Nasdaq Hits a 4 1/2-Year High Amid Optimism in Tech Sector
Stocks managed to extend their New Year’s gains to a third session Thursday, with the tech sector leading the way on optimism about Cisco Systems and chip maker Xilinx -- helping the Nasdaq composite index post its highest close in more than 4 1/2 years.
Blue-chip indexes, by contrast, ended barely higher. Still, the overall tone of the market remained positive, some analysts said.
“At this moment, sentiment still feels good, and I think there’s room for stocks to rally further,” said Phil Schlakman, a trader at JP Morgan Private Bank in New York.
Advancing issues outnumbered decliners by 9 to 7 in active trading on the New York Stock Exchange.
Blue chips struggled for direction after the Dow Jones industrial average surged a total of 162 points, or 1.5%, in the first two trading days of the new year. The Dow ended Thursday with a gain of just 2 points, or 0.02%, to 10,882.15.
The Standard & Poor’s 500 finished up a negligible 0.02 of a point to 1,273.48, which still was a new 4 1/2 -year high.
The Russell 2,000 index of smaller stocks rose 2.52 points, or 0.4%, to a record close of 691.77.
The tech sector dominated the day’s action. The Nasdaq composite added 13.41 points, or 0.6%, to 2,276.87, its highest close since May 2001.
The day’s economic news was mostly upbeat. Reports on holiday retail sales appeared to meet projections, and an index of activity in the services sector of the economy showed strength in December.
Also, energy prices fell, with near-term oil futures in New York sinking 63 cents to $62.79 a barrel after reaching a 2 1/2 -month high Wednesday.
Natural gas futures prices slumped to their lowest since before Hurricane Katrina after a government report showed U.S. inventories rose unexpectedly last week. Gas ended at $9.50 per million British thermal units. The price has plunged 38% since mid-December.
Gold pulled back from a 24-year high reached Wednesday, sliding $7.60 to $526.30 an ounce in futures trading.
In the bond market, however, investors appeared cautious ahead of today’s government report on December employment. The 10-year Treasury note yield edged up to 4.36% from 4.35% on Wednesday.
In other market highlights:
* Cisco rallied 50 cents to $18.35, its highest since mid-September, after a Citigroup analyst said that the computer networking giant’s revenue growth was poised to accelerate in 2006. Xilinx jumped $1.62 to $28.55 after it boosted its sales forecast for its quarter ended in December.
Among other tech shares, Intel rose 36 cents to $26.27, Broadcom gained $1.56 to $50.11 and software firm SAP surged $1.12 to $47.94.
* Google crossed the $450 mark, adding $6 to a record $451.24, after the Wall Street Journal reported the company plans to announce an agreement to sell video downloads from the National Basketball Assn. and CBS, a direct challenge to Apple Computer video sales for iPods. Apple fell 59 cents to $74.38.
* Pixar, which leaped $4.20 on Wednesday on speculation about a possible sale to Walt Disney, fell $2.16 to $56. Credit Suisse First Boston analyst William Drewry cut his rating on the computer-animation film studio to “neutral” from “outperform,” saying the shares are now “priced for perfection.”
* Los Angeles-based premium jeans maker True Religion Apparel jumped $2.54, or 15%, to $19.40. Chief Financial Officer Charles Lesser attributed the rise to positive reports by analysts this week.
* Energy-related stocks were broadly lower. Halliburton lost $1.53 to $64.59. Noble Energy fell $1.33 to $40.64.
