MARKET SNAPSHOT-- 10:22 AM --Chip climb boosts tech stocks
Intel boosts chips; Q3 productivity up 3.8%
By Julie Rannazzisi, CBS.MarketWatch.com
Last Update: 10:22 AM ET Nov 2, 2000
NEW YORK (CBS.MW) - A rally in the chip sector brought out the technology buyers Thursday, pushing the Nasdaq to higher ground right out of the chute. The Dow Industrials followed suit, driven by Intel's near 6-percent jump, although advances were more muted.
The overall market generated good buying interest in the biotech and financial sectors while retail and oil issues retreated. In technology, Internet issues enjoyed positive action for a third straight session, with the Goldman Sachs Internet Index ($GIN) rising a lofty 18 percent over the same period.
The Dow Jones Industrials Average ($DJ) added 11 points, or 0.1 percent, to 10,910. Aside from Intel, the Dow's frontrunners included Hewlett-Packard, Eastman Kodak, Citigroup and IBM.
The Nasdaq Composite ($COMPQ) tacked on 76 points, or 2.3 percent, to 3,409 while the Nasdaq 100 Index rallied 77 points, or 2.4 percent, to 3,302.
The Standard & Poor's 500 Index ($SPX) rose 0.5 percent while the Russell 2000 Index ($RUT) of small-capitalization stocks climbed 1.1 percent.
Volume came in at 240 million on the NYSE and at 486 million on the Nasdaq Stock Market. Market breadth improved as advancers topped decliners by 13 to 9 on the NYSE and by 20 to 11 on the Nasdaq.
Separately, Trim Tabs observed that cash has been king at U.S. equity mutual funds - at least until Oct. 31, the last day of tax selling. In fact, at the end of September 2000, cash as a percentage of total assets topped 5 percent for the first time since November 1998. Cash peaked at 5.9 percent at the end of the September 1998 market bottom. In Trim Tabs' opinion, it indicates the market has bottomed.
Intel give chips a hand
Chip monolith Intel (INTC) climbed $2.13, or nearly 5 percent, to $47 and took the Philly Semiconductor Index ($SOX) up 4.0 percent. Altera (ALTR), which saw its shares take a beating Wednesday, gained $1.13 to $33.69. Xilinx also recovered, adding $2.56 to $70.
At its analyst meeting Wednesday, Intel said it's on track to meet its already projected 4 percent to 8 percent sequential growth rate. In late September, Intel roiled markets with its announcement that third-quarter revenue would fall below its previous expectations due to waning demand in Europe. Intel gave a long-term forecast for revenue growth of about 18 percent at its Wednesday meeting.
"We are impressed with the status of Intel's manufacturing technology," PaineWebber said in a note to clients, notching up its 12-month price target to $52 from $45. But CIBC WorldMarkets said it'll remain cautious until visibility into PC demand improves.
Aside from Intel's reassuring words, the chip sector is benefiting from the Semiconductor Industry Association's rosy growth projections for 2000 to 2003. Late Wednesday, the SIA said the global semiconductor industry will exceed $200 billion for the first time in 2000 and grow by over 59 percent to $319 billion over the next three years.
Treasury action
Treasury prices turned mixed but remained close to the unchanged mark. The 10-year Treasury note edged up 1/32 to yield ($TNX) 5.735 percent while the 30-year government bond shed 2/32 to yield ($TYX) 5.79 percent.
Thursday saw the release of non-farm productivity, which rose 3.8 percent versus the expected 2.9-percent rise expected by a survey of economists conducted by CBS MarketWatch.com . Closely- monitored unit labor costs grew by 2.5 percent.
The good productivity news was tempered by the rise in unit labor costs, noted Ian Shepherdson, chief U.S. economist at High Frequency Economics. The climb, he said, reflects a huge 6.4 percent rise in hourly compensation costs.
"It is hard to tie these data into the hourly earnings and ECI numbers, which are much less scary, but with compensation costs rising at this pace, any slowdown in productivity growth would be very bad news," Shepherdson concluded.
In other news, weekly jobless claims were unchanged in the latest week at 308,000 and leading economic indicators were flat in September. View Economic Preview, economic calendar and forecasts and historical economic data.
In the currency market, the euro backpedaled but continued to hover at its highest levels since mid-October. As expected, the European Central Bank left short-term rates unchanged at its policy-setting meeting. The euro lost ground in the wake of the news with euro/dollar easing 0.2 percent to 0.8587 while dollar/yen edged up 0.1 percent to 108.32 |
