Hot prospects for second-half chip sales lit a fire beneath tech stocks Wednesday, fueling a 5.09-point rise in the Wired Index to a record 448.01. Telecom issues also advanced as excitement built for Cable & Wireless' pending buyout of MCI's Internet operations.
With Intel (INTC) reporting a 29 percent drop in quarterly earnings after the closing bell Tuesday, it's not as though traders are heartened by the semiconductor industry's current performance. Rather, they're looking ahead to future gains, as PC inventories diminish and as Asian economies gradually emerge from fiscal wilderness.
"Semiconductors have been so depressed for so long, just getting back to normal territory is good for the group," said Jonathan Joseph, an analyst with NationsBanc Montgomery Securities. "Stocks move not because things get better, but because they get less worse."
Intel is certainly looking less worse, climbing US$3.94 to $84.63 on hopes that recent cost-cutting moves will brighten the company's outlook. Second-quarter earnings fell to 66 cents a share -- slightly lower than Wall Street's expectations -- but traders seemed to agree with CEO Craig Barrett that Intel's restructuring efforts will result in better profits.
Applied Materials (AMAT), which manufactures equipment for making chips, benefited from the upbeat sentiment, soaring $2.06, or 7.2 percent, to $30.56.
Wind River Systems (WIND) also shook off some dust, rising $2.88, or 8.6 percent, to $36.25 after unveiling new cross-platform software for chip-laden smart appliances.
Dell Computer (DELL) advanced $4.50 to $111.88 after rival Compaq Computer reported better-than-expected quarterly profit. Microsoft (MSFT) kept pace with its PC partners, edging $1 higher to $117.50 a day before posting its own second-quarter results.
Sun Microsystems (SUNW) rose $3.31 to $49.44, and Cisco Systems (CSCO) rose 63 cents to $95.50.
Cable & Wireless (CWP) climbed $1.31 to $42.13 on expectations that the company will announce any minute now a $2-billion acquisition of MCI's retail Internet business. The deal would clear the way for MCI to finally get into bed with WorldCom, creating America's second-largest phone company. The US Justice Department gave its blessing to the marriage in the late afternoon, and WorldCom (WCOM) showed its appreciation by jumping $2 to $54.75.
Agricultural biotech concern Monsanto (MTC) gained $1.63 to $55.50 after saying it will buy the crop-breeding unit of Anglo-Dutch Unilever. The deal follows last month's acquisition of Cargill's international seed business, and is part of a recent shopping spree by Monsanto to transform itself into the world leader for genetically engineered plants.
Online outfits continued losing ground as investors cast a wary eye at those overinflated market caps. Yahoo (YHOO) gave up $3.75 to $182.75, while America Online (AOL) sagged $2.38 to $118.13. The Dow Jones Industrial Average finished 11.07 points lower at 9,234.47 after drifting above 9300 for the first time ever in early trading. The Nasdaq rose 24.08 points to end at a record 1,992.49, while the S&P 500 slipped 2.66 points to close at 1,174.92.
