’s rally, which has pushed the Dow 5.3% higher this month, has been fueled in part by investors’ reallocation of assets. With money markets paying so little and little upside seen in bonds, some fund managers have taken on greater risk in the hopes of boosting their return.
“The move up in stocks seemed to be fueled by some moves out of bonds,” said Brett Gallagher, deputy chief investment officer at Julius Baer, referring to reaction to the jobs report. “We’ve been hearing anecdotally that pension funds have come to the conclusion to make 9% on their money, they’re going to have to increase their exposure to equities.”
Enthusiasm for stocks was tempered by North Korea’s withdrawal from the global treaty to prevent the spread of nuclear weapons.
“If there wasn’t any North Korea issue, this market would be up a lot more,” said Anthony Iuliano, head equity trader for Glenmede Trust.
In other highlights Friday:
* FleetBoston fell 10 cents to $27.40 after it halved its earnings outlook for the fourth quarter and set aside $800 million to cover loan losses attributed in part to corporate bankruptcies.
* Schering-Plough sounded a sour note ahead of a rush of earnings reports next week. The drug maker fell 10 cents to $22.96 after cutting its 2002 earnings target on declining sales of allergy drug Claritin.
* Decode Genetics surged 87 cents, or 41%, to $2.97. Investment bank J.P. Morgan raised its rating of the biotech company to “overweight” from “neutral,” saying little value was being attributed to its product pipeline.
* U.S. Steel rose $1 to $14.70. Prudential Securities raised its rating for the steelmaker to “buy” from “hold,” lauding its announcement Thursday that it would buy rival National Steel.
* Debt-laden power producer Mirant slumped 35 cents, or about 13%, to $2.39 after saying it will sell $300 million more in assets to bolster its finances.
Market Roundup, C4-5
