Nasdaq Posts Highest Close in a Month
Wednesday January 17, 5:27 pm Eastern Time
By Denise Duclaux
NEW YORK (Reuters) - Technology stocks climbed on Wednesday, driving the Nasdaq up to its highest close in a month, as solid corporate results lured investors back into high-tech powerhouses and tame inflation data fostered hopes of more interest-rate cuts.
After the close of regular trading, International Business Machines Corp. (NYSE:IBM - news), the world's No. 1 computer maker, posted results that beat Wall Street's expectations. And Apple Computer Inc. (NasdaqNM:AAPL - news) reported its first loss in three years, but those results beat previously lowered expectations.
IBM shares jumped to $104 on the Instinet electronic brokerage system from their regular close of $96-11/16, up $3-15/16 on the day, on the New York Stock Exchange. Apple's stock also surged to $17-3/4 from its Nasdaq close of $16-13/16. During regular trading, Apple had slipped 5/16.
During Wednesday's regular session, blue chips fell as investors swiveled out of old-economy stalwarts, including drug stocks, and into higher-growth tech shares on hopes the economy will rebound if the U.S. Federal Reserve ratchets down interest rates some more in 2001.
``The Nasdaq is doing extremely well with some good earnings reports out after the closing bell last night,'' said Peter Coolidge, managing director of equity trading at Brean Murray & Co. ``We did not get the unexpected and the tech market breathed a sigh of relief from that.''
The Nasdaq Composite Index (.IXIC) rose 64.23 points, or 2.45 percent, to 2,682.78. Computer networking company Juniper Networks (NasdaqNM:JNPR - news) helped boost the tech-packed measure, leaping $8-3/16 to $136-3/16 after beating earnings estimates and raising its full-year forecast late Tuesday.
The Dow Jones industrial average (.DJI) lost 68.32 points, or 0.64 percent, to close at 10,584.34. Minnesota Manufacturing & Mining Co. (NYSE:MMM - news), better known as 3M, lost $3-1/2 to $110 and pressured the blue-chip gauge after blaming the slowdown in U.S. economic growth and the strong dollar for the shortfall in its quarterly results.
But the Dow got a lift from two of its biggest tech components, IBM and Hewlett-Packard Co. (NYSE:HWP - news) Computer and printer maker H-P gained $1-1/4 to $31-5/8.
The Standard & Poor's 500 index (.SPX) gained 2.82 points, or 0.21 percent, to 1,329.47.
The Nasdaq has risen 11 percent so far in 2001, after a harrowing drop of nearly 40 percent last year. The Dow has dipped 1.2 percent so far this year, compared with a 6.2 percent drop in 1999.
``The reason we are not going down, down, down is that we had so much commentary about earnings disappointments that it's setting the stage for a rally,'' said Tony Dwyer, chief market strategist at Kirlin Holdings.
But the Nasdaq did end well off its high of more than 5 percent earlier in the session. Intel Corp. (NasdaqNM:INTC - news), the world's No. 1 computer chip maker, lost 7/8 to $30-1/2 after dabbling in positive territory much of the day. The Nasdaq heavyweight, which released its results after Tuesday's close, just squeaked by already lowered earnings forecasts and warned sales would fall 15 percent in the first quarter.
``There are still some people who have been badly hurt and there is some tendency to sell into strength,'' said Jim Oberweis, president and portfolio manager of Oberweis Asset Management, which oversees $250 million in assets.
Semiconductor and Internet stocks helped the Nasdaq to maintain some buoyancy, as Wall Street focused on the sector's bright spots in earnings. Chip equipment maker Novellus Systems Inc. (NasdaqNM:NVLS - news) climbed $5-5/8 to $44-3/8 and communications chip maker Applied Micro Circuits Corp. (NasdaqNM:AMCC - news) rose $10 to $80-3/8 after they both beat expectations.
Internet gear maker Cisco Systems Inc. (NasdaqNM:CSCO - news) edged up 1/2 to $39, telecom group Worldcom Inc. (NasdaqNM:WCOM - news) jumped $1-3/16 to $22-1/2, business software maker Oracle Corp. (NasdaqNM:ORCL - news) gained $1-7/16 to $33-1/4, and fiber-optic parts maker JDS Uniphase Corp. (NasdaqNM:JDSU - news; Toronto:JDU.TO - news) rallied $5-5/8 to $53-3/4. All four lifted the Nasdaq in heavy trading.
Drug makers Johnson & Johnson (NYSE:JNJ - news), down $2-1/2 to $91-11/16, and Merck & Co. Inc. (NYSE:MRK - news), off $2-1/16 to $81-1/4, pressured the blue-chip gauge as technology stocks grabbed the spotlight.
Wall Street took comfort in news that the U.S. Consumer Price Index for December was largely in line with consensus forecasts, indicating the Fed can focus its efforts on sustaining U.S. growth and not on fighting inflation. Core CPI, which excludes volatile food and energy costs, edged up just 0.1 percent in December, compared with a gain of 0.3 percent the previous month. Overall CPI rose 0.2 percent in December, identical to its November gain.
Investors are hoping more Fed rate cuts can cushion the slowing U.S. economy's fall from a blockbuster pace of growth and keep the slowdown from biting too deeply into corporate profits.
More evidence of slowing U.S. economic growth came just ahead of the opening bell, when the government reported December industrial output posted its biggest drop in two-and-a-half years. |
