Earnings Push Tech Sector Up; AT&T; Hurts Dow
Stocks closed mostly higher Tuesday on continued demand for technology shares.
In other trading, oil prices fell for a seventh consecutive session. Gold surged.
On Wall Street, Texas Instruments’ earnings report and outlook buoyed the tech sector, helping to lift the Nasdaq composite index 15.76 points, or 0.8%, to 1,940.90 -- nearing the 21-month high reached Thursday, before profit-taking pulled the market back.
TI shares jumped $1.61, or 6.3%, to $27.28, and the SOX chip-stock index added 8.99 points, or 1.9%, to 482.46, its highest level since mid-2002.
TI late Monday said profit in the third quarter more than doubled from a year earlier. The company also was upbeat about the current quarter. The news helped spur buying across the tech sector.
But blue chip shares were weighed down in part by AT&T;, which slumped $1.07 to $20 after reporting that third-quarter sales declined.
That hurt the Dow Jones industrial average, which lost 30.30 points, or 0.3%, to 9,747.64. The Standard & Poor’s 500 index managed a small gain, adding 1.35 points, or 0.1%, to 1,046.03.
Rising stocks outnumbered losers by 18 to 14 on the New York Stock Exchange and by about the same on Nasdaq. Trading was heavy.
Many analysts have argued that stock prices already reflect the strong earnings gains expected from a large cross section of companies in the second half of this year. As a result, profit-taking could hinder the market in the near term, some say.
“I think we’re going to be seeing some very choppy trading over the next several weeks,” said Jack Caffrey, equities strategist at J.P. Morgan Private Bank in New York.
Disappointment over third-quarter numbers Tuesday hurt restaurant chain Brinker International (parent of Chili’s), which slumped $4.21 to $29.60; and video store chain Blockbuster, which sank $2.28 to $19.22.
On the plus side, America West Holdings jumped $2.15 to $13.30 after the airline beat analysts’ profit estimates in the quarter. Internet services provider EarthLink gained $1 to $8.52 on its earnings report.
There was little action in the bond market Tuesday. Treasury yields were slightly lower. Currency markets also were relatively calm.
But crude oil futures in New York lost 17 cents to $30.18 a barrel, the seventh straight decline since the price reached $31.97 on Oct. 10. Analysts said they would be scrutinizing the U.S. government’s report today on weekly crude inventories for insight into supply trends.
Also, ministers of the Organization of the Petroleum Exporting Countries said Tuesday that the cartel may need to increase production if crude prices remain at the recent, relatively high, levels.
Prices are still about $2 higher than they were before OPEC decided at a meeting Sept. 24 to cut production quotas by 3.5% starting Nov. 1.
In other trading, near-term gold futures in New York gained $7.70 to $381.70 an ounce. The price had pulled back in recent weeks after reaching a seven-year high of $387.50 on Sept. 24.
Among Tuesday’s highlights:
* Tech stocks leading Nasdaq higher included FileNet, up $1.19 to $26.69; Novellus Systems, up $1.21 to $39.49; Veritas Software, up $1.20 to $35.29; and United Online, up $1.96 to $29.22.
* The biotech sector also was hot. Biogen rose $1.16 to $38.55, Cephalon jumped $2.18 to $47.73 and Myriad Genetics gained $1.02 to $13.37.
* Eastman Kodak was up 52 cents to $23.64 after a group of shareholders said they would ask the company to reconsider a plan to sharply reduce its dividend as it makes aggressive strides into the digital camera market, stepping back from its traditional film business.
* Retailer Best Buy jumped $1.28 to $54.08. The firm said it would begin paying a cash dividend, starting with a 30-cents-a-share payment in December and a 10-cents-a-share quarterly dividend thereafter.
* NYSE trading firm LaBranche said it suspended its dividend after reporting a plunge in third-quarter profit. The stock fell as low as $9.25 but rebounded to close at $10.40, up 8 cents.
* Gold stocks rallied with the metal. Barrick Gold rose 74 cents to $19.40 and Newmont Mining jumped $1.98 to $41.10.
