Tech rally lifts Nasdaq a third day

Even a drop in the Dow Jones industrials fails to sway analysts, who hope the market has bottomed out.

Compiled from Times wires

© St. Petersburg Times, published April 12, 2001

NEW YORK -- In a rare display of optimism on Wall Street, high-tech stocks posted solid gains Wednesday to overcome a poor earnings report by Motorola. Blue chips suffered, however.

The Nasdaq Composite Index rose for the third consecutive session, as investors bought shares of market-leading technology companies on hopes their prospects will soon start to brighten. Semiconductor stocks, widely seen as the leading indicator of a recovery in the broader technology market, led the advance Wednesday. The shares rallied after an analyst from Salomon Smith Barney issued a report recommending the group, saying business is likely to pick up later this year.

Paced by gains in companies such as Applied Micro Circuits, Applied Materials and Intel, the Nasdaq gained 46.92 points, or 2.5 percent, to 1,898.95. Since last Thursday, the Nasdaq index has risen 16 percent. Even with the gain, it remains 62 percent below the peak reached in March 2000.

"I am not sure this is the beginning of a straight move to the upside," said Philip Dow, managing director in equity research at Dain Rauscher Wessels in Minneapolis. "My guess is we are in a backing and filling, grinding mode. The watchword I am looking for from my analysts is that things are not getting worse."

The Dow Jones Industrial Average fell even as the Nasdaq moved higher, pulled down by oil and drug company stocks. The Dow fell 89.27 points, or 0.9 percent, to 10,013.47. Declines in Exxon Mobil, Johnson & Johnson and Merck more than offset gains by Intel, J.P. Morgan Chase and Citigroup.

The Standard & Poor's 500-stock index was little changed, declining 2.49 points, or 0.2 percent, to 1,165.89.

Analysts said they were encouraged to see some softness in prices after the big gains recorded Tuesday.

"I am loving today's action because I don't want to see huge gains piled on top of one another," said William Meehan, chief market analyst at Cantor Fitzgerald. Meehan said strength in technology and financial stocks was a sign the market's long slide probably is over.

"We have been telling clients to avoid safe, defensive-type stocks because we think the market has bottomed," he said. "We are seeing real buying here, not people covering their short positions."

-- Information from the New York Times and Associated Press was used in this report.

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