Chips Bounce, But Stay Cautious
Chipmaker stocks
rallied Tuesday after an upbeat industry report and a
positive earnings report from Texas Instruments. That helped
lift Merrill Lynch’s Semiconductor HOLDR to the biggest
session gain among the exchange-traded funds.
The sector also
got a boost from a semiconductor equipment manufacturers’
association report showing sales had more than doubled from
a year ago.
I’d be a bit
cautious about reading too much into that report. Last week,
the book-to-bill report, which measures demand for equipment
used to make chips, slipped for the third straight month.
Also, Texas Instruments
(
TXN |
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positive results. Shares slipped 15/16 to 67 1/16. The chip
industry still feels distributional to me.
The Semiconductor
HOLDR
(
SMH |
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PowerRating) surged 4.0%, closing just under its 50-day
moving average. Among its component stocks, Intel
(
INTC |
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rose 2 7/8 to 140 7/8, Applied Materials
(
AMAT |
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1/2, KLA Tencor
(
KLAC |
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Technology
(
MU |
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PowerRating) 1 3/4 to 86 3/4.
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Other tradable
tech funds also led their peers, but the gains did not
enable the funds to break out of prior market ranges or
establish fresh, bullish trends. The Internet Architecture
HOLDR
(
IAH |
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PowerRating) picked up 2.5%, the Broadband HOLDR
(
BDH |
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PowerRating)
1.9%, the Technology SPDR
(
XLK |
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PowerRating) 1.7%, and the Nasdaq 100
Tracking Stock
(
QQQ |
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News |
PowerRating) 1.3%.
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On the downside,
the Biotech HOLDR
(
BBH |
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PowerRating) extended Monday’s losses,
falling 4.7%, the day’s biggest decline among the tradable
funds.
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The Energy SPDR
(
XLE |
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PowerRating)
continued to trade off the energy commodities markets,
ignoring Street-beating Q2 results at Exxon Mobil
(
XOM |
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PowerRating).
The tradable fund lost 0.9%. The Pharmaceutical HOLDR
(
PPH |
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Chart |
News |
PowerRating)
shed 3.4%.
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