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Techs fearless on Fed
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August 23, 1999: 4:31 p.m. ET
Technology investors optimistic Fed rate hike likely will be the last of 1999
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NEW YORK (CNNfn) - Technology stocks would not shrink Monday from a widely expected Fed move and instead seemed to take the certain challenge of an interest rate hike in stride.
The Nasdaq Composite index, a tech-heavy barometer of the sector's fortunes, pushed ahead up 71.37 to 2719.70, according to preliminary data. It was a day-long positive move in which the index never flirted with negative territory.
The strong showing was even more striking in that it happened the day before the Federal Open Market Committee was due to meet to discuss interest rate policy.
Most Wall Street economists expect the Federal Reserve to raise short-term interest rates a quarter of a percentage point to 5.25 percent.
Such a move normally would cool down technology stocks, because higher interest rates make it more expensive for them to borrow, but James Volk, director of trading at D.A. Davidson, said investors were merely moving to a recently reduced sector.
"There is still a lot of room to go on the Nasdaq and the S&P [500]," said Volk. "The rotation is going back into the old leaders, technology and financials."
At the head of the surge were semiconductors and chip equipment firms, including market leader Intel (INTC), which rose 2-15/16 to 82-7/8. That was overshadowed, however, by Broadcom (BRCM), which jumped 6-11/16 to 129-9/16 in Monday trading.
Elsewhere, Lam Research (LRCX) gained 3-7/8 to 53-3/4, PMC-Sierra (PMCS) rose 4-1/16 to 95-1/2 and Applied Materials (AMAT) was up 2-15/16 to 66-7/8.
While chips were moving forward, Internet stocks were not far behind, taking advantage of market sentiment that the interest rate hike may be the last of the year.
Yahoo! (YHOO) moved solidly ahead, up 7-1/8 to 152-1/8, after the company on Monday rolled out its Yahoo! Digital site. This service will let users watch and listen to digital content, along with purchasing music that they can download immediately.
Other portal services also climbed into positive territory Monday, but did not do so as forcefully as Yahoo. Lycos (LCOS) gained 13/16 to 44-15/16 while Excite@Home (ATHM) rose 2-1/4 to 39-15/16. Infoseek (SEEK) was up 9/16 to 32.
Online auction firm eBay (EBAY) saw its shares rise 1-7/16 to 124-7/16 in a choppy day of trading after the company altered its plans to increase requirements for users who choose to employ "reserve prices."
Reserve prices are basically a minimum price that the seller will accept on an online auction. These are usually not revealed and eBay said customers had complained they were set at unrealistic levels.
eBay tried to charge sellers a $1 fee for using reserve prices, along with making minimum bids more closely tied to the figures. After protests among registered users, eBay offered to alter the fee pricing structure and postponed other aspects.
While some eBay users threatened to go to other services, eBay competitors got little help. Ubid (UBID) lost 3/4 to 23-15/16.
Sun Microsystems (SUNW) stock gained 9/16 to 74-13/16, after the workstation and Java developer announced its purchase of Forte Software, for $540 million in stock. Forte (FRTE) shot up 4-1/8 to 21-1/8.
On the Internet access front, PSINet (PSIX) edged 5/16 higher to 45-7/8 as it revealed its purchase of data communications and e-commerce application firm Transaction Network Services (TNI) for $720 million.
With the deal, PSINet said it was looking to beef up its ability to offer electronic commerce services and other sales and transaction capabilities. Transaction Network shares soared 9 to 43-1/4.
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