Tech Stocks Jump
By Elizabeth Lazarowitz
NEW YORK (Reuters) - Technology stocks shot higher on Friday despite a warning of weaker sales from top computer chip maker Intel Corp. (NasdaqNM:INTC - news) as investors sensed the worst may be over for the beaten-down sector.
But after the close of trading, news that Florida's top court ordered hand recounts of U.S. presidential ballots in a key Florida county threatens to throw a wet blanket on Friday's rally when trading resumes on Monday.
The ruling revived Vice President Al Gore's chances for the presidency, overshadowing decisions by two Florida judges earlier in the day that favored Texas Gov. George W. Bush.
Wall Street's gains -- wrought in part from growing hopes that more than a month of election uncertainty would soon draw to a close -- began to wither after the court decision threatened to drag the election process out some more.
Stock futures ticked lower after the Florida Supreme Court decision. And Intel's stock fell to $32-7/8 in after-hours trading from its close of $34 on Nasdaq. Intel ended the regular session up $1-11/16, a gain of over 5 percent.
``We are definitely headed lower,'' said Gary Campbell, chief investment officer at Commerce Bank, of St. Louis, which manages $9 billion in assets.
``What was getting built into the market yesterday and today was a feeling that this whole thing was going to get resolved. This throws us into real political turmoil,'' Campbell added.
On Friday, the technology-packed Nasdaq Composite Index (.IXIC) climbed 164.77 points, or 5.99 percent, to end at 2,917.43, capping off the week with a gain of 10.2 percent.
Intel was among the Nasdaq's most heavily traded shares, leading a substantial rally in semiconductor stocks that indicated investors may believe that the stream of bad news in the high-tech sector is near an end. Intel, which has been among the 30 stocks that make up the blue-chip Dow average since Nov. 1, 1999, also helped lift the Dow on Friday.
The Dow Jones industrial average (.DJI) ended the day up 95.55 points, or 0.90 percent, at 10,712.91, buoyed by its financial and high-tech components. For the week, the Dow gained 3.3 percent.
The broader Standard & Poor's 500 Index (.SPX) rose 26.34 points, or 1.96 percent, to 1,369.89.
Year to date, the Dow is down 6.8 percent, while the Nasdaq composite is down 28.3 percent.
The Nasdaq market had zipped up in early trading Friday on the morning after Intel, the world's No. 1 semiconductor maker, said a worldwide economic slowdown would cause it to miss fourth-quarter sales forecasts. Intel had disclosed the bad news after Thursday's closing bell.
``If a company like Intel, which is obviously a bellwether ... disappoints, and the market actually responds positively, then I think there are not too many other areas of disappointment that could come down the pipeline,'' said Peter Gottlieb, portfolio manager at First Albany Corp., which manages $500 million.
Analysts said Intel's announcement came as little surprise
as it echoed a chorus of profit warnings from the likes of personal computer maker Gateway Inc. (NYSE:GTW - news) and Apple Computer Inc. (NasdaqNM:AAPL - news) and mobile phone giant Motorola (NYSE:MOT - news).
Even on Friday, not all the news was rosy for the high-tech sector, however. Sun Microsystems (NasdaqNM:SUNW - news) fell $3-7/8 to $38-15/16 amid talk that the network computer company faces accounting problems and that it might warn of weaker quarterly results.
But Intel's rise helped push the Philadelphia Stock Exchange's semiconductor index (.SOXX) up a hefty 12 percent. Other gainers included Applied Materials (NasdaqNM:AMAT - news), up $4-3/16 at $44-3/16, Novellus Systems (NasdaqNM:NVLS - news), up $4-1/4 at $33-7/16, and KLA Tencor (NasdaqNM:KLAC - news), up $5-1/2 at $35-15/16.
The mood on Wall Street also improved after fresh data showed the ultra-tight U.S. labor market has eased, which boosted hopes that the economy may be slowing enough that the Federal Reserve will cut interest rates.
Analysts said investor sentiment got a substantial boost on Tuesday, when Federal Reserve Chairman Alan Greenspan said the Fed was on watch for excessive slowing in consumer and business spending.
Financial markets took the remarks to mean the Fed could shift to a ``neutral'' policy stance soon, sending stocks skyrocketing. The Nasdaq shot more than 10 percent higher, posting the biggest one-day gain in its 29-year history.
Hopes for lower rates may cushion the blow of election uncertainty, analysts said.
``The picture is that the Fed is going to be moving to a 'neutral' bias and that's going to keep a floor underneath the market,'' said Paul Cherney, market analyst at S&P Marketscope.
The Fed has raised interest rates six times since June 1999 in an effort to rein in inflation.
U.S. nonfarm payrolls grew last month by just 94,000 jobs, well below economists' forecast for a gain of 140,000, while the unemployment rate inched up to 4.0 percent from its 30-year record low of 3.9 percent.
J.P. Morgan & Co. (NYSE:JPM - news) and Citigroup (NYSE:C - news), both among the 30 stocks in the Dow average, advanced on Friday. J.P. Morgan rose $2-1/4 to $147-1/4, while Citigroup added $1-3/4 to $51-1/2.
In mid-afternoon trading, stocks briefly rocketed after decisions by two Florida judges, which rejected Democratic bids to throw out thousands of absentee ballots favoring Bush and seeming to nudge the Republican candidate closer to victory.
The news gave a lift to stocks seen as benefiting from a Bush administration, such as tobacco giant Philip Morris (NYSE:MO - news), which touched a 52-week high of $40-1/2, before finishing the session down 1/16 at $39-5/8. |
