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Techs lead Wall St. rally
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August 7, 2000: 4:46 p.m. ET
Nasdaq, Dow rise for third session as investors find value in tech issues
By Staff Writer Catherine Tymkiw
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NEW YORK (CNNfn) - U.S. major stock indexes rallied for the third straight session Monday as investors set aside interest rate concerns to snap up bargains in the technology sector.
The Nasdaq composite index set the tech tone, gaining nearly 2 percent, led by Cisco Systems and Dell; both are reporting quarterly results this week. The tech interest spilled over into the Dow Jones industrial average, which was boosted by Hewlett-Packard and IBM.
Investors saw value in technology issues, with strong results expected to come in from bellwethers such as Cisco and Dell. Last Friday's jobs report showed the nation lost jobs in July, lending further comfort to investors hoping for an end to interest rate hikes by the Federal Reserve.
On Tuesday the Labor Department will report second-quarter productivity and expectations are for a 4.5 percent gain, compared with a 2.4 percent gain during the first quarter. If the numbers come in as expected, analysts said, it would signal that productivity is still outpacing inflation.
 "The market fundamentals are improving. The economy is slowing and the Fed is close to a bottom (on rate hikes)," said Phil Orlando, chief investment officer at Value Line Asset Management. "Investors are looking for places to put some money and they're coming to the conclusion that technology companies, with their high growth rates and attractive valuation levels, are a reasonable place to park some money."
That search helped the Nasdaq jump 75.63 points to 3,862.99. The index is still off 5 percent from the start of the year but building on last week's gains.
 The Dow surged 99.26 to 10,867.01. The blue chip index is off 5.4 percent from the start of the year. The S&P 500 gained 16.39 to 1,479.32.
Market breadth was positive. On the New York Stock Exchange, advancers beat decliners 1,714 to 1,134, as more than 853 million shares changed hands. On the Nasdaq, winners outpace losers 2,233 to 1,678, as volume reached more than 1.3 billion shares.
In currencies, the dollar rose against the yen but slipped versus the euro.
Cisco, Dell, lead tech buying wave
With earnings season winding down, some tech leaders, most notably Cisco Systems, are still due to report this week and generating strong interest from buyers.
"Cisco reports tomorrow (Tuesday) and Cisco is the 800-pound gorilla of technology nowadays," said Alan Kral, portfolio manager at Trevor Stewart Burton. "People are reasonably confident that it ought to be a pretty good number and that has set the tone for the tech group as a whole. More than half of the Dow's gains are in technology stocks."
Cisco Systems (CSCO: Research, Estimates), due to report quarterly results Tuesday, gained 11/16 to 66-1/4, Dell (DELL: Research, Estimates), reporting Thursday, advanced 1-1/4 to 42-5/8, and Applied Materials (AMAT: Research, Estimates), reporting results Wednesday, rose 2-3/16 to 69-15/16.
Analysts UBS Warburg expects Cisco's results to fall in line with forecasts and maintains a "buy" rating on the tech firm.
 The biggest gainer on the Dow was Hewlett-Packard (HWP: Research, Estimates), rising 3-9/16 to 115-5/16. And IBM (IBM: Research, Estimates) jumped 7-16 to 116-5/16.
Investors comforted by the economy
Although economic news was lacking Monday, analysts said investors have gotten more comfortable with the idea that the Federal Reserve's monetary policy-making body will leave interest rates unchanged when it meets Aug. 22.
"Historically August has the reputation of being one of the poorer performing months but, this time around, with some of the rate fears about the Fed's meeting seemingly cooling off, this August may not be too bad," Harry Laubscher, market analyst with Tucker Anthony, said. "In the short term, we expect stock prices to work their way higher."
If interest rates hold steady, the cost of borrowing or lending money will be stable and profitability can continue to grow at a decent clip.
"The perception is turning toward the fact that the economy is slowing and we can still continue to grow even if the economy grows at 5 percent," said Peter Cardillo, director of research at Westfalia Investments.
But interest-rate sensitive financial issues sold off. J.P. Morgan (JPM: Research, Estimates) shed 1-3/16 to 142-7/16, and American Express (AXP: Research, Estimates) fell 1 to 58-13/16.
Verizon, union still talking
In company news, negotiations resumed Monday morning between Verizon Communications (VZ: Research, Estimates), the nation's largest local phone company, and its union after a strike early Sunday put more than 85,000 of its unionized employees on the picket lines. Verizon shares rose 15/16 to 47-7/8.
 Barnesandnoble.com (BNBN: Research, Estimates) advanced 1-7/16 to 5-3/16 on reports the online bookseller is joining forces with Microsoft to form an electronic book partnership, according to an article in The New York Times.
Amazon.com (AMZN: Research, Estimates) gained 1-5/16 to 33-13/16 after the news about its rival barnesandnoble.com. 
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