Stocks Hit Fresh Highs on Tech Lead
Stocks ended at fresh highs for the year Wednesday as some bullish calls by brokerages and better-than-expected August sales at Cisco Systems lifted technology shares.
Nasdaq notched a new 17-month high, while the blue-chip Dow industrials and the broader Standard & Poor’s 500 index both hit new 14-month highs.
Wednesday’s comment by Cisco Chief Executive John Chambers that August sales were a little bit above his expectations provided most of the fuel for the day’s rally, said Ozan Akcin, chief market strategist at Puglisi & Co. “I think it’s an indication that tech spending is coming back,” he said.
The Dow rose 45.19 points, or 0.5%, to 9,568.46. The S&P; 500 gained 4.28 points, or 0.4%, to 1,026.27. The technology-laced Nasdaq composite climbed 11.42 points, or 0.6%, to 1,852.90.
The S&P; 500 was up for its seventh session in a row and Nasdaq for its sixth. The Dow had its fourth up session. Trading volume was heavy as more investors returned from August vacations.
Winners beat losers by 5 to 3 on the New York Stock Exchange and by 3 to 2 on Nasdaq, but stocks backed off earlier intra-day highs as some investors locked in gains after a strong start to a month that is traditionally tough for the market. The Nasdaq index had been up as much as 22 points.
“I kind of think the late pullback is nothing more than just some profit-taking,” said Peter Cardillo, chief strategist at Global Partners Securities Inc. “This market has been up strongly over the last couple of days ... and I kind of suspect that everyone is scratching their heads and saying, ‘What’s going on here? September is usually weak.’ ”
The Cisco news, which pushed the networking equipment maker’s shares up 65 cents to $20.24 -- highest since January 2002 -- boosted other networking stocks as well. Adtran soared $8.07 to $66.07 after it also gave an upbeat outlook.
In addition, brokerage CSFB raised its price targets on a few application-software companies, including Intuit. The move followd Goldman Sachs’ upgrade of the software sector to “attractive” from “neutral” on Tuesday.
Intuit gained $1.13 to $47.84, PeopleSoft soared 98 cents to $19.65, Siebel Systems rallied 50 cents to $11.01 and Mercury Interactive jumped $2.18 to $48.05.
In other trading, Treasury bond yields eased after their big run-up Tuesday. The yield on the benchmark 10-year T-note slipped to 4.59% from 4.60%.
In other highlights:
* Nortel Networks gained 31 cents, or 9.6%, to $3.53. The company won a $1-billion contract to upgrade Verizon Communications’ wireless network. Rival Tellabs rose 79 cents to $7.34.
* GE got a boost from brokerage J.P. Morgan, which raised its rating on the stock to “neutral” from “underweight.” GE’s television network, NBC, won Vivendi Universal’s auction Tuesday with a proposed merger to create a new entertainment company worth more than $40 billion. GE rose 68 cents to $31.12 and Vivendi gained 36 cents to $18.61.
* In other merger news, Caremark Rx agreed to buy AdvancePCS for more than $5 billion in stock and cash, reducing to three the number of major players in the U.S. drug-buying industry. Caremark fell $2.10 to $23.30. AdvancePCS rose $7.45, or 18.6%, to $47.45.
* Eli Lilly sank $4.70, or 7%, to $62.10 after the government said the firm must perform more tests of its proposed incontinence drug before the medication could be approved.
Market Roundup, C6-7
