Techs Finish Higher; Blue Chips Flat

N E W  Y O R K, Aug. 13, 2001 -- Technology stocks rose today as Wall Street bet that embattled chip makers like Intel may turn the corner, but blue chips slipped asthe murky economic outlook kept investor enthusiasm in check.

The market has been range-bound over the last few weeks asinvestors wait for hints of an economic pick-up. TheFederal Reserve has slashed interest rates six times this yearand is expected to cut again at its policy-setting meeting nextTuesday to spark growth in the world's largest economy.

"We were forced to wade through 800 pre-announcements ofearnings — it seemed like the largest confession season that Ihave ever live through," said Ted Oberhaus, manager of equitytrading at Lord Abbett & Co., echoing investors' growingfrustration over the market's lackluster performance. "We wererewarded for our patience with more bad numbers, layoffs anddividend cuts. We really need a catalyst to get this marketgoing."

The tech-rich Nasdaq Composite Index rose 25.31points, or 1.29 percent, to end at 1,981.78. The blue-chip DowJones Industrial average slipped 0.34 points, to 10415.91. The broader Standard & Poor's 500 Indexadded 1.05 points, or 0.09 percent, at 1,191.21.

Goldman’s Upgrade

In its bullish call, Goldman Sachs added Intel, the world'slargest maker of chips for personal computers, to itsrecommended list. Other tech companies added to that listincluded microchip maker Analog Devices, communications chipmaker Broadcom and wireless technology firm Qualcomm.

The investment house said it had raised its ratings onIntel, Analog Devices and a third company, Maxim IntegratedProducts Inc., in anticipation of the business environmentturning positive toward the fourth quarter.

On Broadcom and Qualcomm, Goldman believes the inventorycorrection in the telecom sector is well on its way.

Intel rose 50 cents to $30.45, boosting the Nasdaq andoffering support to the Dow. Analog Devices, which trades onthe New York Stock Exchange, moved up $1.70 to $49.15. Maximjumped $2.97 to $51.16 on the Nasdaq.

The Philadelphia Stock Exchange semiconductor index, theleading gauge of the sector, perked 1.39 percent.

"There's likelihood of a pretty big knee jerk reaction whenthat [tech] group starts to move, particularly semiconductors,"said March of Armada. But the general view, he said, is "growthmay be slower for the coming cycle than it was in the last oneprimarily due to maturity in the personal computer market."

Network computing giant Sun Microsystems lost 3cents at $16.19. Merrill Lynch slashed its estimate of Sun'searnings for the first quarter of 2002, to 1 cents per sharefrom 4 cents.

Stocks to Watch

Alcoa Inc., the world's No. 1 aluminum producer, rose 21cents to $37.22, reversing an early loss. The Dow componentrevised its earnings downward after some of its customers filedfor bankruptcy earlier this month.

Oracle Corp., the most active issue on Nasdaq, added 53cents to $15.69. The stock managed to erase an earlier lossafter ABN Amro cut its earnings estimate for the businesssoftware maker, saying it does not believe Oracle will be ableto mount a serious threat against rivals such as Siebel SystemsInc..

BEA Systems Inc. lost 20 cents at $18.30 after ABN Amroslashed its rating for the software maker to "add" from "buy"partly because of weakness in international markets.

AOL Time Warner Inc. fell $1.50 to $42.80. A round oflayoffs is about to hit the company's Internet unit as themedia giant tries to ensure it will meet its 2001 financialtargets, sources familiar with the situation said.

ROHN Industries Inc. tumbled more than 37 percent, or $2.17to $3.68. The telecommunications equipment provider, warned itwould not meet its 2001 financial forecasts due to thecontinued spending cuts by customers amid the global economicslowdown.

Cendant Corp. agreed to buy discount air ticket sellerCheap Tickets Inc. for $425 million in cash, as the franchisinggiant looks to break into the online travel agency business.Cheap Tickets soared 37.80 percent, or $4.48 to $16.33, whileCendant was up 46 cents at $19.66.

Investors Await Key Earnings, Economic Data

This week Wall Street braces for earnings reports from keycompanies such as home improvement retailer Home Depot,retailing giant Wal-Mart Stores, top computer-chipequipment maker Applied Materials and computer makerHewlett-Packard.

Investors will also take cues from a heavy economiccalendar that includes weak July retail sales, ahead of theopen on Tuesday.

Also on the plate this week are reports suchas June business inventories as well as July figures for U.S.industrial production and capacity utilization, due onWednesday, and Thursday's U.S. Consumer Price Index for July, akey gauge of retail level inflation, and weekly jobless claimsnumbers.

Friday brings a preliminary consumer sentiment reading for August from the University of Michigan.

But no key data was slated for release today.

"I don't think anyone is looking to be very aggressiveunless we get some surprise information, some major takeover orsomething. This week we have a lot of economic numbers, thatwill bounce us around," said Tom Sparico, trader at hedge fundBengal Partners in Stamford, Connecticut.

"The big picture is that the (economic) slowdown isdecelerating but given the murkiness of the future outlook asfar as how long it will take to really get capital spendinggoing … the recovery is going to be sluggish."

Friday’s Dow Rally

U.S. blue-chip stocks posted their biggest rise in a monthFriday, reversing steep losses, as Wall Street bet that goodinflation news would encourage the Federal Reserve to whittleaway again at interest rates and spur growth in the nation'sfloundering economy.

Technology stocks notched small losses, recovering from amore than 2 percent tumble early in the day after analystsslashed their earnings forecasts for software giants likeOracle.

The Dow Jones industrial average climbed 117.69points, or 1.14 percent, to 10,416.25, and the Nasdaq compositeindexdipped 6.85 points, or 0.35 percent, to 1,956.47.The broader Standard & Poor's 500 index advanced 6.73points, or 0.57 percent, to 1,190.16.

The Associated Press and Reuters contributed to this report-->