Tech stocks stay afloat as old-economy stocks sink
Many technology stocks scrape out modest gains in an otherwise disappointing day for U.S. markets.
The Nasdaq composite index rose 21.64 to 4,103.81, and the Standard & Poor's 500 index dropped 7.25 to 1,502.59. The Dow Jones industrial average dropped 112.09 to close at 11,103.01.
Large cap tech stocks stumbled slightly. At the end of regular trading, Microsoft dropped 93 cents to $70. Cisco Systems remained unchanged at $66.56, and Intel fell 56 cents to $73.50. IBM fell $2.56 to $130.31.
Volumes, which have been caught in summer doldrums throughout the month, remained slow as investors braced for the upcoming holiday weekend. Roughly 1.5 billion shares traded hands on the Nasdaq on Wednesday, compared with 2 billion or more during the bull run of February and March and the frenzied retreat in April.
"There was not a lot of activity outside of the brokerage stocks," said Todd Clark, head of listed trading at W.R. Hambrecht. "The market is just consolidating or pulling back from recent gains."
The merger between two financial powerhouses Credit Suisse Group and Donaldson, Lufkin & Jenrette spilled over into the tech sector. Credit Suisse will buy DLJ for $13.4 billion in cash and stock or about $90 a share. Shares of DLJ's online brokerage firm, DLJdirect, fell $2.44, or 22 percent, to $8.56.
The CNET tech index lost 7.13 to close at 3,311.52. Losers edged out winners, with 54 of the 97 stocks in the index falling, 37 rising and six remaining unchanged.
Of the 18 sectors tracked by CNET Investor, Internet e-tailers posted the sharpest gains, rising 2 percent. Makers of peripheral equipment for computers were the day's largest losers, falling nearly 2 percent.
Among members of the CNET tech index, CMGI rose $5.19, or nearly 13 percent, to $45.81. Amazon.com climbed $3.31 to $42.94 after Goldman Sachs analyst Anthony Noto reiterated his "trading buy" rating on the online retail giant.
Amazon stock has made a significant rebound since late July, when a slew of high-profile Internet analysts downgraded the Seattle-based company. Amazon reported second-quarter revenue of $578 million--a 1 percent gain from the first quarter and about $7 million less than Wall Street expected, causing investors to bail out.
The stock has increased 53 percent since bottoming out in late July, when the stock traded as low as $28 per share. But Amazon's midday closing price today is still 41.9 percent below its spring peak, when it traded at $74 per share.
Shares of Commerce One rose $10.88, or almost 21 percent, to $63.25 on a volume of 27.3 million shares, more than four times the stock's average daily volume of 6.6 million, which makes it the most actively traded stock on the Nasdaq.
Shares of Infospace rose $4.69, or about 15 percent, to $36.63 after Alltel said it would offer wireless Internet service using InfoSpace technology. Alltel fell 63 cents to $50.81
Internet consulting firm Viant fell $1.94, or nearly 12 percent, to $14.50 after Credit Suisse First Boston analyst Mark Wolfenberger downgraded the firm to "buy" from "strong buy" and cut its price target to $25. The shares have traded within a range of from $9.12 to $63.56 over the past 52 weeks.
Viant isn't the only Internet consulting company that has suffered blows on Wall Street. CSFB analyst David Sturtz initiated coverage last week of Scient, another consulting firm, with a "hold" rating. Scient shares also fell today, sliding $2.38 to $30.56, while Cambridge Technology Partners dived $1.63, or 21 percent, to $6.06.
Juniper Networks shares hit a new 52-week high after the maker of Internet routers was named to the Nasdaq 100 index. The shares jumped $7.75 to $203.88 and hit a high of $211.56 in midday trading. That's a 202.2 percent increase since late May, when the stock traded at $70.
Shares of Inktomi jumped $6.81 to $126 after Lehman Brothers started coverage of the company with a "buy" rating. The Foster City, Calif.-based company develops and markets scalable software applications designed to enhance the performance and intelligence of large-scale networks.
The Philadelphia semiconductor index fell 13.86 to 1,118.31, led by chip designer Rambus, which lost $4.44 to close at $76.19.
Hyundai Electronics Industries, the world's second-largest computer memory-chip maker, sued Rambus, alleging some of the semiconductor designer's patents are illegal. The suit, filed yesterday in U.S District Court in San Jose, accused Rambus of having patents that are ?invalid, unenforceable, and not infringed by any Hyundai products.?
Rambus shares also fell yesterday after chipmaker Micron Technology sued the company, claiming it violated antitrust laws and holds invalid patents.