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Tech Industry

Markets edge slightly higher after slow day

Stocks edge up moderately in trading, but the markets continue to drift through summer doldrums with low volumes.

Stocks edged up moderately today, but the markets continued to drift through summer doldrums with low volumes.

"It's like watching paint dry," Elizabeth McKay, chief investment strategist at Bear Sterns, said of the day's relative lack of activity.

The Nasdaq rose 52.80 to close the day at 4,011.01, finishing above the 4,000 mark for the first time since July 25. The Standard & Poor's 500 index gained 7.84 to 1,505.97. The Dow Jones industrial average rose 5.50 to close at 11,144.65.

Volume on the New York Stock Exchange was light, with 860 million shares trading hands. Volume on the tech-heavy Nasdaq showed a little more life, with 1.4 billion shares traded.

Nasdaq volume often tops 2 billion shares per day in the winter and spring, but volume tapers off in the beginning of summer until shortly after Labor Day in early September.

In addition to seasonal slowdowns, the Federal Reserve Board's decision yesterday to leave interest rates unchanged also kept markets quiet. For weeks, analysts and economists had been anticipating that the Fed would maintain rates.

Many investors believe that the markets will not move dramatically for the remainder of the week or over the next several weeks. Some predict that the markets will remain sleepy until the Fed's next interest rate hike, which could come as late as November, after the presidential election.

The decision "gives everybody a chance to take the last week of August off," said Todd Clark, head of listed trading at WR Hambrecht. "You'll see lower trading volumes probably until the kids go back to school."

Clark predicted that the Fed will not interfere with the economy unless inflation spikes, in which case it will likely tighten interest rates again. Clark and others are bracing for a mild correction in September, historically a rough month for the markets.

Some analysts think the next major market catalyst lies far ahead.

"Wall Street will be paying attention to earnings releases," said Richard Peterson, a market strategist at Thomson Financial Securities Data. Peterson also said that earnings season will not heat up until mid October, which makes the economic data and earnings warnings released before then especially important.

Richard McCabe, chief market analyst at Merrill Lynch, believes that some technology stocks might not make it until then.

"While we have no quarrel with the thesis that technology will remain the fastest growing sector of the economy in coming years or decades," he wrote in a report released today, "we are still concerned by what appears to be a technical overexuberant or overbought condition which was only partially corrected last spring."

"This situation continues to cause us to believe that this sector is vulnerable to another phase of decline in coming months to further correct its early 2000 excesses before any new durable or major recovery trend develops," he concluded.

At the end of regular trading, Intel closed up $2.50 at $74.63. Microsoft dropped 50 cents to $70.75.

The CNET tech index gained 35.39 to close at 3,271.49. Losers edged out winners, with 61 of the 97 stocks in the index rising, 36 falling and three remaining unchanged.

Of the 18 sectors tracked by CNET Investor, network equipment makers posted the sharpest gains, rising 3 percent. Wireless equipment makers were the day's largest losers, falling 1 percent.

The initial offering of O2Micro, a maker of integrated circuits that extend the battery life of a range of consumer electronics products, was the biggest percentage gainer on the Nasdaq. The shares jumped $17.77, or about 131 percent, to $20.77.

Unfavorable news hit Visual Networks, which earned the title of largest percentage loser on the Nasdaq. The software maker's shares fell $3.97, or nearly 37 percent, to $6.84 after it announced that third-quarter sales will be half of the company's previous forecast, resulting in a wider-than-expected loss.

Among members of the CNET tech index, Intuit and Siebel Systems posted strong moves.

Shares of Intuit, which makes Quicken and TurboTax personal finance software, rose $8.56, or almost 19 percent, to $54.63 after the company said sales growth will accelerate as more consumers file tax returns online.

Shares of Siebel Systems fell $5 to $167. Oracle is set to debut, a free product aimed at Siebel's industry-leading sales automation software. Siebel has risen 98 percent this year. continued its meteoric ascent, rising $2.52, or 40 percent, to $8.73. The company announced yesterday that IBM agreed to sell its high-speed Internet access to small-business customers. Volume topped 40 million shares, more than 44 times more than the stock's average daily volume of about 918,000 shares, making it the second most actively traded stock on the Nasdaq.