Techs extend smashing advance

Techs extend smashing advance

Bold analyst call on chips bolsters group

By Julie Rannazzisi,
Last Update: 9:45 AM ET Apr
11, 2001

NEW YORK (CBS.MW) – The Nasdaq surged Wednesday, buoyed by a positive
note on the chip sector from Salomon Smith Barney, which sparked buying
interest in the technology group.

Putting an end to uncertainty, China said it will release 24
Americans being held on Hainan Island after a midair incident almost two
weeks ago, the White House said Wednesday morning.

The Dow Jones Industrial Average ($DJ) added 43 points, or 0.4
percent, to 10,144.

The Nasdaq Composite ($COMPQ) surged 88 points, or 4.8 percent, to
1,940 while the Nasdaq 100 Index ($NDX) put on 97 points, or 6.1
percent, to 1,695.

The Standard & Poor’s 500 Index ($SPX) gained 1 percent while the
Russell 2000 Index ($RUT) of small-capitalization stocks added 1

Volume came in at 104 million on the NYSE and at 162 million on the
Nasdaq Stock Market. Market breadth was positive, with advancers beating
decliners by 17 to 14 on the NYSE and by 19 to 6 on the Nasdaq.

Big chip call

Salomon’s Jonathan Joseph upped the semiconductor sector to an
"outperform" from "neutral." The analyst based his
decision on "anecdotal order and shipment data that is so bad it
cannot continue for long and sector data that suggests a fundamental
bottom is only months away."

Joseph said he believes the Philly Semiconductor Index ($SOX) has
downside risk to 400 but upside potential to 700. Joseph upgraded Intel,
Micron Technology, Texas Instruments, Applied Micro Circuits, Altera and
Xilinx to a "buy" from "outperform."

Motorola (MOT), which reported after the close Tuesday a
wider-than-expected loss and its first red ink in over 15 years, rose 20
cents. Motorola posted a loss from operations of 9 cents a share in its
first quarter vs. expectations for a 7-cent loss. Motorola said chip
orders in the Americas and Europe were down very significantly but up
slightly in Japan.

Other chip stocks headed north on the heels of the Smith Barney note,
with Intel up $2.23 and Micron up $2.35.

Specific movers

News that storage leader EMC won’t meet profit targets didn’t ruffle
feathers. The company (EMC) said it now sees first-quarter
earnings-per-share of 18 cents, 2 cents below Wall Street estimates. The
company blamed the shortfall on tightened IT budgets and the effects of
the economic slowdown on U.S. and European customers. EMC will announce
its full results on April 19.

In other corporate news, Amazon shares (AMZN) rose 6.2 percent on
news that it’s forming an alliance with Borders Group (BGP) to launch a
co-branded Web site this summer. Amazon gained 65 cents in the
pre-market. The stock has been on a tear over the past couple of trading
days, tacking on 43 percent.

E-Trade (ET) reported after the close a breakeven first quarter, in
line with results expected by First Call/Thomson Financial. Goldman
Sachs lowered its 2001 EPS estimate on E-Trade to break even from
expectations for a profit of 12 cents a share. Despite E-Trade’s steps
to trim costs, Goldman said weakness in the revenue drivers persists and
that lower marketing spending will dampen growth.

Goldman’s Richard Strauss upped shares of Lehman Brothers (LEH) to a
"market outperformer" from a "market performer." The
analyst said the move was mostly a valuation call but also reflected the
company’s improved positioning in the current environment.

In earnings news, Safeway (SWY) registered a first-quarter profit of
55 cents a share, matching the First Call estimate. The company also
said it remains "comfortable" with Wall Street’s expectations
for a profit per share of $2.61 for the full year.

Treasury activity

Treasury prices were quick to turn lower as the equity futures
markets rose.

The 10-year Treasury note was down 17/32 to yield ($TNX) 5.15 percent
while the 30-year government bond erased 7/32 to yield ($TYX) 5.64

In economic news, import prices fell 1.6 percent in March. Non-fuel
prices shed 0.9 percent. View Economic Preview and economic calendar and

In the currency arena, dollar/yen shed 0.2 percent to 124.18 while
euro/dollar dropped 0.8 percent to 0.8817.

The European Central Bank left short-term rates unchanged at its
policy-setting meeting. Investors had been expecting the central bank to
lower rates by at least 25 basis points. The news weakened the euro.
Read the full story.

Julie Rannazzisi is markets editor for in New York.

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