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Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED -- Ignore unavailable to you. Want to Upgrade?

To: RR who wrote (37498)	6/5/2001 7:47:50 PM
From: stockman_scott	Respond to of 65232

Market Close: Inflation Frightens Few as Nasdaq Rallies Tuesday June 05 06:57 PM EDT By Steven Dale Greenlee, www.NewsFactor.com _________________________________________________________ Tech stocks rallied Tuesday, with investors shrugging off yet another report revealing weakness in the U.S. economy. The ever-volatile chip sector led the rebound, helping to lift the Nasdaq over 40 points at the opening bell. The index climbed another 20 points over the next three hours, hugging the 2,220 line for most of the day. The Comp added 77 points, or 3.60 percent, to finish at 2,233.65, reclaiming a big chunk of last week's 4.5 percent loss. The Nasdaq 100 saw a strong advance to 1,923.90, gaining 85.06 points or 4.63 percent. Advancing issues overwhelmed losers 25 to 14 on a volume of 1.8 billion. Trading activity was more convincing Tuesday following Monday's anemic showing -- the Nasdaq's lightest volume day of the year. Gray Skies on Horizon The government's latest news is that first-quarter productivity fell 1.2 percent, the biggest drop since the first quarter of 1993. A drop of 0.8 percent was expected by Wall Street, although, at least for today, investors dismissed the worse-than-expected numbers and went on a buying spree. Tuesday's report is a revision. The Labor Department (news - web sites) had originally estimated that productivity -- how much a worker produces in an hour -- dipped only 0.1 percent. In the new numbers, the amount of hours worked grew twice as fast as output, which led to the startling drop. Now, labor costs have skyrocketed to an annual rate of 6.3 percent, up from 5.2 percent in the first quarter -- the largest increase in 11 years. Federal Reserve (news - web sites) Chairman Alan Greenspan (news - web sites) had said that productivity would weaken but that the lapse would be temporary. Wall Street gambled Tuesday that the productivity drop and its consequence of increasing inflationary pressure would not pose a risk to the nation's economic recovery, but would cause enough concern for the Fed to cut interest rates for a sixth time during its meeting on June 26th and 27th. Chips Find Favor Investors snapped up chip stocks after punishing the sector for what seems like an endless number of sessions. The Philadelphia Semiconductor Index (SOX) tacked on an impressive 6.47 percent, with all 16 companies it tracks showing hearty gains. Specialty chipmaker Xilinx (Nasdaq: XLNX - news) lit a fire under the sector by announcing it would meet first-quarter expectations, down 25 percent from the fourth quarter. But it said cancellations have eased, which was unexpected music to investors' ears. Xilinx shares, which have dropped nearly 10 percent since May 25th, rose a robust 9.67 percent to US$45.61. Altera (Nasdaq: ALTR - news), like Xilinx a maker of programmable logic chips, had an equally good session, rising a spectacular $2.44 or 9.83 percent. Sector leader Intel (Nasdaq: INTC - news) registered the smallest increase in the SOX index; its shares climbed 4.32 percent on average volume. Storage Picks Up Steam Hardware stocks saw strong interest Tuesday, although interest in computer makers was more marginal. Hewlett-Packard (NYSE: HWP - news) lowered its second-quarter earnings-per-share estimate to 3 cents from 15 cents. Its shares gained a modest 49 cents to $30.09. No. 1 Dell (Nasdaq: DELL - news) put on $1.22, gaining 4.88 percent to $26.22. Inching ahead was Apple Computer (Nasdaq: AAPL - news), realizing a 28 cent gain, while Gateway (NYSE: GTW - news) shares hung onto a 15 cent advance. Storage makers saw the most impressive jumps in the sector. EMC (NYSE: EMC - news) added $2.95, while Brocade (Nasdaq: BRCM - news) put on a phenomenal 12.19 percent or $4.08 to close at $37.56.>>