Tech Stocks Pare Losses, Climb
Friday, August 16, 2002
NEW YORK — Technology stocks shed early losses and rose Friday as investors snapped up semiconductor and wireless stocks, but traders remained wary amid a mixed bag of earnings reports and soft economic data.
In midday trading Friday, the blue-chip Dow Jones industrial average was down 8 points at 8,809 while the technology-packed Nasdaq Composite Index was up 14 points at 1,359. The broader Standard & Poor's 500 Index was up 2 points at 932.
"There's selective stock picking still going on," said Matthew Ruane, director of listed trading at Gerard Klauer Mattison & Co. "It looks like the semis and the Nasdaq are trying to form something of a base."
The lure of beaten-down stocks was also sucking money out of the bond market as Treasury prices retreated after a souped up rally earlier this week that drove 10-year yields to a four-decade low, traders said.
Surprisingly weak data on U.S. consumer sentiment and housing starts also did little to shore up confidence that the economic recovery is on track, but traders bracing for a huge drop in sentiment breathed a sigh of relief after the decline was less steep than feared.
No. 2 personal computer maker Dell Computer (DELL) offered bulls a little hope after it reported it had pulled itself back into profitability. It also raised expectations for revenue in the current quarter, saying it will continue to grab market share from competitors. Dell ticked up 41 cents to $27.55.
Analog Devices (ADI) soared as investors focused on news its revenue stabilized despite a sluggish semiconductor market.
In addition, their book-to-bill ratio was above 1, indicating that "orders in the current quarter were more than current revenue, which gives you some optimism that revenue is going to increase," said Jack Geraghty, an analyst at Gerard Klauer Mattison & Co.
The Philadelphia Stock Exchange's semiconductor index jumped 5 percent.
Wireless stocks also got a boost after J.P. Morgan on raised its investment rating on wireless telephone company Western Wireless Corp. (WWCA) to "buy" from "market perform" based on a significantly revised outlook for the company's roaming business and a strengthening retail subscriber business.
Western's shares surged 99 cents to $2.54, a gain of 64 percent, and other wireless companies like Nextel Communications Inc. (NXTL) up 46 cents at $6.49, followed suit.
But Vivendi (V) slumped $1.60, or 15 percent to $9.20 after the U.S.-French media company was hit by negative reports from two investment banks.
Stocks may have run out of steam after recent gains, and growing skepticism about the strength of the U.S. economic rebound could keep a cap on buying, said James Volk, director of institutional trading at D.A. Davidson and Co.
"Obviously, (a better economy) will help because it means better earnings, but people are still concerned that that's not coming into play yet," Volk said.
Worries about corporate corruption have not completely evaporated, either. Jack Grubman, the well-known Wall Street analyst under fire for his dogged support of disgraced telecoms giant WorldCom Inc. , resigned on Thursday.
Retailers retreated after helping boost the market on Thursday. The S&P retail index was down 2 percent.
Gap Inc. (GPS), the largest U.S. specialty apparel retailer, slumped 7.5 percent after it posted a drop in earnings and said its early August sales were below projections. It was down $1 at $12.
Timber company MeadWestvaco Corp. (MWV) tumbled after it said about 500 lawsuits alleging injury from asbestos exposure have been filed against the company in recent months, but it expects no impact on its financial results. It slumped $7.31, or 28 percent, to $18.75.
One particularly bright spot was Serena Software (SRNA), which jumped sharply after it reported a 41 percent gain in quarterly profits on lower costs and a change in accounting for amortization of goodwill. It rose $3.30, or 32 percent, to $13.47.
Declining issues outnumbered advancers about 6 to 5 on the New York Stock Exchange. Volume was light at 379.12 million shares, compared with 466.93 million traded at the same point Thursday.
The Russell 2000 index, the barometer of smaller company stocks, rose 1.73, or 0.4 percent, to 392.46.
Overseas, Japan's Nikkei stock average finished Friday up 0.1 percent. In afternoon trading in Europe, Germany's DAX index was down 1.7 percent, France's CAC-40 fell 1.5 percent, and Britain's FTSE 100 declined 0.4 percent.
Reuters and the Associated Press contributed to this report.
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