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Gains in Tech Shares Give Wall Street a Lift

Rally amid a stagnant market helps investors take minds off expected rise in interest rates. Nasdaq adds 1%.

June 23, 2004|From Times Wire Services

A rally in technology shares lifted stocks moderately higher Tuesday, as PalmOne's strong earnings report injected a bit of life into what has been a stagnant market.

The gains helped investors put aside some of their interest rate concerns. But while Goldman Sachs Group and Morgan Stanley were rewarded for posting strong quarterly earnings, other interest-rate-sensitive stocks were mixed.

Investors continued to wonder whether the Federal Reserve would raise the benchmark rate by a quarter percentage point or a half point when its Open Market Committee meets next week. That kept the markets mixed through most of the session before the tech rally caught on.

"If you look at the sectors, only technology seems to be breaking out to the upside," said Michael Sheldon, chief market strategist at Spencer Clarke. "Aside from tech, you're seeing light buying by investors, but it's not aggressive. There's no terrific surge in volume. There's not a lot of strength behind this, but it's better than nothing."

The Dow Jones industrial average rose 23.60 points, or 0.2%, to 10,395.07.

The Standard & Poor's 500 index gained 4.11 points, or 0.4%, to 1,134.41.

The tech-heavy Nasdaq composite index led the way, rising 19.77 points, or 1%, to 1,994.15.

Advancing issues outnumbered decliners by about 5 to 4 on the New York Stock Exchange.

A dearth of major economic data was reflected in very modest trading volumes and small, hesitant price moves in the U.S. Treasury market. The yield on the benchmark 10-year note rose to 4.72% from 4.69% on Monday.

Traders did not expect major moves in either the bond or stock markets ahead of next week's Fed meeting.

"I think we're having the summer doldrums a little early this year," said Neil Massa, equity trader at John Hancock Funds. "After [June] 30th, once the Fed moves and the handover in Iraq takes place, we'll be able to pick a direction. Until then, there's just nothing going on."

Among the day's market highlights:

* PalmOne surged $7.90, or 37%, to $29.36 after reporting earnings that surpassed analysts' estimates by 14 cents a share, thanks to strong demand for its hand-held computing devices. That triggered buying in other technology stocks, particularly semiconductors. Intel rose 52 cents to $28.04 while rival Advanced Micro Devices climbed 57 cents to $14.67.

* JDS Uniphase, the largest maker of fiber-optic network parts, soared 38 cents, or 12%, to $3.58. Lucent, the biggest U.S. telephone-equipment maker, climbed 19 cents to $3.71.

They gained after SBC Communications, the No. 2 U.S. local-telephone company, said France's Alcatel would help it build a $6-billion fiber-optic network that offers digital television service. JDS supplies equipment to Alcatel. SBC fell 33 cents to $24.07.

* BEA Systems added 23 cents to $8.13 and Siebel Systems rose 31 cents to $10.90. The government on Monday made public a deposition by Oracle Chief Executive Larry Ellison, in which he said those software firms were attractive takeover targets. The government is trying to block Oracle's takeover bid for PeopleSoft.

Oracle fell 3 cents to $11.12; PeopleSoft rose 61 cents to $18.85.

* Quarterly earnings were strong at Goldman Sachs and Morgan Stanley, pushing Goldman up $1.81 to $90.60 and Morgan Stanley up 90 cents to $52.15.

But some analysts worried that wariness on the part of investors could hurt the brokerage industry longer term, especially if interest rates rise faster than expected. Among other financial stocks, UBS lost $1.02 to $72.18, Merrill Lynch added 10 cents to $54.17 and Lehman Bros. inched up 3 cents to $73.45.

* Wal-Mart Stores, already hurt by lower-than-expected June sales, slumped 87 cents to $54.06 as a federal judge approved class-action status for a sex-discrimination lawsuit against the company. The class could involve up to 1.6 million current and former female employees, making it the largest civil rights case in U.S. history.

Market Roundup, C7

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