Tech Stocks Climb, Dow Pares Gains
NEW YORK – Technology stocks climbed Wednesday amid growing hopes that an economic rebound is not far off, but blue chips pared their previous days' gains as investors locked in profits.
The technology-heavy Nasdaq composite rose 52.32 points, or 2.41 percent, to 2,220.56, according to the latest data, the highest close since March 7.
But the Dow Jones industrial average gave up early gains with final-hour selling to close down 21.66 points, or 0.20 percent, at 10,876.68. The benchmark Standard & Poor's 500 Index edged up 0.98 points to 1,267.42.
Analysts said the market continues to gain strength as investors grow increasingly confident that the Federal Reserve will reduce interest rates for the fifth time this year when it meets May 15.
The Dow finished Tuesday at 10,898.34, its best close since Feb. 13, when it reached 10,903.32. More spectacularly, the Nasdaq has climbed more than 32 percent from its closing low for the year, 1,638.80, reached less than a month ago on April 4.
But traders were cautious, cashing in some profits in non-tech sectors that have surged higher the past few weeks. The market is still concerned about how long it will take for earnings and the economy to show substantial improvement, analysts said.
Although the week's main economic event does not occur until Friday with the release of the closely watched U.S. jobs report, investors kept their eyes peeled for a few economic releases.
U.S. March factory orders rose a larger-than-expected 1.8 percent, following February's revised drop of 0.1 percent.
The Federal Reserve, in its periodic ``beige book'' summary of national economic activity, painted a mildly downbeat picture of the U.S. economy at the beginning of the second quarter of this year, noting slow growth and a steady weakening in manufacturing activity.
``Almost all districts report a slow pace of economic activity in March and early April,'' the Fed said.
Companies are now expected to post their weakest earnings in the second quarter rather than the year's first three months, said Ronald J. Hill, investment strategist at Brown Brothers Harriman.
``After several weeks of rally, we are taking a bit of a breather. We have had a lot of good news on the profit front relative to reduced forecasts, but that good news is starting to slow down,'' Hill said. ``Investors still have some nervousness in front of them.''
Improving the mood were comments on Internet-gear giant Cisco Systems Inc. by Wall Street brokerage Morgan Stanley. The firm said there are indications the large-corporation networking market in North America is stabilizing, yet CSFB maintained a neutral rating on Cisco. Cisco shares jumped 12.4 percent, or $2.20, to $20, the highest since March 23.
"We're seeing a rotation into technology," said Alan Skrainka, chief market strategist at Edward Jones. "There's a growing sense that the U.S. economy has bottomed out and will show improvement in the months ahead."
Gains were fairly broad-based with tech shares extending a week-long uptrend. Decliners were concentrated in energy-related issues, pressured by sharp declines in crude oil and gasoline prices eroded by news of swelling petroleum supplies.
Duke Energy fell $1.79 to $44.81, and Exxon Mobil, a Dow stock, tumbled $2.05 to $86.75. Utility stocks also fell.
The Dow's components were mixed. IBM fell sharply, down $2.44 to $116.07, and Wal-Mart stumbled 68 cents to $52.82.
However, Boeing advanced 80 cents to $64.23 and General Motors rose $1.36 cents to $56.48, likely helped by stronger-than-expected orders for March.
Declining issues matched advancers on the New York Stock Exchange where volume was 1.06 billion shares, up from 858.14 million at the same point Tuesday.
The Russell 2000 index, which measures the performance of smaller companies stocks, was up 1.49 at 491.96.
Overseas markets were mixed Wednesday. Japan's Nikkei stock finished the day essentially flat. In Europe, Germany's DAX index fell 0.8 percent, Britain's FT-SE 100 slipped 0.4 percent, and France's CAC-40 lost 1.2 percent.