Posted at 11:20 a.m., Friday, June 29, 2001
Microsoft's court win fuels tech-stock gain
Associated Press
NEW YORK — Technology stocks advanced today, positioning the Nasdaq composite index for a five-session winning streak, as the market again celebrated Microsoft's appeals court win in its antitrust fight with the government.
However, technical glitches held up trading of Nasdaq stocks, prompting the exchange to extend its trading an hour to 5 p.m. EDT, and delayed the compilation of major market indexes.
Blue chips, meanwhile, gave back some of their gains made yesterday, when investors had a delayed positive response to the Federal Reserve's sixth interest rate cut of the year.
Soon after 4 p.m., the Dow Jones industrial average was down 67.77 at 10,498.44. It was not known when a final figure for the Dow or other indicators would be available.
The market's broader indicators were higher. The Nasdaq composite index, which hasn't had a down day this week, was up 43.85 at 2,169.31. Wall Street's broadest measure, the Standard & Poor's 500 index fell 2.29 to 1,223.91.
On the last day of a dismal quarter, one that was marred by more than 600 profit warnings, analysts said the market is beginning to look ahead, helped most of the market to move higher today. With six interest rate cuts this year — the latest delivered Wednesday — investors believe business could indeed turn around in the second half of 2001.
"We are seeing signs that the economy is stabilizing, and that is great news. And what we are seeing vis-a-vis Microsoft is that the current (presidential) administration is pro business, and that's good," said Arthur Hogan, chief market analyst at Jefferies & Co. "That combination of news is going to spark a summer rally."
Technology stocks continued to benefit by association with Microsoft. But the software maker retreated slightly from its gains of yesterday, when a federal appeals court reversed a lower court ruling ordering the breakup of the company. Microsoft, a Dow industrial, slipped 93 cents to $71.81.
Tech advancers included two of the Dow's other tech components. Hewlett-Packard rose $1.35 to $28.60, and Intel advanced 78 cents to $30.42.
But the Dow's gain was severely limited by Honeywell, its biggest loser. Honeywell tumbled $3.10 to $35.10 after proposing to reduce the price of GE's takeover offer by more than $1 billion and to sell off units worth $2.1 billion to win the necessary approval from the European Union.
GE's CEO Jack Welch rejected the proposal, saying it makes no sense for shareholders and that it still falls short of what EU regulators are seeking. GE slipped 12 cents to $48.75.
Investors have been alternately skittish about earnings and the economy and hopeful that business will improve in the second half of the year. They were disappointed Wednesday by the Fed, which lowered interest rates by a quarter point, half the size many on Wall Street wanted.
But after thinking about the Fed's move, analysts said the market saw the smaller cut as a sign that the economy is improving.
"All the economic data over the last few weeks has been better than expected, and that shows a trend that things are getting better ... The Fed didn't cut more because it doesn't have to — the economy is getting better," said Hogan, the Jefferies analyst.
Hogan said he's encouraged by this week's string of stronger-than-expected reports, including two that were released today.
The Chicago Purchasing Management Association, which is considered a good gauge of business activity across the nation, reported that its June index rose to 44.4 from 38.7 in May.
Another positive for the economy came from the University of Michigan's full-month report on consumer sentiment, which was reported to have risen to 92.6 in June from 92 in May.
Advancing issues outnumbered decliners nearly 2 to 1 on the New York Stock Exchange. Volume was 1.72 billion shares, compared with 1.30 billion yesterday.
The Russell 2000, which measures the performance of smaller company stocks, index rose 8.30 to 511.29.
