Tech stock rally follows Cisco remark
The Nasdaq rises about 6 percent after Cisco's CEO says he's "comfortable" with analysts' estimates. Better-than-expected economic data also boosts stocks.
The Nasdaq composite index rose 88.49 points to 1,580.82, and the Dow Jones industrial average was up 173.19 to 9,123.78.
Cisco Chief Executive John Chambers caused chip stocks and the entire tech sector to surge after announcing that the networking giant expects to make first-quarter estimates.
"I am very comfortable with the consensus estimates," he said at a Goldman Sachs conference in New York. Cisco shares gained $2.47, or 22 percent, to $13.95.
Techs and blue chips were also up earlier in the day after a report from the National Association of Purchasing. The report showed that the index for non-manufacturing business activity rose to 50.2 last month from 45.50 in August, a four-year low. Economists expected the reading to drop to 43.
"Overall, this report, along with the manufacturing index released on Monday, suggests that the economy may have been beginning to bottom prior to Sept. 11. But we expect a consumer-led 'second leg' (of the dip) for the remainder of the year," Merrill Lynch analyst Martin Mauro said in a research note.
The software sector fared Wednesday, with Microsoft gaining $3.18 to $56.23 and Oracle picking up $1.06 to $13.66.
CNET's Server Software index was up almost 12 percent, and the CNET PC Software index rose 7 percent.
The markets had opened lower Wednesday after Nortel Networks and Openwave Systems issued profit warnings Tuesday after the closing bell. That put an end to the day's rally after the Federal Reserve's half-percentage point cut to interest rates.
By market close, Nortel was up 25 cents to $5.54, turning around earlier losses. The telecom-equipment maker on Tuesday said it expects a third-quarter loss of $3.6 billion and plans to slash its payroll by another 30 percent.
Openwave was off $4.42, or 40 percent to $6.64. The wireless Internet software company on Tuesday announced that it expects to lose money in the first quarter. The company said losses should be around 1 cent to 4 cents per share. First Call had predicted a profit of 9 cents a share.
Priceline.com was one of the gainers in the technology sector. The online travel company, up 34 cents to $4.01, said it has seen a faster-than-expected recovery from the terrorist attacks that have crippled the airline and travel industries.
Among other actively traded shares, Sun Microsystems rose 99 cents to $9, Intel rose $1.69 to $21.23, AOL Time Warner gained $1.45 to $34.31, Yahoo rose 67 cents to $9.91 and Amazon.com was up 68 cents to $6.76.
Staff and Reuters contributed to this report.