MIDDAY MARKETS: Techs rally on economic data

3 min read

Two economic reports had markets on an upswing at midday, though a tight-lipped Greenspan didn't give investors any hints on the Federal Reserve's interest-rate stance.

The Nasdaq rose 38.36 points to 1,956.85, and the Dow Jones industrial average gained 117.80 points to 9,805.33. The Inter@ctive Week @Net Index rose 5 points to 186.55.

Investors got two contradictory pieces of economic data Tuesday: a weaker-than-expected durable goods report indicated the economy is slowing, while a strong consumer confidence report showed the economy isn't spiraling into a recession. Overall, the two reports were a sign that things aren't going to an extreme either way.

"There is a little less fear out there that the economy is out of control on the downside," said Dick Schmaltz, director of investment at J. & W. Seligman. "Investors are thinking that much like the economy is not in a free-fall, earnings are probably not in a free-fall as dramatically as the bear case emphasizes."

A report on durable goods--which indicates consumers' appetite for expensive manufactured products ranging from refrigerators to airplanes--showed a modest drop in February after a steep decline the previous month. The number fell 0.2 percent in February to a seasonally adjusted $199.20 billion. The data were weaker than expected, confirming a slowing in the U.S. economy and giving more hope that Greenspan would lower interest rates yet again.

U.S. consumer confidence--a broad gauge of consumer attitudes--rose steeply in March, triggered by an improvement in the economic outlook for the next six months and better job prospects, the Conference Board said on Tuesday. The index rose to 117 in March from an upwardly revised February reading of 109.2, surprising analysts who had forecast a drop to 104.5.

Investors were also eyeing a speech from Alan Greenspan Tuesday, but got little news from the tight-lipped Federal Reserve Chairman. Though he didn't drop any hints about what the Fed will do with interest rates, Greenspan did say that better statistical measures were needed to give analysts a clearer picture of how new technologies are affecting the economy.

In company news, Vitesse Semiconductor (Nasdaq: VTSS) fell $3.94 to $30 after it ratcheted down projections for the second time in three weeks. And the communications chipmaker isn't alone. Rival TranSwitch (Nasdaq: TXCC) was off $2.81 to $16.06 following a profit warning. Competitors PMC-Sierra (Nasdaq: PMCS), up $1.34 to $33.60, and Conexant (Nasdaq: CNXT), down 3 cents to $10.47, were also suffering.

The cuts at mobile phone makers also continued Tuesday, as Ericsson (Nasdaq: ERICY), up 66 cents to $6.50, and Nokia (NYSE: NOK), off 8 cents to $27, each announced a new round of layoffs.

Amazon (Nasdaq: AMZN) was off 16 cents to $10.78, AOL Time Warner (NYSE: AOL) rose $1.44 to $42.33 and Yahoo (Nasdaq: YHOO) gained $1 to $15.19.

Cisco Systems (Nasdaq: CSCO) gained 50 cents to $18.38, Intel (Nasdaq: INTC) rose $1.06 to $29.38, Oracle (Nasdaq: ORCL) increased 83 cents to $16.52 and Microsoft (Nasdaq: MSFT) was up $1.75 to $57.81.

ZDII staff and Reuters contributed to this roundup.