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Tech sector gets boost
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April 27, 2001: 4:33 p.m. ET
Stocks advance as growth data quells economy, profit fears
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NEW YORK (CNNfn) - U.S. technology stocks moved mostly higher Friday as the latest government economic data eased some investors' fears about a recession and weak profits from companies in the sector.
A flurry of buying helped drive the Nasdaq composite, which is heavily weighted with technology names, 40.74 points higher to 2075.59, and pushed all the major tech segment indexes higher as well.
The stocks of companies that make components and equipment used to build fiber-optic networks were among the most actively traded on Nasdaq.
Shares of JDS Uniphase (JDSU: up $1.05 to $19.26, Research, Estimates), the No. 1 supplier of components used in fiber-optic systems, rose sharply. At the same time, there was a sharp drop in shares of Ciena (CIEN: down $1.86 to $50.29, Research, Estimates), a supplier of optical switching-systems that enable telecommunications service providers to deliver high-speed Internet services to their customers.
The fiber-optic and data-networking segments have come under a lot of pressure in recent months amid a sharp drop in capital spending by telecommunications service providers. That's especially true in the United States, where a slowing and uncertain economy has prompted many of them to either defer or cancel new equipment orders.
On Thursday, a revenue and profit warning from Corning (GLW: down $0.25 to $20.75, Research, Estimates), a leading supplier of fiber-optic cable, underscored the weakness, but its shares edged up slightly. The stock fell earlier in the day, after the company turned in a quarterly profit report that narrowly beat expectations but ratcheted down its financial targets for the current quarter and the remainder of the year.
Corning's news prompted a downgrade from J.P. Morgan analyst Charlie Willhot, who lowered Corning's shares to "hold" from "buy," citing concerns about growth in the fiber-optic market. He also reduced his forecast for the fiber-optic cable market in 2002, saying he now anticipates a 10 percent decline rather than the previously forecast growth of between 10 percent and 15 percent.
"We would look for signs that the capital spending environment is bottoming and, more importantly, that fiber could return to a growth market as catalysts for upgrading Corning," Willhot wrote in a note to clients Friday.
Even so, the broader networking segment showed signs of strength. The American Stock Exchange's networking index gained 16.69 points to 432.38, a 4 percent rise.
That gain was part of a broader stock market rally sparked by the latest data from the U.S. Commerce Department that showed the economy grew at a 2 percent annual rate in the first quarter. Most economists had forecast growth of slightly less than 1 percent.
Networking stocks moving higher included Cisco Systems (CSCO: up $0.39 to $15.60, Research, Estimates), Sun Microsystems (SUNW: up $1.60 to $17.38, Research, Estimates), Lucent Technologies (LU: up $0.12 to $10.80, Research, Estimates) and Juniper Networks (JNPR: up $3.22 to $55.02, Research, Estimates).
Semiconductor and PC hardware stocks also finished mostly higher.
In the semiconductor segment, shares of Intel (INTC: up $1.54 to $30.18, Research, Estimates), the No. 1 PC processor maker, rose sharply a day after executives hosted an analysts' meeting during which they reiterated some of the same cautiously optimistic comments they made last week when reporting the company's latest quarterly results.
Shares of Advanced Micro Devices (AMD: up $2.49 to $30.00, Research, Estimates), Intel's chief rival in the PC processor market, also advanced. Other chipmakers finishing higher included Micron Technology (MU: up $1.59 to $44.07, Research, Estimates), National Semiconductor (NSM: up $1.39 to $28.14, Research, Estimates) and Altera (ALTR: up $0.90 to $25.16, Research, Estimates).
The stocks of companies that make the equipment used to manufacture chips gained as well, including Applied Materials (AMAT: up $3.05 to $53.89, Research, Estimates), KLA Tencor (KLAC: up $2.29 to $52.64, Research, Estimates) and Novellus Systems (NVLS: up $2.06 to $52.88, Research, Estimates).
The Philadelphia Stock Exchange's semiconductor index, which lists 16 chip and chip-equipment makers, added 31.17 points to 642.83, a 5.1 percent gain.
The top-tier PC vendors, including Dell Computer (DELL: up $0.68 to $26.00, Research, Estimates), Compaq (CPQ: up $1.20 to $18.20, Research, Estimates), Hewlett-Packard (HWP: up $0.44 to $28.39, Research, Estimates) and Gateway (GTW: up $0.75 to $19.50, Research, Estimates), all rose as well.
The Goldman Sachs computer hardware index finished 10.79 points higher at 331.05, a 3.4 percent advance.
A stellar quarterly earnings report from VeriSign gave its stock and the Internet segment a boost.
After Thursday's close, VeriSign (VRSN: up $5.69 to $51.91, Research, Estimates), which supplies Internet security software and manages the largest Internet domain-name registry database, logged a quarterly profit that smartly beat Wall Street's expectations. Executives also stood by their previous estimates for the current quarter and the remainder of the year.
Other dot.coms moving higher Friday included Internet media company Yahoo! (YHOO: up $1.24 to $19.50, Research, Estimates); Web advertising firm DoubleClick (DCLK: up $0.85 to $12.86, Research, Estimates); and online auctioneer eBay (EBAY: up $0.87 to $46.87, Research, Estimates).
Net stocks moving to the downside included online retailing leader Amazon.com (AMZN: down $0.16 to $15.27, Research, Estimates) and online services provider EarthWeb (EWB: up $0.06 to $13.23, Research, Estimates).
The Goldman Sachs Internet index rose 3.89 points to 136.64, a 2.9 percent gain on the day. 
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