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The Honolulu Advertiser

Posted at 11:40 a.m., Monday, August 13, 2001

Goldman Sachs advice spurs tech stocks

Hawai'i Stocks
Updated Market Chart

Associated Press

Tech stocks rose moderately today on a semiconductor upgrade by Goldman Sachs that helped snap a six-day losing streak for the Nasdaq composite index, but provided little benefit to blue chips.

Much of the buying was halfhearted, though, with the tech advances only solidifying late in what otherwise was choppy trading. Analysts said investors are afraid to make any big stock commitments when the timing of a business recovery is so uncertain.

The technology-heavy Nasdaq closed up 25.78 at 1,982.25, its first positive finish since Aug. 2.

The Dow Jones industrial average was virtually unchanged, slipping 0.34 to 10,415.91, while the Standard & Poor's 500 index rose 1.13 to 1,191.29.

"This market is going to go up and down until there's a clear indication of economic stabilization," said Barry Hyman, chief investment strategist at Ehrenkrantz King Nussbaum. "That hasn't happened."

Dow component and tech bellwether Intel rose 61 cents to $30.56 after Goldman Sachs said that semiconductor stocks appear headed higher. But Wall Street's enthusiasm was limited, resulting in mixed results in the broader sector. Cisco Systems fell 12 cents to $18.21, while Ciena rose 97 cents to $30.99, despite a UBS Warburg reduction of its earnings estimates.

Financial and retail stocks also struggled, including Citigroup, which slipped 51 cents to $49.13, and Wal-Mart, which lost $1.40 to $52.20 on anxiety about second-quarter results due out tomorrow.

Pharmaceutical stocks fared better. Johnson & Johnson rose 68 cents to $55.70.

The unfocused trading was the latest reminder of how ambivalent investors have become about buying in an environment where weak earnings are the norm and companies can't say when business will improve.

The major stock indexes have traded within a narrow range in recent months, as Wall Street rallies on hopes the worst is over and then sells off when it becomes clear that hasn't happened. In the past few weeks, semiconductor stocks have surged on positive research notes by some investment firms, only to retreat as investors rethought their optimism. Blue chips have also been volatile: the Dow's 117-point rally Friday came after the week's earlier losses which had left the index down more than 200.

Even six interest rate cuts this year by the Federal Reserve — and the prospect of a seventh next week — have failed to inspire any long-term advances. Analysts say investors, tired of making investments during rallies that ultimately fizzle out, are waiting for some signal that profitability is ahead before buying.

They also note that Wall Street traditionally slows down in the summer.

"Seasonality is a big part of the quiet trading we're seeing, but it's also market dynamics," said Jon Brorson, director of equities at Northern Trust. "We're at the cusp here as to whether the economy is going to pick up or is still mired in a slowdown."

Advancing issues led decliners 8 to 7 on the New York Stock Exchange. Volume came to 831.37 million shares, compared with 957.04 million Friday.

The Russell 2000 index rose 2.09 to 477.61.

Overseas, Japan's Nikkei stock average fell 2.2 percent to hit a new 16-year low. Stocks fared better in Europe. Germany's DAX index gained 0.7 percent, Britain's FT-SE 100 rose nearly 0.1 percent, and France's CAC-40 was up 1.5 percent.