Dell reaffirms forecast,
sparks tech rally

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By Amy Baldwin
Associated Press

NEWYORK >> Investors newly enthusiastic about tech stocks extended the sector's rally today after Dell Computer became the second big high-tech firm in as many days to issue a positive earnings outlook. Blue-chip stocks had a modest retreat.

Dell's news, along with a similiar forecast from Cisco Systems yesterday, bolstered investors' confidence that the economy will rebound after last month's terrorist attacks.

The market finished well off its highs of the day as profit-taking set in, but Wall Street maintained the positive tone that has defined much of this week's trading.

The focus on tech hurt the Dow Jones industrial average, which fell 62.90 to 9,060.88 after having been up as much as 63 points. The Dow's loss was small compared to the 173 points it gained yesterday to close above the 9,000 level for the first time since the Sept. 11 terrorists attacks.

The blue chips have regained 825 points, or 60 percent, of the 1,369 they lost in the first week of trading after the assaults on the World Trade Center and Pentagon.

Meanwhile, the broader market was mixed today. The Nasdaq composite index rose 16.52 to 1,597.33 after advancing 88 yesterday, its biggest daily point gain since the attacks. The tech-dominated index was up as much as 60 points today before giving back some ground.

The Standard & Poor's 500 index slipped 2.66 to 1,069.62.

Advancers outnumbered decliners nearly 3 to 2 on the New York Stock Exchange, with 1,795 up, 1,322 down and 188 unchanged. Volume was 1.56 billion shares vs. 1.67 billion shares traded yesterday.

The NYSE composite index lost 1.37 to 554.78, the American Stock Exchange composite index rose 7.07 to 828.60 and the Russell 2000 index, the barometer of smaller company stocks, rose 3.94 to 417.16.

The price of the Treasury's 2-year note was 100; its yield remained at 2.74 percent. The 10-year-note fell 12/32 to 103 27/32; its yield rose 5 basis points to 4.51 percent. The 30-year bond lost 5/32 to 101 1/32; its yield rose 1 basis point to 5.30 percent.

Analysts said the tech advance wasn't surprising given the overall market's losses following the attacks. But they don't expect the market to move much higher for the remainder of the year, or until it's clearer when the economy will recover and how the United States will retaliate for the assaults.

"This rally is basically about getting you back to where you should be -- so long as nothing else terrible happens," said Charles Pradilla, chief investment strategist for SG Cowen Securities.

Among today's winners were the two tech bellwethers that affirmed their earnings estimates. Dell rose $1.68, or 8 percent, to $22.32, while Cisco advanced 47 cents to $14.42.

Wall Street has rarely seen such positive outlooks even before the attacks, having had to grapple instead with profit warnings and layoff announcements. The market was especially encouraged that the upbeat news came from the tech sector, which has been hit the hardest by the slowing economy.

The Dow's winners were mostly technology stocks as IBM rose 36 cents to $97.31, Microsoft advanced 21 cents to $56.44 and Intel climbed 32 cents to $21.55.

After the market closed, Gateway, the second-largest direct seller of personal computers, said it had a wider-than-forecast third-quarter loss because demand dropped after the terrorist attacks. The loss excluding certain charges will be 14 cents to 17 cents a share. Analysts were expecting a loss of 4 cents. The company will take a charge of $100 million to $130 million to cover a decline in the value of some investments.

In addition, Gateway said that actions related to the restructuring plan it announced on Aug. 28 would result in a 25 percent reduction of its worldwide work force.

Outside tech, the blue chips were mostly lower. Procter & Gamble fell $2.05 to $71.20, while Wal-Mart declined $1.23 to $51.50.

Overseas, Japan's Nikkei stock average jumped 2.8 percent, or 281.25 points, to finish at 10,205.48.