Associated Press
NEW YORK — Investors newly enthusiastic about tech stocks extended the sector’s rally Thursday after Dell Computer became the second big high-tech firm in as many days to issue a positive earnings outlook. Blue chip stocks had a modest retreat.
Dell’s news, along with a similar forecast from Cisco Systems on Wednesday, bolstered investors’ confidence that the economy will rebound after last month’s terrorist attacks.
While the market finished well off its highs of the day as profit-taking set in, Wall Street maintained the positive tone that has defined much of this week’s trading.
Analysts said the tech advance wasn’t surprising given the overall market’s losses following the attacks. But they don’t expect the market to move much higher for the remainder of the year, or until it’s clearer when the economy will recover and how the United States will retaliate for the assaults.
"This rally is basically about getting you back to where you should be — so long as nothing else terrible happens," said Charles Pradilla, chief investment strategist for SG Cowen Securities.
Among Thursday’s winners were the two tech bellwethers that affirmed their earnings estimates. Dell rose $1.68, or 8 percent, to $22.32, while Cisco advanced 47 cents to $14.42.
Wall Street has rarely seen such positive outlooks even before the attacks, having had to grapple instead with profit warnings and layoff announcements. The market was especially encouraged that the upbeat news came from the tech sector, which has been hit the hardest by the slowing economy.
The Dow’s winners were mostly technology stocks as IBM rose 36 cents to $97.31, Microsoft advanced 21 cents to $56.44 and Intel rose 32 cents to $21.55.
Outside tech, the blue chips were mostly lower. Procter &Gamble fell $2.05 to $71.20, while Wal-Mart declined $1.23 to $51.50.
Investors are becoming increasingly confident that the market and the economy will recover in the wake of the attacks. Analysts said Wall Street’s growing optimism could best be seen in its preference Thursday for tech shares over blue chips.
While market watchers are encouraged by the market’s newfound strength, they cautioned investors against getting overly hopeful that stocks would be able to sustain the momentum.
"There is not a huge amount of upside from here. We are just going to tread water until we see what the economy does," Pradilla said.
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