Why You Can Trust CNET E-tailers lead Nasdaq higher
Official word of a recession doesn't stop tech stocks from rising, led by online retailers, storage technology vendors, and producers of chipmaking equipment.
The Dow Jones industrial average was up 23.04 to 9,982.75, and the Nasdaq composite index rose 38.03 to 1,941.23. CNET's technology indexes were generally higher, with the E-tailer index jumping more than 6 percent. The Storage Index was up 4.4 percent.
In Friday's shortened trading session, the Dow Jones industrial average rose 125.03 points, or 1.27 percent, to 9,959.71, and the Nasdaq gained 28.15 points, or 1.5 percent, to 1,903.20. Volume was light, and the markets closed at 10 a.m. PT because of the Thanksgiving holiday.
"Black Friday," the day after Thanksgiving, is traditionally seen as the start of the holiday shopping season. Online retailers reported strong performance for the day, giving Internet stocks a boost Monday. Amazon.com shares gained 3.13, or 34 percent, to 12.21; AOL Time Warner rose 61 cents to $37.37; eBay was up $3.61, or 6 percent, to $65.16; and Yahoo gained $2.34, or 15 percent, to $18.07.
The early indications were that online commerce was strong, but analysts emphasized that it's too early to make any predictions about whether the good times will last.
Indeed, the National Bureau of Economic Research panel announced Monday that the United States officially entered a recession in March 2001. That would be the first time such a declaration has been made since 1990.
Positive metrics for online holiday sales included a statement from the Nielsen/NetRatings Holiday E-commerce Index saying that 22 percent more home Internet users conducted online holiday shopping on Black Friday as compared with the daily average for Monday through Thursday.
Individual companies also reported upbeat results. AOL Time Warner announced that online transactions on AOL in October were up 80 percent over last year. Yahoo said Black Friday sales were up 60 percent from a year ago, and Amazon said that by midafternoon Friday it was selling about 12,000 more items per hour than at the same time last year.
Amazon announced Sunday that according to its "Holiday Delight-O-Meter," which measures sales, customers have ordered more than 8.9 million items since Nov. 9, 2001.
"Specific numbers posted by AOL, Yahoo and MSN indicate sales growth significantly stronger than the expected e-commerce growth in the low teens forecast by Jupiter Media Metrix and Forrester," Morgan Stanley analyst Mary Meeker wrote in a research note Monday.
But "one day does not a trend make," Meeker added. She remains "cautiously optimistic" about holiday shopping metrics but predicted that this Christmas season should see online shopping gain share from offline sales in several areas.
Goldman Sachs analyst Anthony Noto said there are still three critical weeks left in the shopping season, but he was confident Amazon would hit its earnings and sales targets for the fourth quarter.
Internet giants have been worried that the effects of the economic downturn and Sept. 11 could dampen sales. Many have even turned to the newspapers for advertising this year.
CNET's Semiconductor Capital Equipment Index gained more than 4 percent Monday. Taiwan Semiconductor, the largest contract manufacturer of chips and one of the biggest consumers of chip manufacturing equipment, raised its forecasts for fiscal 2001. Taiwan Semiconductor's American depositary receipts rose 90 cents to $16.60.
Capital equipment maker Applied Materials rose $1.30 to $40.06. Among other equipment companies, Novellus gained $2.24 to $39.18; Lam Research advanced $1.35 to $22.51; and KLA-Tencor picked up $2.42 to $50.05.
Intel shares were up 81 cents, or 3 percent, to $31.87. Competitor Advanced Micro Devices rose 79 cents, or 6 percent, to $14.15.
Among other actively traded shares, Oracle rose 33 cents to $14.74, and Microsoft rose 42 cents to $65.14.
Lucent Technologies fell 34 cents, or 4 percent, to $8.04 after two downgrades. Morgan Stanley lowered the stock to "neutral" from "outperform," and ABN AMRO downgraded it to "neutral" from "add." Analysts said the company's projections for next year aren't reflected in the stock's price.
"We are less confident Lucent will achieve positive sequential revenue growth in the second quarter of 2002," said ABN AMRO's Kenneth Leon. He recommended competitor Cisco Systems as a much better play. Cisco shares were up 34 cents to $19.93.
Reuters contributed to this report.