Technology stocks posted strong gains Wednesday on an analyst's Cisco Systems report that said information technology spending could be stabilizing after months of declines. The Nasdaq composite gained 52 points to finish at 2,220.53.
The Dow Jones industrial average fell 22 points to close at 10,876.68.
"We're seeing a rotation into technology," Alan Skrainka, chief market strategist at Edward Jones, told Reuters. "There's a growing sense that the U.S. economy has bottomed out and will show improvement in the months ahead."
Morgan Stanley analyst Christ Stix issued a cautious note on Cisco Systems, but investors ignored his warnings. They sent the stock up based on his research, which said that spending has leveled out at the company's North American enterprises. The closed up $2.20, or 12 percent, to $20.
That news comes a day after a report by the National Association of Purchasing Manufacturers that indicated the manufacturer sector is stabilizing after months of losses.
i2 Technologies (Nasdaq: ITWO) named a new CEO, promoting president Greg Brady to the top spot. He replaces Chairman Sanjiv Sidhu, who said he will dedicate most of his time to working with customers, employees and partners. i2 shares gained $2.26 to $20.03.
At a J.P. Morgan H&Q conference this week, venture capitalists said too much money had been thrown at shaky technology firms in recent years. But they added that it's entirely possible that the funding spree could pick up again, once everyone's recovered from the most recent economic downturn.
Charter Communications (Nasdaq: CHTR) lost 43 cents to $22, even though the company reported sharply better first-quarter results, bolstered by gains in digital subscribers and its high-speed Internet service.
Online consumer spending should hit $65 billion by the end of the year, according to a new study conducted by industry group Shop.org.
In leading volume movers Intel (Nasdaq: INTC) closed up 76 cents to $31.94, Oracle (Nasdaq: ORCL) added $1.13 to $17.17 and Microsoft (Nasdaq: MSFT) dropped 41 cents to $69.76.
Among other leading tech issues Nortel Networks (NYSE: NT) moved up $1.11 to $16.55, JDS Uniphase (Nasdaq: JDSU) tacked on $1.75 to $23.85, Lucent (NYSE: LU) inched up 37 cents to $11.27 and EMC (NYSE: EMC) closed up $2.06 to $44.
ZDII staff and Reuters contributed to this roundup.