Tech Stocks Helped by Good News From Dell

Technology stocks held their gains Thursday after Dell Computer Corp., the world's No. 1 personal computer maker, stood by its quarterly targets and kept investors' spirits high after a hefty rally the day before. 

However, blue chips finished lower as jittery investors opted to sell amid persisting worries about sliding corporate earnings.

The Dow Jones industrial average fell 62.90 points, or 0.69 percent, to 9,060.88, weighed down by weakness in Procter & Gamble Co., Home Depot Inc., and General Motors Corp.

The Nasdaq Composite Index rose 16.71 points, or 1.06 percent, to 1,597.52. It was the third consecutive gain for the Nasdaq, and the highest close since Sept. 10.

The broader Standard & Poor's 500 Index fell 2.66 points, or 0.25 percent, to 1,069.62.

"I think it's becoming apparent that barring another shock, the economy is not nearly as bad off as some feared it would be and there will be recovery in the economy and earnings in 2002," said Milton Ezrati, senior economic strategist at Lord Abbett & Co. "The market is responding to that."

Tech stocks gained as much as 4 percent, pulling along blue chips, but the rally lost steam near the session's end.

"The fizzle at the end is probably more anxiety around the (jobs) report to be released tomorrow morning," said Ned Riley, chief investment strategist at State Street Global Advisors, which manages more than $700 billion. "And more investors are concerned about the severity of the impact of Sept. 11."

Government data Friday is expected to show the unemployment rate for September rose to 5 percent from 4.9 percent, with 109,000 jobs shed outside the farm sector. The numbers may get worse next month because the survey covers the pay period through Sept. 12, a day after the attacks.

Year to date, the Dow is down 16 percent, the S&P 500 is 19 percent lower and the Nasdaq composite has dropped 35.3 percent.

The stock market had tumbled to three-year lows following the Sept. 11 attacks on the Pentagon and the World Trade Center, but the indexes have now regained a large part of those losses. Stocks are continuing higher this week after the Federal Reserve cut interest rates for a ninth time this year and President Bush proposed up to $75 billion in added pump-priming for the economy.

The latest rally was welcome news to many, who said it was signaling a bottoming process in the 18-month old bear market. But others argued that the fundamentals to fuel a new bull market are still lacking.

"Where are the fundamentals to lift this market through? " asked Larry Wachtel, market analyst with Prudential Securities. "They are just not there."

Dell helped push the tech-packed Nasdaq market toward its third straight winning session. The No. 1 personal computer maker reaffirmed guidance a day after Web gear maker Cisco Systems Inc. said it was comfortable with estimates and propelled the Nasdaq to its largest percentage gain since April.

Dell, which said demand had rebounded more quickly than expected after the assault, helped fuel the tech rally. Its stock ended up $1.68 at $22.32 and helped lift competitors like Apple Computer, up 90 cents at $15.88.

Cisco jumped 47 cents to $14.42, extending Wednesday's gains and ranking as the most active stock on the Nasdaq. Cisco rival Juniper Networks added $1.27 to $13.27 after Morgan Stanley raised its investment rating on the company.

Research In Motion , maker of the BlackBerry wireless e-mail device, slipped 29 cents to $15.46. The company saw results dented by an inventory write-down at one of its troubled resellers, and the firm said the weak economy will hurt future sales.

Corning Inc., the world's No. 1 maker of fiber-optic cable, fell $1.30 to $7.70. The company warned that quarterly earnings will miss estimates as it expands a restructuring effort to combat deteriorating conditions across its business.

Alcoa Inc. fell $1.27 to $30.82. The world's No. 1 producer of aluminum and a Dow component said quarterly profit fell 7.9 percent on lower metal prices and weak demand, and it expects market weakness to continue in the fourth quarter.

Hotel operator Marriott International Inc. fell $1.40 to $32.10. The company reported a drop in fiscal third-quarter earnings due to the economic slowdown and lowered fourth-quarter estimates in the wake of the attacks.

Global Crossing Ltd. plunged nearly 49 percent, or $1.02 to $1.07 after warning that results will come in below expectations. The high-speed communications company also said it is in preliminary talks to merge with its Asian affiliate, Asia Global Crossing Ltd., which sank $1.09 to $1.15.

Workers displaced following the Sept. 11 attack pushed up new U.S. jobless benefits for the second straight week to the highest level in nine years, the Labor Department said on Thursday before markets opened. 

First-time claims for state unemployment insurance benefits rose more sharply than expected to 528,000 in the week ended Sept. 29 from a revised 457,000 in the previous week and the highest since 539,000 in the July 25, 1992, week, when the country was struggling to emerge from its last recession. 

Advancing issues outnumbered decliners 3 to 2 on the New York Stock Exchange. Volume was 1.56 billion shares, compared with the 1.67 billion shares traded Wednesday.

The Russell 2000 index, the barometer of smaller company stocks, rose 3.82 to 417.04. 

Overseas markets were sharply higher Thursday with Japan's Nikkei stock average finishing the day with a gain of 2.8 percent. In Europe, France's CAC-40 climbed 4.3 percent, Britain's FT-SE 100 rose 2.8 percent and Germany's DAX index gained 2.1 percent.

Reuters and the Associates Press contributed to this report.