Techs inch up despite bleak outlook
Investors place cautious bets ahead of this week's Federal Reserve meeting, bringing stocks up despite dour predictions for the technology sector.
The Nasdaq composite index grew 16.03 points to 2,050.87, and the Dow Jones industrial average dropped 100.37 points to 10,504.22.
Though the Street believes the Fed will slash interest rates for the sixth time since January when it meets this Tuesday and Wednesday, investors are debating whether it will be a quarter- or a half-percentage-point cut.
Even if the Fed does cut rates, it might not be enough to inspire big gains. "What the market wants is tangible proof that the liquidity the Fed has pumped into the economy is starting to be reflected in earnings reports," S&P Marketscope analyst Paul Cherney said.
Monday's small serving of economic news isn't expected to sway the decision, though it indicates surprising strength in the economy. Existing home sales rose 2.9 percent to an annual rate of about 5.37 million in May, according to a report from the National Association of Realtors. That compares with a rate of 5.2 million in April and predictions the rate would stay even at 5.2 million.
The tech sector and a couple of its industries reported news that was more bleak.
Investor confidence dropped to a four-year low in June, according to the Index of Investor Optimism, a monthly survey conducted by UBS PaineWebber and the Gallup Organization.
A separate study released by J.P. Morgan Chase Monday predicted that the Standard & Poor's 500 would close out the first half of the year around 1,229--the level where it finished 1998.
Investment banks also gave negative forecasts for the PC and semiconductor equipment industries. Merrill Lynch said a recovery in orders for the semiconductor-equipment industry could be pushed out to the first half of 2002, and J.P. Morgan Chase trimmed estimates for the PC market. But shares were up in both sectors, and CNET's Semiconductor Capital Equipment Index was up 0.76 percent, and CNET's PC Hardware Index rose 0.99 percent.
The only sector showing dramatic gains Monday was storage. CNET's Storage Index was up 4.19 percent, led by EMC, up $1.94, or 7 percent, to $28.35.
In company news, Sierra Wireless cut its second- and third-quarter forecasts and analysts downgraded the shares. The stock became the Nasdaq's biggest loser, down $5.40, or 28 percent, to $14.00.
Compaq Computer rose 40 cents to $13.90 after announcing a restructuring plan that will give a boost to Intel and help the PC maker combat slowing sales by focusing on software and services.
The news is a major boost to Intel's Itanium chip because Compaq will license its Alpha chip technology to Intel and use Itanium in its servers as it looks to consolidate its operations to focus on software and computer services. Intel shares were up $1.07 to $28.58.
Yahoo rose $2.42 to $19.73 on upbeat forecasts for advertising. Amazon.com was up 41 cents to $12.81, and AOL Time Warner dropped 10 cents to $53.00.
Among other technology bellwethers, Microsoft rose 2 cents to $68.85, Oracle gained 29 cents to $17.77, and Cisco Systems jumped 99 cents to $18.51.
Staff and Reuters contributed to this report.