- The Washington Times - Friday, January 4, 2002

NEW YORK (AP) An analyst’s bullish comments about Intel sent tech stocks sharply higher yesterday as Wall Street grew more optimistic about the sector’s ability to lead a market recovery.
Analysts said investors interpreted the news as another signal that a tech turnaround had begun despite economic data that suggested that business overall is still weak. The broader market also moved higher, with the Dow Jones industrials achieving their best finish in four months.
The Dow closed up 98.74, or nearly 1 percent, at 10,172.14, its strongest performance since Aug. 28, when the index closed at 10,222.03.
The technology-focused Nasdaq Composite Index fared even better, gaining 65.02, or 3.3 percent, to 2,044.27. The Standard & Poor’s 500 index, another broader market indicator, advanced 10.60, or 0.9 percent, to 1,165.27.
“Whenever you can get a story that’s positive for technology, it’s going to move that sector,” said Barry Hyman, chief market strategist at Ehrenkrantz King Nussbaum. “Intel is a large-cap leader in the sector and it needs to participate for there to be a recovery.”
Investors bid Intel up $2.52, or 7.6 percent, to $35.52 after a J.P. Morgan analyst recommended the stock because of what he believes are improving business conditions. That assessment gave Wall Street a reason to believe that momentum might be returning to the beleaguered tech sector, which has stagnated for the last year on a mix of terrible earnings and anemic demand from struggling corporations.
The resulting buying spread across technology stocks. Intel competitor Applied Micro Devices rose $2.98, or 18.2 percent, to $19.37. Software maker Oracle also advanced, gaining $1.31, or 9.4 percent, to $15.29.
But the enthusiasm came at the expense of some other sectors including pharmaceutical and consumer goods. Merck dropped 73 cents to $59.03, while Procter & Gamble fell 77 cents to $79.23. Both sectors are considered stable investments in times of uncertainty, but when business is growing, they are considered too conservative.
Investors shrugged off a reminder of how weak the economy remains and how potentially fragile consumer spending might be. The Labor Department reported new claims for unemployment insurance shot up for the second week in a row, suggesting many U.S. workers are still losing jobs. Consumer spending, which accounts for two-thirds of the economy, is closely watched.
“If people lose their jobs and are not able to get other jobs after a few months, they start to re-evaluate their budgets. I imagine that would affect consumer confidence and spending,” said Robert Harrington, head of listed block trading at UBS Warburg.
The market has traded in a narrow range in recent weeks as investors wait for firmer evidence that the economy is strengthening. Although stocks have rebounded from their post-terror-attack lows, analysts say Wall Street is still waiting to hear companies say business is indeed improving before making any big commitments to the market.
The J.P. Morgan report yesterday appeared to convince some investors that now is the time to buy, but market watchers say the caution remains, particularly among individual investors. Many were burned in 2001 when they bought prematurely in rallies that later fizzled on dismal corporate earnings or economic news.
Advancing issues led decliners 2 to 1 on the New York Stock Exchange. Volume came to nearly 1.4 billion shares, compared with 1.18 billion Wednesday.
The Russell 2000 index rose 8.32 to 495.51.

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