CHICAGO (CNN/Money) -
Technology stocks staged a strong rebound Thursday as investors found reason for optimism in positive earnings outlooks from the software and networking sectors.
The Nasdaq Composite Index rose 37.41 to close at 1,438.48. Other tech indexes finishing higher included the Morgan Stanley 35, up 11.48 to 324.38, and the CBOE Technology Index, which advanced 11.13 to 378.95.
Laying the groundwork for the tech rally was German software giant SAP AG, which said its fourth-quarter licensing sales were better than expected. The company, which is due to report its full fourth-quarter results Jan. 30, added that its profit margin will also beat previous estimates. American Depositary Shares of SAP (SAP: Research, Estimates) climbed $1.66, more than 7 percent, to close at $24.15.
SAP's news buoyed the software sector as a whole, with Oracle (ORCL: Research, Estimates) finishing 89 cents higher at $13.01, Peoplesoft (PSFT: Research, Estimates) climbing $1.46 to $21.20, Microsoft (MSFT: Research, Estimates) up $1.57 to $55.81, and Veritas Software (VRTS: Research, Estimates) rising $1.28 to $20.01.
Investors have been looking for solid signs that technology spending is increasing, but so far the messages have been inconsistent. Charles Ryan, equity analyst at BB&T Asset Management, said the news from the software sector should help make the outlook less hazy.
"I like the fact that there's consistency in the sector," Ryan said. "Oracle is saying good things and SAP is saying good things. It's more of the news flow being consistent across the board rather than one [company] saying things look great for next quarter."
Also spurring investors to buy was Foundry Networks (FDRY: Research, Estimates), which jumped $1.28, nearly 16 percent, to $9.43 after the networking equipment maker said it expects to beat Wall Street's forecasts for its fourth-quarter financial results. Deutsche Securities upgraded its rating on Foundry's stock to "buy" from "hold."
Other networking companies trading higher included Cisco Systems (CSCO: Research, Estimates), up 51 cents to $14.95, and Juniper Networks (JNPR: Research, Estimates), up $1.01, or 12 percent, to $9.41.
Among blue chips, AOL Time Warner (AOL: Research, Estimates) advanced 45 cents to $14.33 after the company's financial chief said it will sell shares of its Time Warner Cable unit in the second quarter of 2003. AOL Time Warner is the corporate parent of CNN/Money.
In the semiconductor arena, Advanced Micro Devices (AMD: Research, Estimates) gained 22 cents to $6.91 after the company agreed to jointly develop chip-making technologies for future products with IBM (IBM: Research, Estimates), whose shares gained $2.81 to $87.
AMD rival Intel (INTC: Research, Estimates) added 38 cents to close at $17.06 after the company announced its new wireless-mobile computing technology.
The Philadelphia Semiconductor Index gained 8.59 to close at 331.03. The index is up more than 14 percent in 2003.
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