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Techs on the rebound
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February 1, 2000: 6:34 p.m. ET
Stocks bounce back ahead of Fed decision on rates as fear subsides
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NEW YORK (CNNfn) - Technology stocks surged on Tuesday as interest rate jitters continued to subside, adding momentum to a buying binge overcame the sector late Monday.
Internet stocks, which lagged in Monday's rally, regained their momentum, ending sharply higher. Meanwhile, chip makers and software vendors posted even stronger gains.
The technology-laden Nasdaq composite index, which fell into correction territory on Monday, ended Tuesday's session 111.63 higher at 4051.98, a 2.9 percent rise on the day.
Market observers attributed the sharp rise in tech stocks mostly to a growing sentiment on Wall Street that the Federal Reserve's policy-making committee will raise interest rates 25 basis points, instead of 50 basis points, which some had begun to fear. The Fed is expected to make its announcement on rates on Wednesday.
And the relief rally drew in the bargain hunters, noted Scott Bleier, chief investment strategist at Prime Charter Ltd.
"A buy-the-dip mentality remains very strong in the minds of the market," Bleier said. "Technology stocks are where all the action is, where all the volatility resides, where all the big gains come into play. These are the darlings of the market."
Among Tuesday's biggest Nasdaq movers Tuesday was wireless-communications technology provider Qualcomm (QCOM: Research, Estimates). Shares of Qualcomm rose 7.1 percent, ending 9-1/16 higher at 136-1/16 on news that it finalized a deal with China Telecom, which will license the company's to build out its wireless network.
Also on the move on Nasdaq Tuesday was software giant Microsoft (MSFT: Research, Estimates), which ticked up 5-1/6, or 5 percent, to 102-15/16.
Expedia (EXPE: Research, Estimates), Microsoft's Internet travel company, also surged sharply, adding 5-1/2, or 20 percent, to 32-3/4. After the closing bell on Monday, the company posted a quarterly operating loss of 16 cents per share, much narrower than Wall Street's expected loss of 29 cents per share. Expedia also announced plans to acquire two other online travel companies for roughly $177 million in stock.
Dot.coms on an upswing
Internet stocks recouped much of their recent losses on Tuesday, sending the Dow Jones composite Internet index up 11.13 to 389.4, a near 3 percent rise on the day.
Amazon.com (AMZN: Research, Estimates) ticked up 2-7/8 to 67-7/16, a 4.5 percent gain. The online retailing giant announced Tuesday it would move into the home furnishings sector, with an equity stake in Web site Living.com.
The deal got a mixed reaction from market observers. Banc of America analyst Tom Courtney raised his rating on Amazon to "buy from "market perform." Courtney said the company is nearing "an inflection point, whereby management's strategy will shift toward leveraging its existing asset base rather than continuing to increase incremental investments."
Meanwhile, Jon Burnham, chairman and chief executive of Burnham Securities, told CNNfn that he thinks the company is overvalued.
"I do not see any earnings visibility in Amazon and in fact, I noticed how they are getting rid of some of their employees and starting to do the things that other companies that have problems do," Burnham said.
"I don't understand the valuation given Amazon," he continued. "I think it's a very expensive stock. They're basically not really good businesses. You know, very narrow margin businesses. I don't like it."
Amazon is due to report its fourth quarter earnings on Wednesday.
Network Solutions (NSOL: Research, Estimates) added nearly 15 percent, ticking up 32-7/16 to 249-5/16. The Internet domain-name registrar, which is poised to make a secondary offering 7.73 million common shares, said Tuesday that the U.S. Justice Department has officially closed its probe of the company.
Other Internet winners included: InfoSpace (INSP: Research, Estimates) rising 5-5/8, or 4 percent, to 145-3/4, after announcing a 2-for-1 stock split; Inktomi (INKT: Research, Estimates), which ticked up 3-5/16 to 102-3/4; and DoubleClick (DCLK: Research, Estimates), which added nearly 9 percent, edging up 8-13/16 at 107-5/8.
Chip suppliers surge; equipment makers mixed
Semiconductor makers advanced sharply on Tuesday, adding to Monday's gains.
The Philadelphia Stock Exchange's semiconductor index added 24.37 to end 3.1 percent higher at 802.43.
Shares of microprocessor giant Intel (INTC: Research, Estimates) advanced 2-1/2, or 2.5 percent, to 101-7/16. Meanwhile, Intel rival Advanced Micro Devices (AMD: Research, Estimates) added 9/16 to 36-9/16, a 1.6 percent rise on the day.
Makers of analog semiconductors - which are used to convert real-world signals such as sound and images into a digital format usable by computers and other electronic devices - posted even stronger gains.
Micrel (MCRL: Research, Estimates) surged 13-1/16, or 20.7 percent, to 76-5/16. Analog Devices (ADI: Research, Estimates) added 4-1/2 to 98, a 4.8 percent increase on the day. National Semiconductor (NSM: Research, Estimates) ticked up 4 to end 7.6 percent higher at 56-1/2. And Burr Brown (BBRC: Research, Estimates) advanced nearly 8 percent, ending the session up 2-15/16 at 39-15/16.
Computer equipment makers, however, were not taken along for the ride. The Goldman Sachs computer hardware index slipped a fraction of a point, ending at 501.07.
Shares of Dell Computer (DELL: Research, Estimates) added ½ to 38-15/16, while Compaq (DELL: Research, Estimates) edged up 11/16 to 28-1/8.
Other PC makers slid. Hewlett-Packard (HWP: Research, Estimates) shares fell 2-7/16 to 105-13/16. Gateway (GTW: Research, Estimates) declined 1-7/16 to 59-3/4. IBM (IBM: Research, Estimates) lost 2-5/16, ending at 109-15/16. And Apple Computer (AAPL: Research, Estimates) slipped 3-1/2 to 100-1/4.
Meanwhile, Cisco Systems (CSCO: Research, Estimates) added 8-5/16 to 117-13/16, and Sun Microsystems (SUNW: Research, Estimates) ticked up 2-3/16 to 80-3/4.
Software makers gains
After missing out on the early part of the tech rally on Monday, software vendors advanced sharply on Tuesday.
Among the big winners: Checkpoint Software (CHKP: Research, Estimates) advanced 15.3 percent, or 16-27/32, to 127, after the company announced new architecture for streaming audio and video media applications.
I2Technologies (ITWO: Research, Estimates) rose more than 10 percent, finishing 20-1/2 higher at 213-1/8, after it said it will provide business-to-consumer software and services to ecampus.com, the online college bookstore.
Other gainers included: Verisign (VRSN: Research, Estimates) rising 5 percent, up 8-1/16 at 169-7/16, and Broadvision (BVSN: Research, Estimates), which added 7-1/2 to 134-13/16, a 6 percent rise on the day. 
-- from staff and wire reports
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