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Tech stocks rally
amid quiet session
NEW YORK >> A surge in technology shares lifted stocks moderately higher yesterday, as palmOne Inc.'s strong earnings report injected a bit of life into what has been a stagnant market.
The rally helped investors put aside some of their interest rate concerns. But while Goldman Sachs Group Inc. and Morgan Stanley were rewarded for posting major gains in revenue and soundly beating Wall Street expectations, the rest of the interest rate sensitive financial sector was largely ignored.
Investors continued to wonder whether the Federal Reserve will raise the benchmark rate by a quarter percentage point or a half point when its Open Market Committee meets next week. That kept the markets mixed through most of the session before the tech rally caught on.
"If you look at the sectors, only technology seems to be breaking out to the upside," said Michael Sheldon, chief market strategist at Spencer Clarke LLC. "Aside from tech, you're seeing light buying by investors, but it's not aggressive. There's no terrific surge in volume. There's not a lot of strength behind this, but it's better than nothing."
The Dow Jones industrial average rose 23.60, or 0.2 percent, to 10,395.07. Broader stock indicators were moderately higher. The Standard & Poor's 500 index gained 4.11, or 0.4 percent, to 1,134.41, and the tech-heavy Nasdaq composite index was up 19.77, or 1 percent, at 1,994.15.
The price of the Treasury's 10-year note closed down 316 point, while its yield rose to 4.71 percent from 4.69 percent yesterday. Two-year Treasury notes were unchanged and yielded 2.75 percent.
Other than a handful of earnings reports, once again there was very little market-moving news in advance of the Fed meeting, and analysts expected the markets to remain within a trading range through the week.
"I think we're having the summer doldrums a little early this year," said Neil Massa, equity trader at John Hancock Funds. "After the 30th, once the Fed moves and the handover in Iraq takes place, we'll be able to pick a direction. Until then, there's just nothing going on."
While quarterly earnings were strong at both Goldman Sachs and Morgan Stanley, some analysts and investors worried that a slow summer and wariness on the part of individual investors would impact the brokerage houses' investment businesses, especially if interest rates rise faster than expected. Both companies were down for much of yesterday's session before latching on to the late rally to post strong gains.
Goldman Sachs gained $1.81 to $90.60 after it announced a 71 percent jump in quarterly earnings, beating Wall Street estimates by an impressive 36 cents per share. Morgan Stanley doubled its second-quarter earnings from a year ago, beating expectations by 11 cents per share before a one-time charge.
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