NEW YORK (CNNfn) - The Nasdaq composite index broke a six-session losing streak Monday as investors took Goldman Sachs' advice and bought chip stocks ahead of a possible rebound in the hard-hit sector.
But the day's advance was modest and scattered. Losses in retailers Home Depot and Wal-Mart Stores kept the Dow Jones industrial average from rising a day before both companies post quarterly results. Trading volume stayed light.
"We're still in that pattern," said David Briggs, head of equity trading at Federated Investors. "Everyone is on hold and waiting for the next (quarterly results) pre-announcement season in September."
Still, Briggs was encouraged that the market, which has fallen for more than a year amid limp corporate profits, was not tumbling again.
The Nasdaq composite index rose 25.78 points, or 1.3 percent, to 1,982.25, its first gain since Aug. 2. The Dow Jones industrial average fell 0.34 to 10,415.91, while the Standard & Poor's 500 rose 1.13 to 1,191.29.
More stocks rose than fell. On the New York Stock Exchange, rising shares topped falling ones 1,664 to 1,454 as 832 million shares traded. Nasdaq winners beat losers 2,008 to 1,658 as 1.1 billion shares changed hands.
In other markets, Treasury securities ended little changed. The dollar fell against the euro but rose versus the yen.
Chips rise
Goldman Sachs upgraded the semiconductor sector, adding Intel (INTC: up $0.61 to $30.56, Research, Estimates), Analog Devices (ADI: up $1.54 to $48.99, Research, Estimates), and Maxim Integrated (MXIM: up $3.00 to $51.19, Research, Estimates) to its "recommended list." Linear Technology (LLTC: up $1.51 to $45.83, Research, Estimates) was raised to "market outperformer."
"The recovery writing is on the wall, and we don't see how investors will be able to resist the inflection point," wrote the Goldman analysts, who said fundamentals are likely to strengthen by the end of this year and early 2002.
Monday's is the latest attempt to forecast a recovery for chipmakers, whose shares have tumbled amid slumping demand for computers and telecommunications gear.
In a separate note, Lehman Brothers showed more caution than Goldman, saying "we are not ready to call a bottom."
Later this week, the biggest maker of chip equipment, Applied Materials (AMAT: up $0.36 to $44.84, Research, Estimates), is expected to report fiscal third-quarter earnings of 2 cents a share, a 97 percent drop from year-ago figures.
"We're still in a profits recession," David Sowerby, vice president of Loomis Sales, told CNNfn's Market Call.
Quarterly results from Wal-Mart (WMT: down $1.40 to $52.20, Research, Estimates) and Home Depot (HD: down $0.36 to $48.10, Research, Estimates) are due early Tuesday. Both retailers are seen posting profits of 37 cents per share, little changed from year-earlier figures.
May Department Stores reported second-quarter earnings of 35 cents a share, down 6 cents from the same period a year earlier but in line with estimates.
A comprehensive look at July retail sales also comes Tuesday. Economists surveyed by Briefing.com expect that the government's report will show a 0.2 percent decline last month as consumers faced with rising layoffs and sinking stock portfolios reduce spending.
"The overall total of nominal sales is likely to remain somewhat weak," said Anthony Chan, chief economist at Banc One Investment Advisors.
Alcoa restates, Ford settles
Alcoa (AA: up $0.12 to $37.13, Research, Estimates) late Friday said its second-quarter profits were not as strong as previously reported. Excluding charges, the company said it earned $421 million in the quarter, or 48 cents per share, down from the $429 million, or 49 cents per share, originally reported July 6.
Ford Motor (F: down $1.03 to $23.74, Research, Estimates) has agreed to settle a lawsuit that alleges its cars and trucks stall. The deal could cost the carmaker as much as $1 billion and affect millions of vehicles.
The U.S. government imposed a 19.31 percent duty on Canadian softwood lumber imports Friday, a move that could be good for U.S. paper companies. International Paper (IP: up $0.03 to $39.85, Research, Estimates), which rose Friday, edged higher.
Shares of Hungry Minds (HMIN: down $0.85 to $6.05, Research, Estimates) fell after book publisher John Wiley & Sons (JW.A: up $1.26 to $21.71, Research, Estimates) agreed to buy the publisher of the "For Dummies" series for $6.09 per share. That's below Friday's closing price of $6.90 per share.
But Cheap Tickets (CTIX: up $4.48 to $16.33, Research, Estimates) became Nasdaq's biggest gainer after Cendant (CD: up $0.42 to $19.62, Research, Estimates) said it will buy the online seller of discount air fares in a deal worth about $425 million.
After cutting interest rates six times this year, the Federal Reserve next Tuesday is expect to lower borrowing costs again by the smallest of margins: a quarter-percentage-point cut.
"The question is whether they go any deeper," John Lonski, economist at Moody's Investors Service, told CNNfn's Street Sweep.
The Fed's benchmark lending rate stands at 3.75 percent, its lowest level since 1994. But cheaper money has yet to lift stock prices. The Nasdaq composite index is off 19.8 percent this year, following a record decline of nearly 40 percent in 2000. A broader index, the S&P 500, is down 9.7 percent this year.
Still, those losses are modest compared to Japan's. The Nikkei fell to a 16-year low Monday.
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