Investors shrug off likely interest rate boost
Despite the likelihood of a half-point rise in interest rates, the Nasdaq composite index and Dow Jones industrial average post modest gains.
The Federal Open Market Committee is expected to raise interest rates tomorrow by as much as 50 basis points in an effort to combat inflation and slow the economy. Such a move would typically drive down stocks, but because it has been expected for several days it has largely been factored into the market.
The Nasdaq gained 78.59 to close at 3,607.65, and the Standard & Poor's 500 index edged up 31.40 to 1,452.36.
The Dow rose 198.41 to 10,807.78, led by Philip Morris and International Paper. Philip Morris seeks to buy a stake in Nabisco Holdings.
At the end of regular trading, Intel closed up $3.13 at $118.13. Intel spinoff DevelopOnline.com today said it has received $15 million in first-round funding.
Microsoft gained 56 cents to $69.38.
The CNET tech index climbed 62.75 to 2,861.41, led by shares of Lycos and Excite@Home. Winners edged out losers with 73 stocks rising, 24 falling and two remaining unchanged.
Of the 18 sectors tracked, Internet content companies posted the sharpest gains, rising about 5 percent. Semiconductor makers were the day's largest losers, falling nearly 3 percent.
Among members of the CNET tech index, Excite@Home and Lycos posted strong gains.
Excite@Home rose $2.56, or 13 percent, to $21.88, and Lycos rose $7.50, or 14 percent, to $61.63. Internet company Terra Networks may buy Lycos for $10 billion.
Apple Computer fell $6.63 to $101. CEO Steve Jobs said the Mac OS X will be delayed until early next year, although the effects of the delay may be minimal, according to analysts.
The Philadelphia semiconductor index rose 27.03 to 1,009.18, led by chipmaker Xilinx, which gained $4.31 to $64.06.
America Online will pay a civil penalty of $3.5 million as part of a settlement with the Securities and Exchange Commission over the accounting of advertising costs. The Internet giant improperly reported most of the costs of acquiring new subscribers--such as the expenses of sending computer disks to potential customers--as assets. AOL rose $3.25 at $58.63.
Shares of Brocade Communications might see heavy trading tomorrow. The company reported second-quarter earnings of 11 cents a share after markets closed today. The performance topped the 8 cents a share that analysts expected, according to a survey by First Call. In regular trading, Brocade rose $8.06 to $114.94.
Computer Associates also reported earnings late today. The software maker said fiscal fourth-quarter profit from operations rose 20 percent, meeting analysts' estimates.