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Little Fed effect on techs
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July 28, 1999: 4:20 p.m. ET
Greenspan remarks do little to faze technology issues Wednesday
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NEW YORK (CNNfn) - Reruns from Federal Reserve Chairman Alan Greenspan and a rising chip sector were enough to bolster technology stocks for another day Wednesday.
Greenspan, whose every word is watched by Wall Street, appeared before the U.S. Senate Banking Committee Wednesday, reading the same prepared remarks he made before the House Banking Committee last week.
While speaking to the House committee, Greenspan warned that the Fed would not hesitate to raise interest rates if it saw inflation.
The move hit markets hard last week, especially technology stocks, because those companies borrow money to expand and the cheaper it is to borrow, the better for them. Queries to Greenspan after his remarks Wednesday provided little for investors to grab onto.
This time around, technology investors seemed to have gotten their fears out of the way, and the tech benchmark Nasdaq Composite index edged cautiously higher, up 26.53 to close at 2705.86, according to preliminary data. The index was lower before Greenspan began speaking Wednesday morning, but moved up afterwards.
Semiconductors are solid
Backing up technology's stronger showing were semiconductor stocks, which remained solid as the closely watched BancBoston Robertson Stephens semiconductor conference got underway.
Chip leader Intel (INTC) continued its winning ways Wednesday, rising 2-3/4 to finish at 70-5/16. This built on gains it made Tuesday after it received upgrades from several analysts. In addition, it got a boost from word that it would introduce two new processors for its important fall season.
Chip investors also were emboldened by news that Micron Technology (MU), the largest U.S. memory chip maker, forecast prices for such chips would edge up in the coming months. Micron shares benefited strongly from the announcement, gaining 4-1/16 to 61-15/16.
Elsewhere in the sector, Broadcom (BRCM) shares were markedly stronger, up 11-3/8 to 128. BancBoston Robertson Stephens initiated coverage of the communications chip firm with a "buy" rating Wednesday.
BancBoston tagged it with the rating because Broadcom has a dominant position in the set-top box, cable and networking businesses, all areas that are expected to have increasing importance as cable television and Net access converge.
A generally strong showing from computer hardware firms played a part in the strong showing by tech stocks as well.
On the Dow Jones industrial average, IBM (IBM) gained 2-5/16 to 128-9/16. The company announced Wednesday that was picking up hardware/software firm Mylex in a cash deal worth $240 million. IBM's Dow hardware counterpart Hewlett-Packard (HWP) rose 9/16 to 109-13/16.
Over on the direct computer seller front, Gateway (GTW) shares were up 4 to 78-7/8 while its competitor and counterpart, Dell Computer (DELL), moved 5/8 higher to 42-3/4.
Two developments from Internet portal Yahoo! (YHOO) juiced that company's stock on Wednesday, pushing it to 11-11/16 to 143.
Yahoo launched a Web resume service and, to help it in that effort, took a $1.5 million stake in Webhire, an online job search software firm. Separately, Yahoo reached an agreement with Telebanc to integrate Yahoo's services with the Internet bank.
Earnings moved other Net stocks Wednesday. Investors sold off Internet service provider Mindspring (MSPG) after the company announced earnings late Tuesday of 11 cents per share, besting Wall Street estimates by 2 cents per share. Its shares were off 4-3/4 to 35-1/2.
Online retailer e-Toys (ETYS) shares also were hit, falling 1-1/32 to 38-1/4. After markets closed Tuesday it announced a loss of 17 cents per share.
The company actually beat First Call consensus estimates by 2 cents per share, but Merrill Lynch changed its 1999 earnings estimate on the company, saying e-Toys would lose more than expected due to increased marketing costs.
Like many other Internet-related initial public offerings before it, drugstore.com (DSCM) went straight into the stratosphere Wednesday, closing at 50-1/4.
The company, which offers beauty and health-related products and information online, was priced at $18 before it opened, only to nearly triple in price.
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