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Tech shares push Nasdaq sharply higher

The stock markets start the week off on a positive note following last week's dismal performance.

The stock markets started the week off on a positive note following last week's dismal performance.

After falling 11 percent last week, the Nasdaq composite index gained 103.99, or nearly 3 percent, to 3,766.99. The ratio between advancing and declining stocks was about even, but advancers generated a volume of 1.05 billion shares, compared to 422 million volume churned by decliners.

The Standard & Poor's 500 index climbed 10.94 to 1,430.83, and the Dow Jones industrial average rose 10.81 to close at 10,521.98 led by Intel, which rose $2.25 to $66.81. Microsoft, a component of the Dow, inched up 19 cents to $69.88.

Last week, the Dow slipped 2 percent for the week and the S&P 500 shed 4 percent.

Last week's sharp decline followed several positive earnings announcements, surprising some analysts. "If second-quarter earnings aren't good enough to get the markets moving in the short term, I don't know what is," said Phil Dow, a market strategist at Dain Rauscher Wessels.

However, unfavorable earnings from WorldCom and Nokia were particularly jarring.

Dow advised investors to sit tight, saying a broad market rally may take up to three months. "It'll take time, but the outlook is still pretty good for stocks in general," he said.

At the end of regular trading today, Nokia rose 50 cents to $44.31, while WorldCom climbed $2.50 to $39.06.

A positive economic report today helped spark investor optimism. The National Association of Purchasing Manufacturers index for Chicago, which outlines manufacturing activity in Chicago, declined to 52 in July from 56.8 in June.

"This level indicates sustained but slowing growth," said Peter Kretzmer, an economist at Banc of America Securities. The numbers show that the Federal Reserve's main objective of restraining economic growth by raising interest rates seems to be working.

Today's report is the latest of several that have indicated the economy is slowing somewhat, possibly convincing the Fed to hold back from further rate increases when it meets again in late August.

The NAPM index for the entire country will be released tomorrow, which some economists say will reveal a similar slowdown.

The CNET tech index gained 64.88 to close at 2,731.12. Winners trounced losers, with 78 of the 97 stocks in the index rising, 17 falling and two remaining unchanged.

All of the 18 sectors tracked finished in the green. Makers of networking equipment and server software posted the strongest gains, surging about 6 percent and 5 percent, respectively.

Better-than-expected earnings from Storage Technology sparked a 4 percent surge in the computer data storage sector. The maker of data storage devices reported a second-quarter profit from operations of 9 cents a share, beating the 5-cent average estimate of six analysts surveyed by First Call/Thomson Financial. The company's shares rose $2.75, or 27 percent, to $12.88.

Seagate Technology rose $6.31, or 14 percent, to $50.69. Network Appliance climbed $1.19 to $86.19. Brocade Communications Systems leaped $14.69, or nearly 9 percent, to $178.63. EMC jumped $2.88 to $84.50.

National Computer Systems made some big gains today on the Nasdaq. Shares of the school administration software developer rose $13.75, or nearly 24 percent, to $71.88 after London based Pearson, the world's largest educational publisher, agreed to buy National Computer for $2.5 billion. Volume surpassed 8.7 million shares, more than 27 times the stock's daily average of about 324,000.

Among members of the CNET tech index, Broadcom rose $11.19 to $224.25 after the semiconductor maker said it would buy Altima Communications for $533 million in stock to gain greater access to small- to medium-sized businesses.

Veritas Software also jumped $14.25, or almost 16 percent, to $101.94, while chipmaker PMC-Sierra rose $16.63, or 9 percent, to $193.81.

WebEx posted the biggest percentage loss on the Nasdaq, one day after the company launched an initial public offering. The provider of services that enable companies to hold meetings via the Internet fell $12.19, or about 37 percent, to $20.88.

Taiwan Semiconductor Manufacturing, the world's largest contract manufacturer of semiconductors, today announced that its second-quarter earnings more than doubled amid strong demand for outsourced chips. The company's shares rose $2.13 to $30.38.

Shares of Juno Online Services rose $1.06, or 13 percent, to $9.06 after Time Warner said it would carry Juno's high speed Internet access services on its cable network, the first instance that Time Warner Cable has offered access to its network. Time Warner's shares rose $1.31 to $76.69.

The Philadelphia semiconductor index rose 25.27, or almost 3 percent, to 975.17, led by chipmaker Altera, which gained $5.06 to $98.19.