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Tech Industry

Surprise rally boosts techs

Tech stocks and the broader markets end the day with gains after three downbeat economic reports sent them into the red earlier.

A late-session rally reversed Thursday's losses, driving the Nasdaq up 2.5 percent despite the day's negative economic news.

The Nasdaq composite index picked up 43.93 points to close at 1,775.47, and the Dow Jones industrial average gained 117.28 points, or 1.25 percent, to end at 9,462.90.

"Today we had horrible news. Durable orders were a mess, and everything is pointing to 'Oh my God, the economy still isn't getting any traction.' But now we're up," Brian Finnerty, co-head of capital markets at C.E. Unterberg Towbin told Reuters.

"Investors are buying for next year's earnings because we know there's going to be a turnaround," he said. "Real money is being dragged in because people want to catch that train."

Durable-goods orders, which are a leading indicator of the state of manufacturing, plunged 8.5 percent in September, far below expectations. Analysts were expecting a 1.3 percent drop, but the aircraft, computer and communications-equipment sectors pulled the figure down.

U.S. jobless claims rose to 504,000 in the week ended Oct. 20, up from 496,000, the Labor Department reported. Continued claims for state unemployment benefits for the week ended Oct. 13 were at their highest level in more than 18 years.

Sales of existing U.S. homes slipped 11.7 percent in September, according to the National Association of Realtors, the largest drop since April 1995, when sales fell 12.5 percent. The annual pace of 4.89 million units sold fell short of forecasts from analysts polled by Reuters, who expected on average a rate of 5.2 million units. Sales were interrupted by the Sept. 11 attacks on the United States, analysts said.

And the situation isn't looking any better on the horizon, said Merrill Lynch analyst Bruce Steinberg. The data "suggests that capital spending could fall at a 20 percent rate in the third quarter, and possibly more," he said. "Fourth-quarter capital spending could even be worse."

On the technology front, the launch of Windows XP and a spate of earnings did little to boost stocks.

Microsoft officially launched its Windows XP operating system, but the fanfare was dimmed somewhat by the news that a group of state attorneys general has hired a prominent trial lawyer to pursue its antitrust case against the software company.

And at least one research firm predicted that sales of the new OS could be tepid, as users wait to buy new PCs before upgrading. Microsoft was up $1.24 to $62.56.

Telecommunications provider WorldCom Group posted a sharp drop in net income Thursday, reporting that profits for its data and Internet business fell to $460 million, or 16 cents a share, compared with $780 million, or 27 cents a share a year ago. That's far worse than the 16 cents per share loss analysts were expecting. The company's shares fell 14 cents to $12.31.

Comverse Technology, which makes software and services for networks, said Wednesday evening that it would miss estimates for the third quarter. After initially falling, the company's stock ended up 69 cents to $18.27 Thursday. Rival network-equipment maker Cisco Systems was up 51 cents to $17.74 , but Juniper Networks lost 63 cents to $26.38.

Among other heavily traded tech issues, Intel rose 62 cents to $26.10, Oracle was down 71 cents to $13.95, Lucent Technologies rose 37 cents to $13.95, and Nokia fell 38 cents to $21.71.

Amazon.com was up 13 cents to $7.77, and AOL Time Warner rose 38 cents to $32.48.

Staff and Reuters contributed to this report.