Technology stocks posted solid gains Wednesday, driving the Nasdaq up more than 3 percent, as investors focused on earnings and put the U.S. retaliation against Afghanistan on the back burner.
The Nasdaq jumped 56.06 points, or 3.57 percent, to 1,626.25, and the Dow Jones industrial average was up 188.42, or 2 percent, to 9240.86. CNET's technology indexes also gained across the board.
A tidbit of positive economic news was encouraging. A report on wholesale inventories for August showed that U.S. companies were making progress in paring down their inventory glut prior to the Sept. 11 attacks. The Commerce Department report showed that inventories eased 0.1 percent in August, to $298.68 billion, after a 0.9 percent reduction in July.
Earnings also started to roll in for the third fiscal quarter, with Motorola and Infosys headlining Wednesday's tech results.
Motorola was up 19 cents to $16.91 after a dreary third-quarter report. The wireless-technology maker posted a loss for the third consecutive quarter and cut its outlook for the fourth quarter.
Infosys shares were up $5.55, or 15 percent, to $41.59 after the company beat estimates in its second quarter with a 6.1 percent quarter-on-quarter net profit growth. Wall Street had expected growth of just 1.88 percent. Infosys also said its revenue and earnings forecasts are on target for the third quarter and full year. The software company, which outsources services for mainly U.S. customers, said the Sept. 11 disaster hasn't slowed business.
CS First Boston analyst Richard Kersley said the earnings scorecard for technology companies is likely to weaken over the coming months as analysts bring down their 2002 numbers.
"Analysts have been downgrading near-term numbers (but) leaving 2002 earnings untouched. We believe analysts will begin to downgrade 2002 earnings by the end of this year," said Kersley.
Telecom companies are likely to be the worst off, he noted, because of "the resurfacing of concerns regarding debt." The only area that has seen improvement in earnings forecasts is the media sector.
Expectations over Yahoo's quarterly report after the closing bell also drove strong gains among media companies. Yahoo rose 77 cents, or 8 percent, to $10.93, and AOL Time Warner was up 34 cents to $32.34.
Other company news included reports that the European Commission may seek a fine of around $2.5 billion from software giant Microsoft. Shares rose 95 cents to $55.51, taking back some of Tuesday's 6 percent decline triggered by news that the Supreme Court has refused to hear its antitrust appeal.
The semiconductor sector was also doing well Wednesday. Intel rose $1.59, or 7 percent, to $17.85, and CNET's Semiconductor index was up almost 6 percent.
Lam Research, which makes equipment to manufacture semiconductors, rose $1.21, or 7 percent, to $17.85 after reporting third-quarter results that beat forecasts. The company also said chipmakers continued to cut capital spending. CNET's Semiconductor Capital Equipment index was up around 4 percent.
Among other actively traded stocks, Oracle rose 59 cents to $14.30, Cisco was up 56 cents to $15.15, and IBM was up 11 cents to $97.25.
Staff and Reuters contributed to this report.