Technology shares give Dow a boost
US STOCKS rose last night as investors returned to financial and technology shares on bets the recent rally could have more room to grow after a brief pullback.
Volume, however, was light, a possible indication of a lack of broad conviction.
Technology gains were led by big-cap tech and semiconductor companies after five straight days of losses for the PHLX Semiconductor index. Apple was among the top boosts on Nasdaq, rising 2.9 per cent to $122.95, while the PHLX index climbed 3.2 per cent.
The surge in US markets over the past two months has made investors who missed the rally anxious to get back into stocks, analysts said.
“We’ve had a bit of a correction over the last couple days and people may be going in there and adding a bit, which makes the gains sustainable,” said Kurt Brunner, portfolio manager at Swarthmore Group in Philadelphia, Pennsylvania.
Defensive stocks such as consumer staples and healthcare also gave a lift, underscoring some of the lingering worry about the economy following a report that showed a jump in weekly jobless claims.
Coca-Cola was among the Dow’s biggest lifts, up 2.9 per cent at $44.90, and Merck added 1.5 per cent to $26.05.
The Dow Jones industrial average added 46.43 points, or 0.56 per cent, to 8,331.32. The Standard & Poor’s 500 Index gained 9.15 points, or 1.04 per cent, to 893.07. The Nasdaq Composite Index climbed 25.02 points, or 1.50 per cent, to 1,689.21.
The gains in financials and technolgy were striking, coming shortly after some analysts said the very same sectors would likely lead the market lower, having underpinned its run-up since March.
Shares of semiconductor companies got a lift after Bank of America-Merrill Lynch raised its rating and price target on shares of Novellus Systems citing cost cutting and attractive valuations. Novellus, which provides equipment to the semiconductor industry, rose 7.1 per cent to $16.88.
Financial shares gained, including JPMorgan & Chase, up 4.4 per cent to $35.54.