NEW YORK (AP) Technology buyers set off a modest rally on Wall Street yesterday, encouraged by lower stock prices from the market’s recent sell-off and some mildly positive outlooks in the beleaguered sector.
The gains were tentative and selective, however, coming late in a session mostly characterized by fluctuations. The indecisiveness reflected what has become a trend although stocks occasionally manage small advances, the market has been unable to sustain any broad, upward move because of worries about the timing and strength of an economic recovery.
The Dow Jones Industrial Average closed up 17.16, or 0.2 percent, at 9,730.96. The strongest gains came in the technology-focused Nasdaq Composite Index, which rose 39.85, or 2.1 percent, to 1,922.38. The Standard & Poor’s 500 Index advanced 8.87, or 0.8 percent, to 1,128.18.
“What you’re seeing today is a little bit of money being put back to work as the market tries to grind away through earnings season,” said Charles White, portfolio manager at Avatar Associates. “Although we’ve come back to the reality that the recovery is probably not as immediate as people had thought, things don’t seem to be getting worse, so they are buying.”
Semiconductor equipment maker Novellus rose $3.42, or 9.4 percent, to $39.65 after beating Wall Street fourth-quarter estimates by a penny. A positive forecast for 2002 from European software maker SAP AG was also rewarded. The stock gained $2.49 to $36.80.
Investors also bid Pfizer up $1 to $41.80 after the pharmaceutical company met Wall Street’s expectations for the fourth quarter.
Trading reflected Wall Street’s skittishness about making sizable commitments and worries that corporate performance might not justify high stock prices.
IBM and General Electric fell after Wall Street Journal published stories discussing their accounting practices. IBM lost $2.60 to $107.90, while GE fell 65 cents to $37.65. The recent collapse of Enron, and the subsequent scandal about its bookkeeping, has made many investors unsure of how much credence to lend to earnings reports.
Wall Street’s hesitance might also have been related to budget projections, showing the U.S. government will spend more than it takes in this year and in 2003. The nonpartisan Congressional Budget Office says the shortfall was caused by the recession, the $1.35 trillion, 10-year tax cut approved last year and the cost of the war on terrorism.
The trading yesterday marked a brief respite from the downturn stocks have taken in recent weeks. After rebounding rapidly from the lows encountered after the September 11 attacks, the market has dropped back the Dow has fallen 2.9 percent for the year, while the Nasdaq has lost 1.4 percent and the S&P is down 1.7 percent.
Stock prices have suffered this month as Wall Street studies fourth-quarter results and tries to predict when business and stock prices will improve. So far, earnings have been generally satisfactory; in many cases, they have met lowered estimates.
But investors have been disheartened by the lack of bullish predictions for business performance going ahead.
Some of the tech sector’s bellwethers, including Intel Corp. and IBM, have instead indicated they don’t know if a turnaround is occurring. Intel was up 75 cents yesterday at $32.45.
Investors are also cautious after losing money in 2000 and 2001. Many don’t want to buy until they’re sure business won’t deteriorate further. They worry that stock prices rose too much in the months after the attacks, reflecting unrealistic expectations.
“The market is really in a digestive phase more than anything else. It’s had such a sharp move off the bottom and there’s skepticism about where we go from here,” said Marc Klee, portfolio manager for the John Hancock Technology Fund. “You’ve got a tug of war going on here and it’s probably going to continue for a while.”
Advancing issues led decliners nearly 2 to 1 on the New York Stock Exchange. Volume came to 1.43 billion shares, compared with 1.31 billion on Tuesday.