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Tech Industry

Dow marches ahead; Oracle, Cisco weigh on Nasdaq

Old Economy stocks make sizable gains, but tech stocks are held down by Oracle and Cisco Systems.

Old Economy stocks made sizable gains Monday, while tech stocks were held down by Oracle and Cisco Systems.

The Nasdaq composite index fell 35.34 to 3,416.24, and the Standard & Poor's 500 index inched up 5.50 to 1,432.19.

The Dow Jones industrial average rose 159.26 to 10,977.21, led by General Motors, which gained $3.94 to $60.94.

About seven stocks declined for every six that advanced on the Nasdaq, which generated a moderate volume of about 1.6 billion shares. Volume on the New York Stock Exchange also was on the moderate side, around 921 million shares.

"We've seen very noncommittal trading today," said Brian Belski, a fundamental market strategist at U.S Bancorp Piper Jaffray.

"There's some drifting going on," said Todd Clark, head of listed trading at WR Hambrecht. "People are waiting for Cisco's earnings...and tomorrow's election."

Cisco, a maker of networking equipment, reported per-share earnings after the markets closed that beat analyst expectations by a penny. Shares in the networking company closed down $1.63 at $55.13 in regular trading.

Shares of database giant Oracle were off $2.38, or about 8 percent, to $27.94.

The markets made respectable gains last week after a gloomy October, when the Nasdaq fell 8 percent. The Nasdaq gained 5 percent for the week, while the Dow rose 2 percent and the S&P 500 climbed 3 percent.

Money and politics
The effect of the election on the financial markets has become a hot topic recently.

"Frankly, I'm a little tired of being asked that question," said Belski, adding that he has been asked his opinion on the election's effect on the markets at least five times a day for the past two weeks.

Belski, like most market analysts, sees a divided government as the best possible election outcome. Tom Galvin, chief investment officer at Credit Suisse First Boston, wrote in a report released today that a "narrow margin of victory in Congress will keep gridlock alive and well, which should temper ill wills by the financial markets."

A log-jammed Congress would most likely prevent extreme legislation from getting passed that would shock the economy, analysts said.

"Most investors seem to believe that a split government will be an inactive government that will do little to alter the investment and business environment. Thus, the reaction to any outcome that splits control of the White House and Congress will be muted," Maury Harris, an economist at UBS Warburg, said in a report.

Some market watchers believe the election outcome will not change fundamental economic policy. The eventual winner will probably advocate free trade, modest tax cuts, moderate spending increases, a strong dollar policy, and "other basic ideas likely to lead...to a soft landing (for the economy) but not a recession," Ed Keon, a market strategist at Prudential, wrote in a note released today.

Whatever the outcome, a well-rounded investment strategy might be the best solution. "The key is having a well-diversified portfolio so you're not overly exposed to any particular sector," said Doug Kliggott, chief U.S. equity strategist at J.P. Morgan.

Techs down
The CNET tech index lost 39.62 to 2,688.54. Decliners edged out advancers, with 58 of the 97 stocks in the index falling and 39 rising.

Level 3 Communications was a big loser on the index, falling $4.81, or 12 percent, to $35, while Vitesse Semiconductor rose $4.94 to $80.38.

Of the 18 sectors tracked by CNET Investor, wireless posted the sharpest drops, falling nearly 4 percent. Computer-aided design and manufacturing companies were the day's largest gainers, climbing 2 percent.

America Online and Time Warner are close to gaining regulatory approval for their merger, The Wall Street Journal reported, citing people close to the talks. The companies are nearing an agreement with U.S. regulators that would force them to open high-speed cable lines to one or more Internet rivals in each city served by Time Warner.

AOL shares rose $2.43 to $55.86, while Time Warner rose $3.97 to $83.40.

Broadcom, a maker of cable modems and computer-network switches, has agreed to buy closely held SiByte for as much as $2.07 billion in stock to expand its products for computer networking. The company's shares fell $3.38 to $219.

Investors took a chunk of value out of VA Linux Systems. The maker of software and other products for the Linux computer operating system warned Monday that its fiscal first-quarter results will not meet expectations because of slower-than-expected sales growth from new customers in the dot-com sector.

VA Linux fell $12.63, or 42 percent, to $17.38, while rival Red Hat lost $1.31 to $15.69.

Shares of Turnstone Systems also caught the earnings flu. The company's fourth-quarter sales will be below its forecasts because phone companies are spending less on telecommunications equipment. Turnstone shares fell $19.13, or nearly 65 percent, to $10.38.

Turnstone expects fourth-quarter sales of $38 million, according to a statement. It was expected to have sales of $56.3 million, the average estimate of three analysts polled by First Call/Thomson Financial.

Chip stocks rose modestly. The Philadelphia semiconductor index squeaked ahead $5.16 to $745.77, led by Rambus, which gained $4.44 to $69.38.