US tech stocks rally

NEW YORK: Wall Street was where the action was on Tuesday, as bargain hunters

scooped up recently beaten-down tech stocks and ignored the latest round of

profit warnings as they bet that the market may have already hit bottom.

"The market has become more immune to bad news," said chief

investment strategist at Fahnestock & Co, a New York brokerage, Joseph

Barthel. "The best way to label the rally is as oversold-inspired, with the

catalyst being the Fed meeting in two weeks."

Investors are betting the Federal Reserve will once again come to the rescue

of the US economy - and the stock market - with another interest-rate cut at its

next policy-setting meeting on March 20. The central bank has already slashed

the cost of borrowing by 100 basis points in two moves in January.

The Nasdaq Composite Index shot up 61.51 points, or 2.87 per cent, to close

at 2,204.43, after jumping more than 4 per cent early in the session. The rally,

Nasdaq's second up day in a row, gave the index its best advance since Jan. 23,

when it closed 2.99 per cent higher.

The blue-chip Dow Jones industrial average rose 28.92 points, or 0.27 per

cent, to 10,591.22. As money poured into tech shares, the prices of defensive

stocks dropped, putting a damper on the Dow's advance. The broad Standard &

Poor's 500 Index gained 12.39 points, or 1.00 per cent, to finish at 1,253.80.

Year to date, the Nasdaq is down 10.8 per cent, the Dow has lost 1.8 per cent,

and the S&P 500 is off 5 per cent.

"Tech is a sector that got hit the most and still has the biggest upside

potential in the long run," said Ahmet Okumus, fund manager of the Okumus

Opportunity Fund, which has $250 million in assets under management.

"Usually when the market bounces, the sectors that got hit the most bounce

the most."

Indeed, the theme was a repeat of Monday's, when several computer-chip makers

warned about future results. Investors, figuring the worst of the pain had been

discounted, snapped up those shares.

The same happened on Tuesday. Chip makers Xilinx Inc., Varian Semiconductor

Equipment Associates Inc. and TriQuint Semiconductor Inc. ratcheted down their

sales estimates in the softening US economy, but all three stocks shot higher.

Xilinx rose $1-15/16 to $45-3/16, Varian climbed $3 to $34-1/2 and TriQuint

jumped $1 to $20. The Philadelphia Stock Exchange semiconductor index rocketed

5.54 per cent, and the American Stock Exchange computer hardware index surged

5.23 per cent.

Among Nasdaq's top-tier names, gainers included beaten-down issues like Web

gear maker Cisco Systems Inc. and software company Oracle Corp..

Personal computer seller Dell Computer Corp. rose $2-3/4 to $26-3/16 for a

gain of nearly 12 per cent in active trading after Merrill Lynch gave an upbeat

forecast on Monday for the stock after meeting the company's management.

The rally helped to lift Wall Street's mood. Investors who didn't hunker down

in anticipation of a big snowstorm in the Northeastern states on Monday had

picked up tech shares after big investment houses told clients it was time to

scoop up stocks.

Software giant Microsoft Corp. gained $2 to $59-7/16, while Intel Corp., the

top chip maker, added $1-1/8 to $31-1/2. The pair lifted the Nasdaq and the Dow.

The latest economic data were mixed: Factory orders slid in January to the

lowest level since November 1999, due to falling demand for new aircraft.

Another report showed productivity of US workers - a key factor behind the

record economic boom over the last 10 years - grew in the final quarter last

year even as the economy lost steam, but unit labor costs shot up. A third

report said retail sales grew at a slower pace last month, as cold weather kept

buyers at home.

At the 5 pm (2200 GMT) settlement, the benchmark 10-year note inched up 1/32

at 100-6/32, yielding 4.97 per cent, down from 4.98 per cent at Monday's close.

The 30-year bond was flat at 99-30/32, yielding 5.38 per cent.