Technology Stocks Rally
As War Appears Likely
By Cindy Perman
Monday, March 17, 2003 05:15 PM ET Printer-friendly version
NEW YORK – Technology shares rallied through to the closing bell Monday as investors were relieved to have some clarity on the Iraq situation.
With a U.S. attack on Iraq appearing imminent, the broader market also rallied amid the highly anticipated “war rally,” but techs were the biggest beneficiary of investors' cheer. "The tech sector is what drove the economy over the last five to ten years and that's where you're going to see the biggest bang for your buck," said Brian Kelly, president at MKM Partners.
However, short-covering was cited for a lot of the gains, which occurs when securities are bought to replace those borrowed at the time of a short sale. Short-sellers profit from falling share prices, so when stocks go up, they must cover their positions.
The Nasdaq Composite Index climbed 51.94, or 3.9%, to close at 1392.27, its highest close in about two months. The index is up nearly 57 points, or 4.3%, for the year. Morgan Stanley's high-tech index rose 13.65 to 306.45, while the Nasdaq 100 Index of nonfinancial stocks gained 46.56 to 1077.01.
Volume on the Nasdaq Stock Market was 1.69 billion shares, its highest level since early December, and besting the daily average volume since January 2002 of 1.65 billion shares. Advancers outpaced decliners, 2,129 to 1,074, with one issue unchanged.
Among some big-name techs: Microsoft (MSFT, news) climbed $1.07 to $25.93, while Intel (INTC, news) rose 89 cents to $18.06, both on the Nasdaq Stock Market. International Business Machines (IBM, news) added $3.46 to $82.46 and AOL Time Warner (AOL, news) advanced 60 cents to $11.73, both on the New York Stock Exchange.
Hewlett-Packard (HPQ, news) gained 82 cents, or 5.3%, to $16.40 on the Big Board after the computer and printer maker introduced a server for small and medium-size businesses and said it is offering a number of wireless wide-area network products.
Tech stocks slipped after the opening bell, but shot higher at midmorning after the U.S. and Britain said they won't pursue a Security Council vote authorizing military action against Iraq. Shortly thereafter, President Bush made it clear the U.S. was abandoning diplomacy, issuing an ultimatum to Saddam Hussein to leave Iraq or face war. There are reports that the president will likely give Mr. Hussein 72 hours to step down. Meanwhile, the United Nations pulled all of its inspectors and staff from Iraq. (See full coverage of the situation with Iraq.)
On Tap:
Keep checking in as the CeBIT technology trade show in Hanover, Germany, continues. Plus:
Tuesday: Semiconductor book-to-bill ratio; chain-store sales; FOMC meeting; Oracle earnings
Wednesday: Jabil Circuit earnings
Thursday: Jobless claims; FOMC minutes; Palm, Micron, Solectron earnings
Friday: Consumer-price index
While war is an unsettling concept, traders said the market is rallying as the curtain of uncertainty is lifted regarding the U.S. plans for war. The tech sector's ascent continued through the close.
The chip sector was among the day's best performers, with the Philadelphia Stock Exchange semiconductor index up 17.14, or 5.6%, to 322.29. History suggests war is good for stocks, especially semiconductors, which rallied 49% during the 1991 Gulf War, according to Salomon Smith Barney.
However, graphics-chip maker Pixelworks (PXLW, news) tumbled $1.62, or 21%, to $6.03 on Nasdaq after the company signed a $600 million stock-swap merger agreement with fellow graphics-chip maker Genesis Microchip (GNSS, news) that will enable the companies to combine their efforts in the display and consumer electronics industries. Shares of Genesis climbed 45 cents to $13.62 on Nasdaq.
The rally was also kind to Yahoo (YHOO, news) and some other Internet-based firms, which hit 52-week highs. Yahoo rose $1.69, or 8.2%, to $22.38 on Nasdaq, after the Internet portal on Monday unveiled a video-subscription service that will offer exclusive entertainment and sports content for a monthly fee. That topped Yahoo's March 3 zenith of $21. Amazon.com (AMZN, news) gained $1.84, or 7.5%, to $26.55 on Nasdaq, besting its 52-week high of $25. EBay (EBAY, news) added $3.09 to $87 on Nasdaq, topping its 52-week high of $84.17.
American depositary receipts of Telefon AB L.M. Ericsson (ERICY, news) gained 90 cents, or 14%, to $7.32 on Nasdaq after the Swedish mobile-handset maker said that it and InterDigital Communications (IDCC, news), along with subsidiary InterDigital Technology, have reached a settlement ending the companies' long-standing patent infringement litigation. InterDigital Communications jumped $5.78, or 42%, to $19.54 on Nasdaq. The company also named a new executive management team under its incoming CEO.
Research In Motion (RIMM, news) gained 79 cents, or 6.1%, to $13.67 on Nasdaq after the maker of Blackberry hand-held devices made a series of licensing announcements Monday. Research In Motion shares had jumped a combined 17% on Thursday and Friday in anticipation of the announcements.
-- Shaheen Pasha of Dow Jones Newswires contributed to this article
Write to Cindy Perman at cindy.perman@wsj.com
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Symbol Last Change
HPQ 16.40 +0.82
PXLW 6.03 -1.62
IDCC 19.54 +5.78
YHOO 22.38 +1.69
INTC 18.06 +0.89
IBM 82.46 +3.46
RIMM 13.67 +0.79
AOL 11.73 +0.60
MSFT 25.93 +1.07
ERICY 7.32 +0.90
AMZN 26.55 +1.84
GNSS 13.62 +0.45
EBAY 87.00 +3.09
Index
DJIA 8,141.90 +282.20
Nasdaq 1,392.27 +51.94
Monday, March 17, 2003 05:16 PM EST. Quote delayed: 15 minutes Nasdaq, 20 minutes others.
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