Markets surge on investor enthusiasm for tech stocks

Associated Press

NEW YORK — Stocks moved sharply higher today, as technology shares led a broad recovery following solid earnings reports from three bellwether tech companies.

Microsoft, Nokia and Sun Microsystems all beat Wall Street expectations, reversing what had become a third quarter trend among widely-held tech companies,

The upturn lifted the Dow Jones industrial average above 10,000, one day after the blue chip index fell below that milestone for the first time since March. The Dow closed up 167.96 at 10,142.98, according to preliminary calculations.

The tech-focused Nasdaq composite index also enjoyed a sharp turnaround, climbing 247.17 to 3,418.72. The 7.8 percent climb represented the Nasdaq’s third biggest percentage gain ever.

The Standard &amp Poor’s 500 index was up 43.29 at 1,385.42.

"The market became oversold and undervalued, and it didn’t matter whether you were looking at the overall market or just at technology stocks. When that happens, all you need is a catalyst to get it going again," said Hugh Johnson, chief investment officer at First Albany Corp.

In this case, the catalyst was the better-than-expected earnings reports.

Microsoft, which reported its earnings after the market closed Wednesday, beat Wall Street expectations by 5 cents. The software company shot up $10.13, or nearly 20 percent, Thursday to $61.88.

Wireless communications company Nokia, which also beat analyst estimates, rose $8.13, or 27 percent, to $38.13. Ditto for computer equipment company Sun Microsystems, which rose $7.38 to $117.69.

Johnson noted that in addition to beating expectations, these companies also issued optimistic projections for future sales, suggesting that while spending may be slowing a bit, people are still buying computer products at a brisk pace.

Texas Instruments, meanwhile, jumped $8.88 to $45.75, after meeting analysts’ third-quarter estimates but warnings that revenues may slow.

"The old tech leaders, the new tech leaders are all bouncing back. The banks and brokerages, which had been pretty hard hit, are also bouncing fairly impressively today," said Charles White, portfolio manager at Avatar Associates. "The question is, does it hold?"

Investors seemed to be looking for bargain technology stocks after having spent the last month shedding those companies on the belief they would report disappointing results.

Financial stocks moved higher, also recovering from Wednesday’s selloff. J.P. Morgan climbed $8 to $142.25.

But investors were still scrutinizing earnings reports. Drug maker Eli Lilly recovered after being down more than $5, but still fell 75 cents to $88.50 after meeting Wall Street estimates but warning of slowing growth.

Earlier in the day, Federal Reserve Chairman Alan Greenspan said the central bank is watching oil prices carefully. He did not say how, or if, that would affect interest rates. The Fed has raised rates six times since June 1999 to slow down economic growth that it feared was reaching unsustainable levels.

Advancing issues outnumbered decliners by a 2 to 1 margin on the New York Stock Exchange, where volume came to 1.29 billion shares, behind the 1.43 billion reported Wednesday.

The Russell 2000 index was up 12.68 at 478.89.