From Marketwatch:
Silicon Stocks
Stocks blow past rate jitters
Intel in bear outlook, but roiled Net shares in 3-day rally
By Cecily Fraser, CBS MarketWatch
Last Update: 5:42 PM ET Jun 17, 1999
Tech Report
Internet Daily
NEW YORK (CBS.MW) -- Technology stocks marched higher
Thursday for the third-straight session, blowing off a bad day for Intel as
interest-rate jitters cooled off and Internet issues kept up a brisk stride.
Investors kept close tabs on Alan Greenspan, who hinted the Federal
Reserve might soon raise interest rates modestly to keep inflation under
control. However, the market took heart in the central banker's message
that it wouldn't be necessary to move aggressively to tighten credit. See
Market Snapshot.
"We're going to have benign inflation and reasonably low interest rates,
and the recognition of that will take away the emotion-driven selling," said
Fred Kobrick, a Boston portfolio manager.
Wall Street again
turned to embattled
Internet stocks for
buying opportunities.
The Goldman Sachs
Internet Index gained
2.9 percent, one day
after a whopping 14
percent rise, while the
Amex Internet Index
moved up 1.8 percent. Together, the three days of gains marks the
longest rally the turbulent Net sector has seen in more than a month.
The Nasdaq 100 jumped 1.1 percent. The Morgan Stanley Technology
Index also rose 1.1 percent, and the Pacific Stock Exchange Technology
Index gained 0.4 percent.
Comments from Morgan Stanley Internet analyst Mary Meeker also
generated momentum. According to traders, in an internal morning
meeting, the analyst said while it's difficult to pick a bottom, she feels the
worst is over for Internet stocks. See Net Stocks.
Scotty George, chief market strategist at Corinthian Partners Asset
Management, took issue with Meeker's reasoning. "These stocks are still
searching for a greater equilibrium," said George. "Investors are changing
their psychology on the dips."
But shares of some leading Net names pressed
higher. America Online climbed 4 3/16 to 110
11/16. Henry Blodget, an Internet analyst at Merrill
Lynch, reiterated his "buy" rating on the online
services giant.
Yahoo (YHOO: news, msgs) rose 5/8 to 142 1/4;
Amazon.com (AMZN: news, msgs) gained 1 1/4
to 112 15/16; CMGI (CMGI: news, msgs) leaped
3 3/8 to 96 1/2; Theglobe.com (TGLO: news,
msgs) gained 2 11/16 to 16 7/16. Lycos (LCOS:
news, msgs) soared 7 1/16 to 89 1/2.
Hardware hang-ups
After spending most of the session in negative
territory, computer hardware shares managed to
post modest gains despite bearish outlooks for two
tech bellwethers.
Compaq Computer (CPQ: news, msgs) said it
expects to report a second-quarter loss of as much as 15 cents as the PC
maker said it is feeling the squeeze of pricing pressure, "inadequate"
revenue growth and a "non-competitive cost structure."
"The company remains optimistic on the industry opportunities, which
would imply that many of the issues they are facing are company specific,"
said Merrill Lynch analyst Steve Milunovich in a note to clients, noting that
he continues to like Dell and IBM.
Shares of Compaq
rose 1/4 to 22 1/4 in
choppy trading. The
the Goldman Sachs
Computer Hardware
Index climbed 0.4
percent.
Compaq's rival, Dell
Computer (DELL:
news, msgs) picked up 11/16 to 36 1/2, while IBM (IBM: news, msgs)
fell 1/2 to 120 3/16.
Meanwhile, chip bellwether Intel (INTC: news, msgs) was under pressure
after Credit Suisse First Boston analyst Charlie Galvin cut his 1999 and
fiscal 2000 earnings estimates due to expectations of lower revenue and a
delay in Coppermine, a version of Intel's Pentium III chip for laptop
computers.
Intel's stock slid 1 11/16 to 58. The Philadelphia Semiconductor Index
was flat. See Hardware Report.
Software, networking shares gain
On the software front, the CBOE Software Index gained 2.4 percent,
basking in Oracle's (ORCL: news, msgs) glow. It jumped 1 15/16 to 34
7/8. That's after the database giant surged 31 percent in Wednesday's
session as investors cheered news of better-than-expected earnings. See
full story.
Shares of Microsoft (MSFT: news, msgs), up 1 7/8 to 82 7/8, were also
a standout.
The Amex
Networking Index
rose 1.1 percent, lifted
by a jump in shares of
Cisco Systems
(CSCO: news, msgs),
which rose 1 1/8 to
117 3/8.
Cisco said Thursday
it'll spend $407 million to buy privately held TransMedia Communications.
See full story.
In the broader market, the Nasdaq Composite rose 26.32 points to
2544.15, while the Dow Jones Industrial Average gained 56.68 points to
10841.63.
Cecily Fraser is a reporter for CBS MarketWatch.
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