Optimism about tech spending lifts Nasdaq

ABS-CBN News

Posted at Jun 17 2008 06:21 AM | Updated as of Jun 17 2008 02:21 PM

Reuters

NEW YORK - U.S. technology stocks rose on Monday for the third straight session, fueled by optimism about sales for Research in Motion's BlackBerry and Apple's new iPhone.

Blue-chip stocks slipped, weighed by broker downgrades of Dow components Verizon Communications and AT&T.UBS cut its rating on the stocks, citing pressure from mobile competitors and the weak economy.

But those declines were limited by a rebound of more than 5 percent in the shares of investment bank Lehman Brothers Holdings Inc, after its CEO Richard Fuld took full responsibility for the company's first-ever quarterly loss of $2.8 billion. That relieved investors' fears about the bank's stability. Lehman's stock gained $1.39 to close at $27.20 on the New York Stock Exchange.

The Nasdaq ended almost 1 percent higher, helped by a 6 percent jump in the shares of Research in Motion to $140.98 after investors said that Nokia's new phone models would not pose a threat to RIM's dominance of the business market. It was among the top-weighted gainers in the Nasdaq 100.

Apple gained 2.6 percent to $176.84 after a bullish forecast from RBC Capital markets, which forecast sales of the company's iPhone would reach 14 million this year. Apple ranked No. 1 in the Nasdaq 100's top gainers.

Technology stocks showed strength in response to "a little bit weaker U.S. dollar and optimism about economic growth," said Giri Cherukuri, head trader at OakBrook Investments LLC, in Lisle, Illinois.

Investors deem weakness in the dollar as positive for tech as it makes U.S. tech exports more competitive overseas. The dollar fell versus the euro Monday, snapping a three-session winning streak, as record euro-zone inflation fanned expectations of an interest-rate hike by the European Central Bank.

The Dow Jones industrial average slipped 38.27 points, or 0.31 percent, to 12,269.08. The Standard & Poor's 500 Index edged up 0.11 of a point, or 0.01 percent, to 1,360.14. The Nasdaq Composite Index gained 20.28 points, or 0.83 percent, to 2,474.78.

Among the Dow's major decliners, Verizon shares lost 2.9 percent to $36.24 and AT&T fell 1.4 percent to $36.17 on the New York Stock Exchange. Earlier, UBS cut its ratings on the stocks to "neutral" from "buy."

Fears that floods in the Midwest would drive up prices of soda ingredient corn syrup hit Coca-Cola, which fell 2.2 percent to $54.18, its lowest since last September, and Pepsico Inc, which fell 2.2 percent to $66.04.

Coca-Cola was the top-weighted drag on the Dow.

Corn prices have risen for eight straight days as floods cut back anticipated corn harvests in the Midwest. U.S. corn futures for July 2009 delivery leaped above $8 a bushel for the first time.

Lehman's rebound helped drive a rally in financial shares, with the KBW bank index up 1.4 percent.

A slight decline in the price of oil after its earlier run to a record high also helped the broad market. U.S. crude oil for July delivery fell 25 cents to settle at $134.61 a barrel, off a record high of $139.89 set earlier in the session.

Trading volume was light on the New York Stock Exchange, with about 1.16 billion shares changing hands, sharply below last year's estimated daily average of roughly 1.90 billion. On the Nasdaq, about 1.87 billion shares traded, below last year's daily average of 2.17 billion.

On the New York Stock Exchange, advancers beat decliners by a ratio of about 3 to 2. On the Nasdaq, about four stocks rose for every three that fell.