Stocks rose today after chip titan Intel signaled the beleaguered personal computer industry may turn the corner, but memories of this year's false rallies kept investors cautious.
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"A lot of money has been burnt up and it is going to take time for investors to heal, to resave and redeploy," said Tom Sparico, managing director of equities at broker/dealer Bengal Partners. "It is going to take time for us to work our way back to the confidence levels that business investment will grow at a fast enough pace to add to earnings growth of something more than single digits."
Upbeat comments from Intel sparked a modest early-morning rally, but stocks started to weaken at mid-session. It was the third day in a row an early stocks rally fizzled. Investors remain skittish after a dismal second-quarter reporting season offered few hints that a profit recovery was in sight.
"I keep asking, 'Is this for real? Is there any chance six months from now we are going to see a better economy?' People I know say this is a phony rally and don't be sucked in," said Ned Collins, a trader at Daiwa Securities America.
"I have been negative for a while. I have been trying my best to switch my position and get a little more positive, but it sure is tough," he added. "I keep wondering where is the earnings turnaround going to come from?"
The Nasdaq Composite Index added 19 points, or 0.92 percent, to 2,087.38, after climbing more than 1.6 percent early in the session and then dipping into negative ground. The technology-dominated index pulled in its third straight day of gains and has risen six out of the last seven sessions.
The blue-chip Dow Jones industrial average gained 41.17 points, or 0.39 percent, to 10,551.18, after notching a 0.95 percent gain earlier. The broader Standard & Poor's 500 Index ended up 4.82 points, or 0.40 percent, at 1,220.75.
Advancing issues on the Big Board outnumbered decliners, 1,783 to 1,272. On the Nasdaq, 1,854 stocks rose and 1,777 fell. Roughly 1.2 billion shares changed hands on the New York Stock Exchange and about 1.7 billion on the Nasdaq, based on the latest available numbers.
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Craig Barrett, president and chief executive of Intel, said the personal computer industry has bottomed out and demand for PCs should rebound in the second half of 2001. But he noted a full-blown rebound depends on the global economy's recovering.
Intel, one of the 30 stocks in the Dow average, rose $1.36 to $32.11. The world's No. 1 maker of chips for personal computers was the most active issue on the Nasdaq.
The Philadelphia Stock Exchange semiconductor index advanced 3.15 percent, reflecting gains in other computer chipmakers. The index continued its trek above its own 200-day average, which it first broke above on Wednesday after a bullish call from brokerage Merrill Lynch on chipmakers.
Personal-computer maker Dell Computer Corp. climbed $1.25 to $28.43, while computing sector giant International Business Machines Corp. , a Dow stock, advanced $1.74 to $108.80.
Microsoft Corp., a Dow component and Nasdaq heavyweight, gained 98 cents to $67.45. A federal appeals court rejected the software giant's request to re-examine part of its ruling in the landmark antitrust case against the firm and also declined to speed the case's passage back to a lower court, a move sought by the U.S. government.