Stocks start week on the upbeat

The major indexes gain ground to kick off the week on a positive note following last week's uninspired trading.

3 min read
The major indexes gained ground today to kick off the week on a positive note following the uninspired trading that prevailed last week.

The Nasdaq rose 27.91 to 4,070.59, and the Standard & Poor's 500 index gained 7.63 to 1,514.09.

The Dow Jones industrial average rose 60.21 to close at 11,252.84 led by General Motors, which rose $3.06 to $74.50.

At one point during the day the Nasdaq was up about 55 points and the Dow was up more than 120.

At the end of regular trading, Intel gained 93 cents to $73.88. The chipmaker today recalled its fastest chip--the 1.13-GHz Pentium III--saying it could cause system errors when running certain programs.

Cisco Systems also moved ahead, rising 56 cents to $66.06. The network-equipment company, which already controls much of the Net's infrastructure market, launched an effort today aimed at ushering in an era of "open standards" in the content-delivery business, in competition with Akamai and Inktomi.

The CNET tech index rose 23.25 to close at 3,314.88. Winners beat out losers, with 60 of the 97 stocks in the index rising and 37 falling.

Of the 18 sectors tracked by CNET Investor, computer memory storage companies posted the sharpest gains, rising 3 percent. Internet content providers were the day's largest losers, slipping 2 percent.

Consumer spending in July rose higher than Wall Street expected. The Commerce Department said spending jumped 0.60 percent, slightly faster than the 0.50 percent increase many analysts were anticipating and the biggest increase in five months. Spending climbed 0.40 percent in June.

Personal income also grew by 0.30 percent in July, matching many analysts' expectations, and staying unchanged from June's levels.

Even though the spike in spending may translate into higher inflation, some observers do not think that increase alone will compel the Federal Reserve to raise interest rates.

"If you get some really bad consumer-inflation numbers, or if unemployment drops for more than one month, that would be enough to get the Fed thinking about raising rates," said Drew Matus, an economist at Lehman Brothers.

Matus is also one of the many Fed watchers who believe that the Fed wants to leave rates unchanged when it meets again on Oct. 3, and not tinker with the economy until after the presidential election.

Among members of the CNET tech index, Amazon.com and Yahoo posted losses.

Investors pounded Yahoo's stock today after another analyst joined a growing list of those who think the company is headed for rougher times in the next quarter, when a predicted revenue slowdown could dent Yahoo's earnings. Yahoo fell $12.19 to $122.06.

Amazon fell 81 cents to $39.13 and Microsoft rose 69 cents to $71.31 after the companies said they will work together to sell digital books.

Sabre Holdings broadened its reach into the online travel marketplace today, announcing that it will buy GetThere.com in a cash deal worth about $757 million. GetThere rose $5.06, or almost 42 percent, to $17.19, while Sabre fell 94 cents to $28.81.

Shares of Applied Micro Circuits fell after the chipmaker said it plans to buy MMC Networks for about $4.5 billion in stock, in what will be the second biggest merger in the history of the semiconductor industry. Applied fell $4.75 to $183.81, while MMC rose $31.75, or about 41 percent, to $110.

VoiceStream Wireless also went on a shopping spree. The wireless-communication provider, which was recently bought by German communications giant Deutsche Telekom, said today that it will buy U.S. cell phone company Powertel for $5.75 billion. VoiceStream fell $1.13 to $117.06, as Powertel dropped $5.56 to $81.06.

The Philadelphia semiconductor index fell 9.27 to 1,134.44, led by chipmaker national Semiconductor, which lost $2.06 to close at $40.56.