Closing Market Report

Star-Bulletin news services

Thursday, June 7, 2001

Semiconductor stocks
lead market higher

By Amy Baldwin
Associated Press

NEW YORK >> A brighter earnings outlook from the semiconductor sector gave Wall Street some long-awaited good news today, helping the market advance despite lingering doubts about the economy.

Investors took their time sorting out the market's pros and cons, keeping the major indexes bobbing most of the day. It wasn't until late afternoon that the market was able to put together a unified move forward.

"This is gridlock. This is buyers and sellers meeting in the middle of the ring and no one delivering a knockout punch," said Hugh Johnson, chief investment officer at First Albany Corp.

The Dow Jones industrial average ended up 20.50 at 11,090.74. The Nasdaq composite index rose 46.27 to 2,264.00, while the Standard & Poor's 500 index inched up 6.93 to 1,276.96. Advancers edged decliners on the New York Stock Exchange, with 1,568 up, 1,482 down and 223 unchanged. Volume was 1.08 billion shares vs. 1.06 billion yesterday.

The NYSE composite index rose 0.76 to 645.81, the American Stock Exchange composite index fell 5.28 to 933.49 and the Russell 2000 index advanced 2.19 to 514.77. The Treasury's 10-year note fell 15/32 to 97 20/32; its yield rose 6 basis points to 5.32 percent. The 30-year bond fell 1 to 95 3/32; its yield rose 7 basis points to 5.72 percent.

The Dow's gain was limited by Philip Morris, which fell $1.48 to $48.52. A Superior Court jury in Los Angeles ruled yesterday the company must pay $3 billion to a cancer-stricken smoker, the largest judgment against a cigarette maker in a lawsuit brought by an individual.

But earnings are key to investors, who have been bracing for the upcoming second-quarter results that will mostly quite weak, Johnson said. Adding to investors' wariness is the increasing belief that third-quarter results will be even worse and the uncertainty over whether business will improve by the end of the year. "The market is looking for some sign that the profits recession is going to end -- some light at the end of the tunnel," Johnson said. "Nothing else matters."

Today's high point came from the semiconductor sector, after National Semiconductor reported it broke even in its fiscal fourth quarter. Analysts had expected the company to lose 3 cents a share. National Semiconductor rose $3.07 to $31.04.

Semiconductors were also boosted by a healthy revenue outlook from the Semiconductor Industry Association, which said it foresees sales rising 20.5 percent next year. Intel, a Dow stock, rose $1.34 to $31.16.

Wall Street was eyeing Intel because the high-tech bellwether was giving its first-ever midquarter financial update after the end of the regular session. The company largely reaffirmed its second quarter outlook, and its stock rose $1.15 in after-hours trading.

Meanwhile, slumping profits dragged down the banking sector. J.P. Morgan Chase, a Dow stock, fell $1.21 to $45.63 after acknowledging in a filing yesterday with the Securities and Exchange Committee that the second quarter has remained weak, particularly for its investment banking business.

Retailing stocks were able to rise although many of the nation's biggest retailers reported soft May sales. Gap rose 61 cents to $32 after reporting sales fell 10 percent from a year ago, and warned that second-quarter sales will be weaker than previously expected.

Discounters including Wal-Mart, up 35 cents at $51.10, fared better. However, Wal-Mart said May sales were at the low end of its range of 3 percent to 5 percent gains, and warned that unseasonably cool weather could hurt second-quarter profit margins.

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