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Tech bellwethers gain on market outlook

The Nasdaq composite index rose 106.70 points to 2,305.58 by market close, as investors bet that the economic downturn is nearing its bottom.

Technology stocks shot higher Monday as investors bet that the economic downturn is bottoming out.

"Money seems to be moving into big tech," said Tim Ghriskey, senior portfolio manager with mutual fund firm Dreyfus.

The Nasdaq composite index rose 106.70 to 2,305.58. The Dow Jones industrial average rose 36.18 to 11,337.92.

"The expectation is CEOs of tech companies are going to start whistling a different tune, saying business is dismal but not as dismal. That gives investors light at the end of the tunnel that the profit recession is going to end," said Hugh Johnson, chief investment officer at brokerage First Albany. "In the early stages of a bull market, tech stocks do well. When you are about to come out of a profit recession, tech stocks do well."

Several widely held technology bellwethers surged, including Cisco Systems, up $2.67 to $22.87, Sun Microsystems, up $2.99 to $22.96, and Oracle, up $1.82 to $18.10.

On the New York Stock Exchange, technology gainers included Nortel Networks, which rose 77 cents to $15.22, Corning, which picked up $1.71 to $22.65, and Texas Instruments, which rose $2.19 to $41.90.

Lucent Technologies dipped 5 cents to $9.90. The company's board continues to debate the merits of a merger with Alcatel, according to reports. Alcatel rose 90 cents to $31.05.

Intel increased $1.14 to $29.90 despite a downgrade from analyst Joe Osha of Merrill Lynch. Osha cut ratings on Intel and Advanced Micro Devices, saying the continuing depression in the PC market could hurt both companies. AMD gained $1.90 to $34.39.

Shares of Palm surged 89 cents to $5.94 as one analyst upgraded the stock and called it a bargain. The maker of handheld devices lost 28 percent Friday after it warned of weak sales. Competitor Handspring was up 77 cents to $9.46 on Monday.

Online brokerage E*Trade rose 80 cents to $10 after announcing it agreed to buy Internet brokerage Web Street, up 68 cents to $1.48, for $45 million in stock. E*Trade will pick up 34,000 new accounts in the deal.

Staff and Reuters contributed to this report.