NEW YORK (CNNfn) - Technology stocks bucked a broader market downturn Thursday after testimony from Federal Reserve Chairman Alan Greenspan suggested that further interest-rate hikes are imminent.
In prepared remarks before Congress Wednesday, Greenspan said the Fed's recent short-term interest-rate hikes have had little effect on the nation's robust economy, suggesting that the Fed will become more aggressive in raising interest rates still higher.
That sparked a sell-off in the broader market and a rally in tech stocks, which many analysts believe can maintain their value in a rising interest-rate environment.
"Greenspan's commentary sure indicated there is more than one interest-rate hike to come, and that's not what the market wanted to hear," said Barry Hyman, chief market strategist at Ehrenkrantz King Nussbaum.
"The Nasdaq is a different ball game," Hyman added. "It's not a credit-sensitive sector."
The tech-laden Nasdaq composite index ended the day at a record high, ticking up 121.22 to 4,548.87, a 2.7 percent rise on the day. Meanwhile, the Dow Jones industrial index fell 46.84 to 10,514.57, and the S&P 500 edged down 3.15 to 1,388.25.
H-P down sharply after strong earnings report
Dow component Hewlett-Packard (HWP: Research, Estimates) was one of a handful of tech stocks losing ground Thursday. Shares of the Palo Alto, Calif.-based computer maker ended the session down 4 at 127, a 3 percent decline on the day. Thursday's slide came even after the company reported better-than-expected quarterly earnings after Wednesday's closing bell.
It also came despite bullish comments from several securities firms on Thursday. Credit Suisse First Boston raised its fiscal 2000 earnings estimate to $3.40 per share from $3.35 per share and reiterated a "buy" rating. Lehman Brothers raised its price target to $160 from $130. Deutsche Banc Alex Brown upgraded its rating on the stock to a "strong buy" with a price target of $160.
Even so, some observers said that the upside had already been priced into the stock, and Thursday's downturn was the result of investors selling on the good news.
"There was a bit of a run-up before the results," said ABN Amro analyst Jonathan Ross. "They were good results, but the turnaround is already in the price."
Meanwhile, other computer equipment makers headed higher.
Shares of Dell (DELL: Research, Estimates) added 2-11/16 to 40-11/16, a 7 percent gain. Compaq (CPQ: Research, Estimates) shares added 3/16 to 26-1/16. Gateway (GTW: Research, Estimates) shares gained 13/16, closing at 56-5/16. Apple Computer (AAPL: Research, Estimates) shares edged up 3/4 to 114-7/8.
The Goldman Sachs computer hardware index added 11.34 to 546.16, a 2.1 percent rise on the day.
Chip stocks also headed mostly higher Thursday. The Philadelphia Stock Exchange's semiconductor index advanced 24.88, or 2.6 percent, to 978.8.
Among the day's strongest chip advancers was Cirrus Logic (CRUS: Research, Estimates), which ended the session 2-1/16, or 11 percent, higher at 20-3/4.
Analog Devices (ADI: Research, Estimates) also gained sharply, ticking up 13-1/2, or 10.6 percent, to 141. The company on Wednesday beat analysts' fiscal first-quarter expectations by a nickel per share, and on Thursday Lehman Brothers analyst Daniel Myers pegged a price-target of $180 on the stock and raised his earnings-per-share estimate to $2.32 from $2.01.
Microprocessor giant Intel (INTC: Research, Estimates) added 2-13/16 to 110, a 2.6 percent gain on the day. Meanwhile, shares of Intel rival Advanced Micro Devices (AMD: Research, Estimates) slipped 1-5/8, or 3.7 percent, to 42-1/18.
Also finishing lower Thursday were ST Microelectronics (STM: Research, Estimates), down 7-3/8, or 3.8 percent, at 185-5/8, and Motorola (MOT: Research, Estimates), which slipped 5/8 to 147-1/4.
Antitrust probe weighs on DoubleClick
Increasing pressure from government regulators bogged down Internet advertising outfit DoubleClick (DCLK: Research, Estimates) on Thursday. Shares fell 15-3/4, or 14.8 percent, to 90-3/4, after the Michigan Attorney General's Office said it was pursuing an investigation of the company's business practices, joining similar investigations by New York State as well as the Federal Trade Commission.
Meanwhile, other dot.com stocks headed mostly higher. The Dow Jones composite Internet index added 4.61 to 423.83, a 1.1 percent rise on the day.
Online toy seller eToys (ETYS: Research, Estimates) was among the sharpest advancers, ending 1-7/8 higher at 15-1/2, a 13.8 percent rise on the day. Shares of Internet service provider Concentric (CNCX: Research, Estimates) rose 3-5/8, or 7.1 percent, to 54-11/16. Online community site theglobe.com (TGLO: Research, Estimates) added 11/16, finishing 10.3 percent higher at 7-3/8. America Online (AOL: Research, Estimates) shares added 1-1/8, or 2.2 percent, to 52-7/8.
Heading lower were: Web portal Lycos (LCOS: Research, Estimates), off 3/8 at 72-1/4; online software vendor Beyond.com (BYND: Research, Estimates), which fell 15.32, or 7.5 percent, to 5-13/16; and online retailing giant Amazon.com (AMZN: Research, Estimates), which slid 1-11/16, ending the session 2.4 percent lower at 69.
Microsoft heads higher after Windows 2000 rollout
Microsoft shares added more than 2 percent Thursday, rising 2 points to 99-5/8 after the software giant officially unveiled its long-awaited Windows 2000 operating system.
In recent weeks, there had been some uncertainty surrounding the new operating system, which the company developed as an upgrade to its existing Windows NT operating system, which many market observers said they expect to cause compatibility problems with existing software.
In an interview on CNNfn Thursday, Microsoft chief executive Steve Ballmer said that the new software, which has been in the works for the past year, is ready for widespread deployment across corporate networks and Internet infrastructures.
"It's the most tested, most widely-implemented product in the test phase of anything we've ever built," Ballmer said. "It's rock solid. We've got it deployed on literally hundreds of thousands of desktops. It's ready to go."
Bill Gates, Microsoft chairman and chief software architect, is scheduled to appear for an interview on CNNfn's Moneyline News Hour program Thursday evening at 7 p.m. EST.
Meanwhile, Microsoft competitors posted even sharper gains.
Shares of Red Hat (RHAT: Research, Estimates), the most well-known distributor of the Linux operating system, added 5-3/16, or 7.4 percent, to 75-3/16. Linux is an "open-source" operating system, which means that it is in the public domain and open to modifications by independent developers. Many industry observers see Linux as an emerging rival to Microsoft's Windows operating system, especially in the server market, where it is targeting Windows 2000.
VA Linux (LNUX: Research, Estimates) also rose sharply on Thursday, closing up 10-1/16 at 118, a 9.3 percent rise on the day. Meanwhile, network software vendor Novell (NOVL: Research, Estimates) shares ticked up 2-5/16, or 5.7 percent, to 43-1/16 ahead of the release of its fiscal first-quarter earnings, which were posted after the closing bell.
The company reported earnings of $45 million, or 13 cents per share, in line with analysts' forecasts, on sales that rose 11 percent to 316 million. 
-- from staff and wire reports
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