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Techs edge higher
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September 1, 1999: 4:29 p.m. ET
Mild economic news not enough to rile technology investors Wednesday
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NEW YORK (CNNfn) - Strengthening sentiment among technology investors Wednesday, along with a new initiative by tech stalwart Intel, was enough to help the Nasdaq add to its gains.
The Nasdaq composite index, which is weighted heavily with technology issues, rose 11.46 to 2750.81 Wednesday, according to preliminary data, in a vacillating trading session for the index.
The market had little to be concerned about early in the trading session when the Conference Board said its index of leading economic indicators (LEI) rose 0.3 percent in July, in line with expectations. Additionally, construction spending in July fell for the fourth straight month.
There was little in the numbers to raise any inflation fears among tech investors, who are often more sensitive to rate hike possibilities due to tech's heavy reliance on borrowing.
However, Wednesday's quiet reaction also gave a sense of the market's generally mild view as it awaits August employment figures, due to be released on Friday, according to Michael Cloherty, economist at CS First Boston.
"The labor market remains where the inflationary risk lies," Cloherty said.
"The labor market is where the economy is operating closest to its constraints. That's why the market and the Fed has been obsessing over it."
Intel backstops stocks
Technology stocks were underpinned by well-received news from Intel (INTC), the world's largest maker of semiconductors, as it announced plans to enter the networking sector more fully. Its shares rose 1-1/4 to 83-7/16.
Intel unveiled its blueprints to make chips and other equipment for networking -- the products and applications that manage the flow of data over a network -- and also created a $200 million fund to push for research to build on its architecture.
Intel has been successful in the past when it moved into other areas, most notably the personal computer arena, where it is the dominant maker of semiconductors.
One of Intel's main competitors, Advanced Micro Devices (AMD), sank on the news, losing 3/4 to 19-15/16, as did Micron Technology (MU), down 2-3/8 to 72-1/2. However, others seemed to take the Intel move in stride. Applied Materials (AMAT) gained 2-15/16 to 74 and National Semiconductor (NSM) rose 5/16 to 28-1/2.
Intel's next task is to sign up companies as partners in the new technology. Investors were positive toward those companies that already signed up. Cisco Systems (CSCO) closed up 1-1/8 to 68-15/16 while Cabletron Systems (CS) finished 1/4 higher at 17-1/16.
In the telecommunications sector, Qualcomm (QCOM) shares plummeted, falling 23-1/2 -- more than 12 percent -- to 168-11/16 after Everen Securities released a report questioning whether the wireless phone service company will beat fourth quarter expectations, as it has in recent quarters.
Everen also cautioned that operating profit margins in the business may not increase as much as had been estimated originally. Lack of component availability also may put pressure on bottom lines.
Despite the warnings, investor concern didn't appear to spread as strongly to other wireless firms Wednesday. Ericsson (ERICY) edged up 5/16 to 32-7/8 while Nextel (NXTL) lost a mild 1-3/16 to 56-5/8.
Long distance phone service provider IDT (IDTC) may get more customers due to its rate cut but investors didn't show much enthusiasm for the stock after the news.
The company's shares lost 11/16 to 28-15/16 after it announced it would charge 5 cents per minute, 24 hours a day, seven days a week, with a $3.95 monthly fee. The move was a direct challenge to AT&T, which on Monday announced a 7 cents per minute plan with a $4.95 fee.
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