- The Washington Times - Wednesday, November 12, 2003

NEW YORK (AP) — Wall Street broke out of its slump yesterday, surging higher after a forecast jump in semiconductor sales gave investors a reason to buy after three days of declines. The Dow Jones Industrial Average rose more than 110 points, while the Nasdaq Composite Index gained more than 2 percent.

Larger-cap stocks led the day, including technology bellwethers IBM Corp. and Intel Corp., which benefited from the Gartner Inc. forecast. Traders attributed some of the momentum to the week’s slow start; the bond markets were closed Tuesday for Veterans Day. Many investors were returning to Wall Street after a long weekend, and with money to spend, said Brian G. Belski, fundamental market strategist at US Bancorp Piper Jaffray.

“Investors this year have conditioned themselves to buy the dip, and today, they saw an opportunity,” Mr. Belski said.

The Dow ended the day up 111.04, or 1.1 percent, at 9,848.83.

The broader gauges also closed higher. The Nasdaq closed up 42.36, or 2.2 percent, at 1,973.11. The Standard & Poor’s 500 Index gained 11.96, or 1.1 percent, to close at 1,058.53.

The market appears to be in a “consolidation phase … with shallow pullbacks met with buying,” said Peter Cardillo, president and chief strategist of Global Partner Securities Inc.

“Once the consolidation phase is over, I think the second leg of this bull run will commence,” Mr. Cardillo said. “That will probably take us up to new highs by the end of the year.”

Fueling yesterday’s technology rally, market research firm Gartner said it expects worldwide semiconductor sales to increase more than 20 percent next year. Chip maker Intel rose 69 cents to close at $34.10. IBM Corp. also made gains, rising $1.33 to $90.69.

After the bell, Applied Materials Inc. announced earnings that beat analyst estimates by a penny, excluding charges largely from restructuring. The company, which manufactures machines that make semiconductors, closed the regular session up 54 cents at $25.44, and rose more than 3 percent in after-hours trading. Tech investors also were looking forward to results from computer manufacturer Dell Inc. today.

Analysts say investors have been torn between booking gains and holding their investments, in case the market moves significantly higher. Some still worry that strong earnings and economic data already are reflected in stock prices, leaving little room for growth in the months ahead.

Stocks declined during the past few sessions, in the absence of economic news and as earnings season wound down. The Gartner forecast may well have been the catalyst that Wall Street was seeking to break out of its decline.

Another apparent trigger for yesterday’s rally was Ford Motor Co., which shook off a credit-rating downgrade by Standard & Poor’s Corp. Ford closed up 75 cents, or 6.1 percent, at $13.06, after stating that the downgrade doesn’t reflect the health of its business. S&P;, citing poor profitability and cash flow, cut the car company’s rating to one notch above junk.

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