Tech Sector Chips In as Wall Street Bounces Back
Encouraged by some upbeat business forecasts, investors stormed back into the stock market Wednesday after a few days of modest selling.
The Dow Jones industrial average gained 111.04 points, or 1.1%, to 9,848.83, while the Standard & Poor’s 500 index added 11.99 points, or 1.2%, to 1,058.56.
The market’s leaders this year -- technology issues and smaller stocks -- were out front again on Wednesday.
The technology-heavy Nasdaq composite index surged 42.36 points, or 2.2%, to 1,973.11, closing at its high for the session.
The Russell 2,000 small-stock index rallied 12.09 points, or 2.3%, to 540.66.
Traders attributed some of the momentum to the week’s slow start. The stock market was open on Veterans Day on Tuesday, but some investors took a long weekend and just returned to Wall Street on Wednesday -- with money to spend, said Brian G. Belski, market strategist at US Bancorp Piper Jaffray.
“Investors this year have conditioned themselves to buy the dip, and they saw an opportunity,” Belski said.
Blue chip stocks had fallen in five of the six previous sessions as some investors took profits after October’s robust rally.
A report from technology research firm Gartner Group on Wednesday helped stoke optimism. The firm said it expected semiconductor sales worldwide to reach $210 billion next year, up more than 20% from this year’s estimated total.
The SOX chip-stock index jumped 17.30 points, or 3.4%, to 531.02, highest in more than a year. It’s up 86% this year.
General Electric also boosted sentiment after Chief Executive Jeffrey Immelt said at a conference that he saw “more and more positive signs” about the economy. GE shares were up 59 cents, or 2.1%, to $28.70.
Investors seemed to be in a mood to see good news even in bad news. Ford Motor shares jumped 75 cents, or 6.1%, to $13.06 even though Standard & Poor’s cut the company’s debt rating to one notch above junk status. Some investors apparently expected worse.
Rising stocks outnumbered losers by 3 to 1 on the New York Stock Exchange and on Nasdaq.
The Treasury bond market provided support for stocks, as yields fell modestly after the government sold $16 billion in five-year notes at a yield of 3.43%, which was below some estimates.
The bid-to-cover ratio on the five-year sale, measuring the value of bids submitted for each dollar of debt sold, was 2.27, up from 2.25 in October.
Some analysts had been concerned that investors’ appetite for Treasury securities would wane because of expectations that interest rates would rise next year and because of the dollar’s weakness.
Among the day’s highlights:
* Chip stocks that rose sharply included PMC-Sierra, up $1.10 to $21.90; Advanced Micro Devices, up $1.46 to $18.08; and National Semiconductor, up $1.59 to $43.62.
* El Segundo-based Computer Sciences jumped $3.40 to $44.19. The computer services company’s latest quarterly earnings, reported late Tuesday, beat expectations.
* In the software sector, SAP rose $1.23 to $38.98, Macromedia was up $1.16 to $20.18 and Veritas Software surged $1.47 to $38.43.
* Many heavy-industry and commodity-related stocks rallied. Caterpillar rose $1.71 to $73.66, mining firm Inco was up 61 cents to $32.78 and truck parts maker Eaton gained $1 to $101.02.
* Home builders’ shares rose after recent profit-taking. Lennar gained $2.22 to $92.18 and Pulte added $2.21 to $89.02.
* Tobacco stocks were strong. Philip Morris was up $1.55 to $50.25 and RJR Tobacco rose 99 cents to $51.02.
* On the downside, some insurance stocks weakened. Allstate slipped 24 cents to $40.46 and St. Paul lost 7 cents to $36.89.
* Mexico’s main index hit a record high, rising 173.80 points, or 2.1%, to 8,539.31.
