Technology stocks maintained their momentum this week, buoyed by some tame economic data that might keep the Fed from raising interest rates later this month. A trickle of earnings should give traders something to mull over next week.
For the week, the Dow Jones industrial average slid 181 points to 10,614.06 while the Nasdaq moved up 62 points to end at 3,874.93.
On Friday, the Labor Department reported that its producer price index (PPI) was unchanged overall and advanced 0.2 percent excluding food and energy prices in May.
The PPI, combined with last week's mellow employment figures, gave investors the courage to resume buying tech leaders, particularly chip and telecommunications stocks.
"There is no doubt that the interest-rate increases are having an effect on the economy," said Bernie Horn, portfolio manager at Polaris Capital Management. "But people tend to be very optimistic about the bullish tones in the market," he said, noting that despite rising borrowing costs, investors are surprised by corporate announcements of slowing revenue growth.
Perhaps the biggest news this week was really just a confirmation of the inevitable as Judge Thomas Jackson called for Microsoft (Nasdaq: MSFT) to be split into two companies.
While the news had little affect on Microsoft shares, some competitors saw slight gains.
Jackson also ruled the company would remain intact until the appeals process is exhausted.
"Microsoft, as it is presently organized and led, is unwilling to accept the notion that it broke the law or accede to an order amending its conduct," Jackson said in his 23-page remedy order.
"We will be appealing this decision, and we have a very good case on appeal," said Microsoft Chairman Bill Gates in a video news release Wednesday.
Of course, we're months or even years away from anything resembling a break-up of the software giant. In the interim analysts expect the stock to tread water until the crucial appeals process begins, a battle Microsoft (Nasdaq: MSFT) fully expects to win.
Looking ahead to next week, Adobe Systems (Nasdaq: ADBE) will report its second-quarter earnings report.
First Call consensus expects the applications software developer to earn 48 cents a share in the quarter.
Last quarter, Adobe pocketed $64.6 million, or 51 cents a share, on sales of $282.2 million.
Jay Vleeschhouwer, an analyst at Merrill Lynch, maintains a “buy” recommendation and expects it to earn 48 cents a share on sales of around $295 million.
“Adobe’s been a strong performer for most of the past year,” Vleeschhouwer said. “It’s really benefiting from some of its new products as well as upgrades of their popular programs like PhotoShop and Illustrator.”
Internet incubator CMGI (Nasdaq: CMGI) will also check in with its third-quarter results.
Analysts are expecting a loss of $1.73 a share in the quarter.
Last quarter, it earned $1.3 million, or 1 cent a share, on sales of $153.5 million.