Blue chips surge but technology issues fall again

Associated Press

NEW YORK — Blue chip stocks surged today, offsetting some of the damage in the technology sector as investors again sold off shares or turned away from companies viewed as too risky.

But the market’s enthusiasm for aluminum, farming equipment and financial services wasn’t enough to lift the tech sector out of its malaise. Earnings reports dogged stocks even as the end of the third-quarter earnings season approached.

The Dow Jones industrial average closed up 245.15 at 10,835.77, according to preliminary calculations, the second straight session that the blue chips have gained more than 200 points.

The tech-focused Nasdaq composite index struggled, falling 87.03 to 3,191.33, after being off nearly 130 points earlier in the day. The Standard &amp Poor’s 500 index rose 19.07 to 1,395.65.

In a continuation of what has been the pattern all month, concern about the long-term profitability of technology stocks drove many investors Monday to unload those shares in favor of blue chips.

The Nasdaq fell last week while the Dow rose more than 360 points.

"I think people are fed up with technology and they shouldn’t be. It’s the only growth sector out there," said Barry Hyman, chief investment strategist at Weatherly Securities. "People instead have sought the safety of the Dow, looking at financials and consumer staples to play the market."

Technology stocks fell across the board. Qualcomm tumbled $6.75 to $68.13 after one its primary customers, Globalstar Communications, missed Wall Street estimates for third-quarter earnings. Globalstar plunged $3.63, or 60 percent to $2.38.

Cisco Systems fell $2.63 to $48.06 after Lehman Brothers cut the stock’s 12-month price target between $60 and $65 instead of $90.

The Dow’s advance grew out of widespread gains. Investors appeared to be putting their money in old-economy stocks, ranging from American Express, up $2.63 to $58.44, to agriculture equipment manufacturer Caterpillar, which rose $2.06 to $34.94. Aluminum producer Alcoa jumped 13 percent, up $3.25 to $28.25.

The shift into blue chips reflected investors’ anxiety about the economy, and subsuqent move into stocks that are viewed as sure bets for growth, albeit slower growth.

"Whenever the market starts worrying about a slowdown in the economy, it goes after companies that will continue to grow their earnings no matter what: drugs, beverages, food, these are all defensive issues," said Gary Kaltbaum, a technical analyst at JW Genesis. "The market is as defensive as I’ve seen in years."

The U.S. economy has been showing signs of moderating growth but the Commerce Department said Monday personal incomes rose a strong 1.1 percent in September — the fastest pace in more than a year.

Spending, propelled by heavy demand for durable goods such as autos, was up 0.8 percent, the largest amount since February.

Advancing issues outnumbered decliners by nearly a 2-to-1 ratio on the New York Stock Exchange, where volume came to 1.16 billion shares compared with 1.08 billion on Friday.

The Russell 2000 index rose 2.88 at 482.73

Overseas, Japan’s Nikkei stock average fell 0.81 percent. Germany’s DAX index rose 0.30 percent, Britain’s FT-SE 100 climbed 0.34 percent, and France’s CAC-40 was up 0.45 percent.