Tech stocks gain,
blue chips suffer

NEW YORK >> Optimism that the embattled technology sector was due for a recovery sent stocks modestly higher yesterday despite a new revenue warning from semiconductor company Broadcom Inc.

While Broadcom, which makes chips for television set-top boxes and other electronics, said high inventories resulted in delayed shipments, investors were encouraged as it said future quarters looked brighter.

"Tech acts like that. You couldn't have said a good thing about tech last week, and now we're seeing some buying," said Bryan Piskorowski, market analyst at Wachovia Securities. "Overall, I think the market's becoming comfortable with the economic slowdown over the summer. I think we see now that it's not something pervasive or something that's going to continue."

Investors were also encouraged by a new report by J.P. Morgan Securities, which said disappointing earnings would not be a factor in the year's overall results. The brokerage also raised its year-end target on the Standard & Poor's 500 index to 1,200 from 1,150.

The Dow Jones industrial average gained 1.69, or 0.02 percent, to 10,314.76.

Other stock indicators were moderately higher. The Standard & Poor's 500 index was up 1.89, or 0.2 percent, at 1,125.81, and the Nasdaq composite index rose 16.07, or 0.8 percent, to 1,910.38.

Investors preferred semiconductor companies and small-cap stocks, while bidding financials and blue-chip stocks lower for the session. Another increase in oil prices due to concerns over Hurricane Ivan's effect on oil exploration in the Gulf of Mexico did not have a large impact on trading. A barrel of light crude settled at $43.87, up $1.06, on the New York Mercantile Exchange.

Trading volume was relatively light on Wall Street as many investors awaited better economic data later in the week, including new readings on retail sales and the consumer price index today. The Federal Reserve's Sept. 21 meeting on interest rates, at which the Fed is likely to raise the benchmark rate a quarter percentage point to 1.75 percent, also kept investors on the sidelines.

Broadcom said it now expects revenues for the quarter to come in flat or just slightly higher than a year ago. The company said customers of its set-top box chips have asked for shipping delays due to excess inventory, but added that it still expects growth in future quarters. Broadcom surged $2.60 to $30.30.

"I think people believe that we're at the lows for tech right now. They want to be optimistic. That's why you're seeing techs respond so well, even on the bad news," said Michael Palazzi, managing director of equity trading at SG Cowen Securities. "And in semiconductors, you always get a nice bounce in late September and October. It just seems to be happening early this year."