Dow climbs as Nasdaq sets new low

The Nasdaq composite index rose as much as 35 points in early trading only to close down 27.88 at 2,707.10--the lowest level so far this year. The tech-heavy market was 47 percent lower than its intraday peak of 5,132, set on March 10.

The Standard & Poor's 500 index climbed 5.84 to 1,341.93, while the Dow Jones industrial average rose 121.53 to 10,629.11.

About 25 stocks declined for every 14 that advanced on the Nasdaq, which generated a volume of 2.05 billion shares and set a new closing and intraday low for the past 52 weeks. Volume on the New York Stock Exchange nearly reached 1.1 billion shares, and the number of winners equaled the number of losers.

Some investors think stocks are largely oversold and are poised to rally on the first sign of good news. But analysts lament that there is not much likely to come from companies or government data crunchers in upcoming weeks to catapult the markets upward.

"Unfortunately, there's no real catalyst for an oversold rally," said Arthur Hogan, chief market strategist at Jefferies.

Hogan believes a resolution to the presidential election, or a change in the Federal Reserve's bias from a risk toward inflation in the economy to a neutral stance, could get traders in the buying mood again.

Many investors are also worried about fourth-quarter corporate earnings and an overall slowing in the economy. The markets need "any significant sign that the economy isn't slowing so much that earnings are going to hell," said Hogan.

Earnings news remains a concern. On Oct. 1, Wall Street predicted companies in the S&P 500 would increase fourth-quarter earnings by 15.6 percent from a year ago, according to First Call/Thomson Financial. As of Wednesday morning, market watchers expected 10.3 percent growth.

The downward revision is even more dramatic for the 81 tech companies in the S&P 500. Analysts now put fourth-quarter earnings growth at 15 percent--nearly half of the 29 percent they were estimating on Oct 1.

"This is the unfortunate downside of a moderating economy with low inflation," said Bryan Piskorowski, a market strategist at Prudential.

Government statistics give investors reason to be concerned. The Commerce Department reported Wednesday that gross domestic product (GDP) grew at an annual rate of only 2.4 percent in the third quarter, the slowest pace in nearly four years.

GDP, the country's total output of goods and services, jumped 5.6 percent in the second quarter and 4.8 percent in the first. The Federal Reserve has raised interest rates six times since June 1999 in an effort to combat inflation and cool the red-hot U.S. economy.

The Fed may have curtailed inflation, but corporate profits have also felt the heat. The Commerce Department said U.S. corporations' after-tax profits rose by a scant 0.6 percent in the third quarter, the weakest performance in nearly two years. After-tax profits rose 2.5 percent in the second quarter and 5.7 percent in the first.

The CNET tech index fell 12.86 to 2,286.99. Decliners led advancers, with 55 of the 97 stocks in the index rising, 40 falling and two remaining unchanged.

Of the 18 sectors tracked by CNET Investor, computer data storage companies posted the sharpest drops, falling 6 percent. Semiconductor equipment makers were the day's largest gainers, climbing nearly 4 percent.

In the storage sector, EMC dropped $6.31, or nearly 8 percent, to $73.19; Brocade Communication Systems unraveled $7.25 to $153.75; and Network Appliance lost $2.22 to $50.

Optical network equipment makers also fell. Ciena declined $10.50, or about 13 percent, to $73.50, and JDS Uniphase fell $2.59 to $57.50.

KLA-Tencor kept the chip equipment sector up, rising $2.41, or about 9 percent, to $29.94 followed by Applied Materials, which gained $1.88 to $42.94.

Broadcom rose $9.94, or about 12 percent, to $95. The maker of chips used in set-top TV boxes and cable modems said Tuesday that it will buy Israeli chipmaker VisionTech for about $677 million in stock.