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Thursday January 11, 5:03 pm Eastern Time
Techs: First 3-Day Rally Since Labor Day
By Haitham Haddadin
NEW YORK (Reuters) - Technology stocks surged on Thursday, giving the Nasdaq market its first three-day back-to-back rally since Labor Day in September, as investors remained upbeat in the face of disappointing corporate news from tech leaders.
But the 'Old Economy' stocks were mostly left in the dust as investors continued to snatch up beaten-down issues in computer hardware, software and telecommunications despite downbeat news since Tuesday from marquee names like mobile phone giant Nokia Corp. (NYSE:NOK - news), Web gear maker Cisco Systems Inc. (NasdaqNM:CSCO - news) and Yahoo! Inc. (NasdaqNM:YHOO - news).
``The notion that the market can deal with this kind of bad news and basically separate itself is a sign that we are trying to find a bottom here, and that ultimately the bargain hunting is coming through,'' said Prudential Securities analyst Bryan Piskorowski.
The tech-packed Nasdaq composite index (.IXIC) jumped 116.39 points, or 4.61 percent, to end at 2,640.57, on near-record trading volume of 2.76 billion shares. The index is up almost 7 percent year to date, and the rally came after the market was slammed recently by worries that the nation's economic slowdown may be more severe than previously thought.
The blue-chip Dow Jones industrial average (.DJI) edged up just 5.28 points, or 0.05 percent, to 10,609.55, helped by its technology components like software titan Microsoft Corp. (NasdaqNM:MSFT - news).
Keeping a cap on the Dow was the flow of money out of defensive issues, including drug giant Johnson & Johnson (NYSE:JNJ - news), off $3-7/16 at $92-7/16, tobacco titan Philip Morris (NYSE:MO - news), down $2-1/2 at $41-5/8, and chemical company DuPont (NYSE:DD - news), which shed $1-7/8 to $45.
The broader Standard & Poor's 500 Index (.SPX) rose 13.55 points, or 1.03 percent, to 1,326.82, thanks to the tech gains.
Besides Microsoft, up $2-1/8 at $55, Nasdaq's big advancers included Veritas Software (NasdaqNM:VRTS - news), up $3-13/16 at $94-7/8, network computer maker Sun Microsystems (NasdaqNM:SUNW - news), which added $2-7/8 to $31-15/16, and computer box maker Dell Computer (NasdaqNM:DELL - news), up $1-1/2 at $22-13/16. Fiber-optics company JDS Uniphase (NasdaqNM:JDSU - news) rose $2-11/16 to $49-3/8 and Web gear maker Juniper Networks (NasdaqNM:JNPR - news) bolted up $13 to $132-5/16.
But Yahoo! fell $4-5/8 to $25-7/8, after hitting a fresh 52-week low at $24-1/8, in the wake of a warning late on Wednesday that it would suffer its first year-over-year drop in earnings this year because of the economic slowdown.
``The market was disheartened last week by the fact that we had a rally induced by the Federal Reserve (interest-rate cut) but had no follow-through,'' Prudential's Piskorowski said. ``But now we've seen breadth improve extensively on Nasdaq.''
Nearly three shares rose for every one that fell on Nasdaq, while advancers beat decliners 4 to 3 on the New York Stock Exchange.
But not everyone was reaching for the bubbly just yet.
``The stocks that have been beaten down the most are making a comeback,'' said Ahmet Okumus, fund manager of the Okumus Opportunity Fund, which has $250 million in assets under management. ``It seems like we are falling into a recession, but even in bear markets, you have up days.''
Yahoo!, one of the most active issues on Nasdaq on Thursday, has been the S&P 500's worst-performing stock over the past 12 months with an 86 percent plunge. But other Internet-related stocks held up strongly, and the American Stock Exchange's Internet index (.IIX) soared 5.59 percent.
``It appears that we can treat Yahoo's problems as just that -- Yahoo's problems,'' said Arthur Hogan, chief market analyst at Jefferies.
Mobile phone giant Motorola (NYSE:MOT - news) inched up 15/16 to $22-1/8 after saying late Wednesday its earnings had met analysts' lowered expectations. Nokia, the world's No. 1 mobile phone company, rose $2-7/16 at $42, having sparked a sector-wide drop Tuesday after posting lackluster sales.
Nortel Networks (Toronto:NT.TO - news; NYSE:NT - news), the most actively traded issue on the Big Board, reversed modest losses to rally. The world's No. 1 supplier of fiber-optic network equipment said it has cut nearly 1,000 jobs in Canada as part of a plan to freeze staffing and focus on its high-growth businesses. Nortel finished at $34-1/16, up $2-1/8.
Even Cisco Systems recovered and finished the day higher, after feeling the heat following its chief executive's warning on Wednesday that the current quarter has been ``a little bit more challenging'' than company executives had anticipated.
Cisco, which was Nasdaq's most actively traded stock, gained $2-7/8 to $39-1/8.
Wall Street is gearing up for Friday's key economic numbers -- retail sales and the producer price index for December. The government data on Thursday was essentially a mixed bag, showing that prices of U.S. imports fell modestly in December, retailers' profits were squeezed in the third quarter and unemployment claims fell in the latest week despite a trend of growing joblessness.
Federal Reserve Bank of Philadelphia President Anthony Santomero said on Thursday he sees no evidence the U.S. economy has stopped growing, and he predicted activity would pick up in the second half of 2001.
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