Nasdaq back above 1,900 as U.S. stocks end higher
Monday September 13, 4:47 pm ET
By Susan Lerner
NEW YORK (CBS.MW) -- Another surge in technology stocks propelled the Nasdaq past the 1,900 level for the first time in almost two months Monday, while blue chips stalled ahead of key economic data set for release this week.
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The Nasdaq Composite Index (NasdaqSC:^IXIC - News) closed up 16.07 points, or 0.9 percent, to 1,910.38 -- marking its first close above 1,900 since July 20.
The Dow Jones Industrial Average (^DJI - News) , however, managed a gain of just 1.69 points to 10,314.76, while the S&P 500 (CBOE:^SPX - News) added 1.89 points, or 0.2 percent, to 1,125.81.
Hewlett-Packard (NYSE:HPQ - News) and Intel (NasdaqNM:INTC - News) were the best-performing blue chips, with respective gains of 2.2 percent and 1.3 percent.
H-P won a $290 million five-year contract from the Defense Logistics Agency to provide information technology infrastructure. The agreement includes one-year options for another five years.
Blue chips were pressured by Merck (NYSE:MRK - News) , which ended down 0.7 percent at $45.45, after the U.S. Food & Drug Administration advisory committee rejected an application for Exanta from the company's partner AstraZeneca (NYSE:AZN - News) .
Other Dow decliners were American International Group (NYSE:AIG - News) and JPMorgan Chase (NYSE:JPM - News) . See Financial Stocks.
Advancers led decliners 20 to 13 on the New York Stock Exchange and 19 to 12 on the Nasdaq. Big Board volume neared 1.3 billion shares, while more than 1.7 billion shares traded on the Nasdaq.
By sector, biotechnology, semiconductors, networkers, Internet, hardware and biotechnology were among the best performers. Utilities, real estate and banks fell.
Technology shares have been on the rebound after a sluggish summer, triggered by an improved outlook from mobile handset maker Nokia (NYSE:NOK - News) and renewed hopes of an Oracle-PeopleSoft deal after a federal court ruling late last week.
Even shares of Broadcom were higher Monday despite a warning, as analysts said the company continued to experience relative strength in several wireless data-networking markets.
Broadcom (NasdaqNM:BRCM - News) said it now expects revenue to be flat to slightly higher than the sequential second quarter's $641 million, vs. prior forecasts of a rise to $673 million to $680 million, as certain customers requested that their orders be delayed due to excess inventory.
The company maintained its gross margin forecast. Its stock rose 9.5 percent.
"With a little bit more optimism out there right now, I think the market can handle some of these setbacks just as long as they don't become overwhelming," said Paul Mendelsohn chief investment strategist at Windham Financial Services.
Other strategists, meanwhile, saw investors beginning to look further to the future.
"We're finally hearing investors point to valuations based on 2005 estimates," Cantor Fitzgerald U.S. market strategist Marc Pado told clients. "That means they've basically written off the results for the remainder of this year and are starting to look past the current inventory problems."
Smith Barney increased its recommended equity allocation to "overweight" and lowered its cash weighting, citing a more constructive view for 2005.
The firm now suggests a portfolio weighting of 60 percent equities (up from 55 percent), 35 percent bonds and 5 percent cash (down from 10 percent), vs. the benchmark weightings of 55 percent equities, 40 percent bonds and 5 percent cash. Read more.
Also, J.P. Morgan Securities strategists raised their S&P 500 target for the end of 2004 to 1,200, from 1,150, as they lifted their S&P 500 operating earnings forecast to $67 a share for 2004 and $70.50 for 2005. The broker cited the positive surprise of second-quarter results and its expectation that margins will not deteriorate in the second half.
"We had originally penciled in the third quarter as the first quarter of disappointment to consensus earnings expectations," strategists said. "We no longer believe earnings will disappoint for the rest of the year."
MKS Instruments (NasdaqNM:MKSI - News) leapt 14 percent. The maker of equipment used by chip equipment companies was the subject of a positive story in Barron's over the weekend. See Screamers.
Lucent Technologies (NYSE:LU - News) rallied 5.2 percent on NYSE-leading volume of 60 million shares, after UBS raised its 2005 earnings and revenue estimates on the belief that the company will win part of a contract from Cingular.
A couple of mergers were also in focus.
British advertising agency WPP Group (NYSE:WPP - News) confirmed it had the backing of Grey Global (NasdaqNM:GREY - News) in a takeover valued at $1,005 per Grey share. Including Grey's $172 million in cash, the deal is valued at $1.52 billion.
Sony (NYSE:SNE - News) and its group of investors, meanwhile, raised their bid for Metro-Goldwyn-Mayer (NYSE:MGM - News) to $5 billion in an effort to beat Time Warner's (NYSE:TWX - News) offer, according the Wall Street Journal. On Monday, Time Warner withdrew its bid, clearing the way for Sony to buy the film studio Read more.
Elsewhere, US Airways Group (NasdaqNM:UAIR - News) , as expected, filed for Chapter 11 bankruptcy protection. Shares tumbled 31 percent.
Krispy Kreme (NYSE:KKD - News) flirted with four-year lows after the doughnut maker's auditor refused to approve the company's results until an outside law firm completed "additional procedures" related to an unspecified acquisition. The stock closed down 3.5 percent.
Crude futures climbed Monday as Hurricane Ivan threatened the Gulf of Mexico -- home to 25 percent of total U.S. production. October crude closed up $1.06 at $43.87 a barrel on the New York Mercantile Exchange. See Futures Movers.
In the commodities market, December gold futures closed up $2.20 at $406 an ounce in New York -- a more than one-week high. See Metals Stocks.
U.S. Treasury prices rose ahead of data due out later in the week. The benchmark 10-year note was up 9/32 at 100 25/32 to yield (CBOE:^TNX - News) 4.15 percent.
The U.S. dollar remained confined to recent ranges. The greenback slipped 0.1 percent against Europe's shared currency, with one euro fetching $1.2254. The buck rose 0.4 percent at 110.05 yen. See Currencies.
Among the data set for release this week are retail sales and current account reports Tuesday and factory reports Wednesday. The consumer price index report is scheduled for release Thursday. See Economic Calendar.
