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Technology Stocks : EMC How high can it go? -- Ignore unavailable to you. Want to Upgrade?

To: George Towne who wrote (5738)	4/19/1999 7:33:00 PM
From: Gary	Respond to of 17183

Analysts report some, more dynamic tech stocks, remain attractive Techs retain shine despite shift into cyclicals By Ian Simpson NEW YORK, April 19 (Reuters) - U.S. markets are likely facing a longer-term shift out of high-flying technology and drug stocks as investors look for cheaper buys, analysts said Monday. But they added that big-name shares in the computer and computer-related sectors remain attractive because many can still generate healthy earnings, their best feature. Wall Street has been increasingly jostled in the last two weeks as investors nervous about slowing earnings in the technology and drug sectors switched into areas with cheaper stocks. They especially have focused on so-called cyclical, or stocks that rise and fall with the performance of the economy. These included workaday industries like steel, paper, oil, metals and heavy machinery. Those are sectors that have been stagnant for months even as the Dow Jones industrial average (.DJI - news) broke through the landmark 10,000-point level. ''I believe this change will have more legs to it than anything we've seen in the last three or four years,'' said John Manley, senior equity strategist at Salomon Smith Barney. Mark Loftus, senior vice president for investments at Everen Securities in Itasca, Ill., said signs of a more stable world economy was another factor propelling a move into ccyclical. ''It's not going to be over in the next few days. Some of these stocks are too cheap, and they have room to run,'' he said. The shift out of the technology issues shows up clearly in various stock indices. At midafternoon Monday the technolgy-laden Nasdaq composite index (.IXIC - news) was at 2407 points, down 7 percent from its record close a week ago. Mercurial Internet stocks in particular have plunged with the investor exodus. The American Stock Exchange's Internet index (.IIX - news) was down 18 percent Monday from its record close last Tuesday. By contrast, cyclical are roaring. The 30-stock Dow Jones industrial average, heavy with such cyclical as oil, auto makers and manufacturing issues, was up 8 percent Monday since the start of the month. In a sign of the shifting sentiment, Fidelity Investment's Magellan fund, the biggest U.S. mutual fund, said Friday it cut its holdings in semiconductor maker Intel Corp. (INTC - news) and phone equipment maker Lucent Technologies Inc. (LU - news). Financial giant Citigroup Inc. (C - news) and media conglomerate Time Warner Inc. (TWX - news) took their places in the Magellan portfolio. However, analysts warned that the cyclical' boom did not mean that technology and drugs stocks should be abandoned. Arun Kumar, Lehman Brothers senior U.S. equities strategist, said the recent shift would only be transitory despite the ''truly stupendous performance'' in cyclical. In a recent report, he said global economic growth likely would remain steady, not accelerate, limiting cyclical' performance. They also will be hurt by excess capacity in factories and gluts in basic materials. ''We don't believe it is time yet to rotate away from our growth, noncyclicality or big cap (capitalization) tilts,'' he said.