Tech Stocks Edge Higher on Bright Outlook
Friday January 10, 4:35 pm ET
By Herbert Lash
NEW YORK (Reuters) - Technology shares inched ahead on Friday on hopes for a brighter 2003, while other stocks wobbled after an unexpected drop in jobs spooked investors worried about corporate profits and the economy's health.
A government report showing the economy shed 101,000 jobs in December surprised economists who had expected companies to increase hirings. Stock indexes fell after the market opened, but the tech-heavy Nasdaq erased losses and moved higher as investors were unwilling to read too much gloom into the data.
"Overall my feelings are pretty constructive," said Brian Pears, head of equity trading at Victory Capital Management. "The fact that we haven't given back any of the gains (of the new year's rally) is good."
Techs continued a strong rally sparked on Thursday by a handful of strong earnings outlooks. The Nasdaq gained about 4.4 percent for the week, and is up 8.4 percent in January, as investors hope companies will renew their capital spending.
The Nasdaq Composite Index (NasdaqSC:^IXIC - News) closed up 9.29 points, or 0.7 percent, at 1,447.75, according to the latest figures.
Web gear giant Cisco Systems Inc. (NasdaqNM:CSCO - News) rose 27 cents, or 1.8 percent, to $15.22, and was the most active stock on the tech-heavy Nasdaq. Chip leader Intel Corp. (NasdaqNM:INTC - News) rose 36 cents to $17.42 and was Nasdaq's second-most active issue.
The Dow Jones industrial average (CBOT:^DJI - News) edged 8.77 points higher, or 0.1 percent, at 8,784.95, while the broader Standard & Poor's 500 Index (CBOE:^SPX - News) was flat, closing at 927.57, the exact same close as Thursday.
Rising shares slightly outnumbered declining shares on the New York Stock Exchange, and gainers outnumbered decliners by almost 6 to 5 on Nasdaq. Almost 1.5 billion shares were traded on the NYSE and more than 1.65 billion shares traded on Nasdaq.
The Dow and S&P 500 were ahead 2.1 percent each for the week.
ASSET REALLOCATION
The new year's rally, which has pushed the Dow 5.3 percent higher so far in January, has been fueled in part by investors' reallocation of assets. With money markets paying so little, and little upside seen in bonds, some fund managers have taken on greater risk in the hopes of boosting their return.
"The move up in stocks (after the jobs report) seemed to be fueled by some moves out of bonds," said Brett Gallagher, deputy chief investment officer at Julius Baer. "We've been hearing anecdotally that pension funds have come to the conclusion to make 9 percent on their money they're going to have to increase their exposure to equities," he said.
Any enthusiasm for stocks was tempered by North Korea's withdrawal from the global treaty to prevent the spread of atomic weapons on Friday. The move sparked alarm around the world, but the United States said though a cause for concern, it was not unexpected.
"If there wasn't any North Korea issue, this market would be up a lot more," said Anthony Iuliano, head equity trader for Glenmede Trust Co.
FLEET LOAN PROVISION
FleetBoston Financial Corp. (NYSE:FBF - News) halved its earnings outlook for the fourth quarter as it set aside $800 million to cover loan losses. The latest loan loss provision, partly due to big corporate bankruptcies in the weak U.S. economy, will be $450 million higher than the third quarter's, Fleet said.
Fleet shed 10 cents, or 0.4 percent, to $27.40.
Schering Plough Corp. (NYSE:SGP - News) sounded a sour note ahead of a rush of earnings reports next week. The drug maker fell 10 cents, or 0.4 percent, to $22.96, after cutting its 2002 earnings target due to a rapid decline in sales of allergy drug Claritin, which began selling without a prescription in the United States last month.
Decode Genetics (NasdaqNM:DCGN - News) surged 87 cents, or 41 percent, to $2.97. Investment bank J.P. Morgan raised its rating of the company to "overweight" from "neutral," saying little value was currently being attributed to the biotech company's product pipeline.
United States Steel Corp. (NYSE:X - News) rallied $1, or 7.3 percent, to $14.70. Investment bank Prudential Securities raised its rating for the steelmaker to "buy" from "hold," lauding its announcement on Thursday that it would buy smaller rival National Steel Corp. (OTC BB:NSTLB.OB - News) |
