Technology stocks rose today as Wall Street bet that embattled chip makers like Intel may turn the corner, but blue chips slipped as the murky economic outlook kept investor enthusiasm in check.
The market has been range-bound over the last few weeks as investors wait for hints of an economic pick-up. The Federal Reserve has slashed interest rates six times this year and is expected to cut again at its policy-setting meeting next Tuesday to spark growth in the world's largest economy.
"We were forced to wade through 800 pre-announcements of earnings — it seemed like the largest confession season that I have ever live through," said Ted Oberhaus, manager of equity trading at Lord Abbett & Co., echoing investors' growing frustration over the market's lackluster performance. "We were rewarded for our patience with more bad numbers, layoffs and dividend cuts. We really need a catalyst to get this market going."
The tech-rich Nasdaq Composite Index rose 25.31 points, or 1.29 percent, to end at 1,981.78. The blue-chip Dow Jones Industrial average slipped 0.34 points, to 10415.91. The broader Standard & Poor's 500 Index added 1.05 points, or 0.09 percent, at 1,191.21.
In its bullish call, Goldman Sachs added Intel, the world's largest maker of chips for personal computers, to its recommended list. Other tech companies added to that list included microchip maker Analog Devices, communications chip maker Broadcom and wireless technology firm Qualcomm.
The investment house said it had raised its ratings on Intel, Analog Devices and a third company, Maxim Integrated Products Inc., in anticipation of the business environment turning positive toward the fourth quarter.
On Broadcom and Qualcomm, Goldman believes the inventory correction in the telecom sector is well on its way.
Intel rose 50 cents to $30.45, boosting the Nasdaq and offering support to the Dow. Analog Devices, which trades on the New York Stock Exchange, moved up $1.70 to $49.15. Maxim jumped $2.97 to $51.16 on the Nasdaq.
The Philadelphia Stock Exchange semiconductor index, the leading gauge of the sector, perked 1.39 percent.
"There's likelihood of a pretty big knee jerk reaction when that [tech] group starts to move, particularly semiconductors," said March of Armada. But the general view, he said, is "growth may be slower for the coming cycle than it was in the last one primarily due to maturity in the personal computer market."
Network computing giant Sun Microsystems lost 3 cents at $16.19. Merrill Lynch slashed its estimate of Sun's earnings for the first quarter of 2002, to 1 cents per share from 4 cents.
Stocks to Watch
Alcoa Inc., the world's No. 1 aluminum producer, rose 21 cents to $37.22, reversing an early loss. The Dow component revised its earnings downward after some of its customers filed for bankruptcy earlier this month.
Oracle Corp., the most active issue on Nasdaq, added 53 cents to $15.69. The stock managed to erase an earlier loss after ABN Amro cut its earnings estimate for the business software maker, saying it does not believe Oracle will be able to mount a serious threat against rivals such as Siebel Systems Inc..
BEA Systems Inc. lost 20 cents at $18.30 after ABN Amro slashed its rating for the software maker to "add" from "buy" partly because of weakness in international markets.