Market Update: Comp Gains 2.1%, Dow Bounces 0.2%

Philip Morris was smoked by court ruling against it. Intel closed up ahead of its much-awaited midquarter update.
By Diane Hess ,

(Updated from 4:14 p.m.)

Stocks moved up on a low volume day as the market prepared for a midquarter update from

Intel

(INTC) - Get Report

, due out after the close of regular trading today.

The

Nasdaq Composite closed up by 46.3 points, or 2.1%, to 2264, despite another splash in the confessions bucket late yesterday. The most recent preannouncement came from communications chipmaker

Broadcom

(BRCM)

. But like the index on which it trades, Broadcom gained today; the stock closed up by 13.1% to $40.24.

Yesterday evening, Broadcom warned that its second-quarter sales would fall as much as 35% from first-quarter levels. But separately, a report from the

Semiconductor Industry Association

today said the industry will rebound in the second half of this year. "The stock is being rewarded by people who think this is the worst," said Jay Meagrow, vice president of trading at

McDonald

.

The

Dow Jones Industrial Average ended the day up by 20.4 points, or 0.2%, to about 11,091.

Philip Morris

(MO) - Get Report

, a component of the blue-chip index, lost 2.96% to $48.52 after a Los Angeles court yesterday ordered the tobacco giant to hand over more than $3 billion to a 56-year-old man with lung cancer.

The broader market

S&P 500 closed up by 6.9 points, or 0.6%, to about 1277. As a group, retailers advanced modestly, despite mixed May

same-store sales numbers released this morning by a bevy of retailers. The

S&P Retail Index

gained 1.2%.

Wal-Mart

, which reported disappointing sales, closed ahead by 0.7% to $51.10.

Investors bid up technology stocks ahead of Intel's earnings update. Over the past three quarters, Intel has warned of revenue shortfalls in similarly timed updates. This time around, investors are searching for a bottom in the chip sector's cycle and appear hopeful about what the industry bellwether has to say. Intel closed the regular trading day by 4.5% to $31.16, and the

Philadelphia Stock Exchange Semiconductor Index

jumped 7.7%, making it one of today's strongest sectors on the stock market.

"Everybody's looking for a little guidance down the road," said Ray Hawkins, vice president of block trading at

J.P. Morgan

, who suggested that Wall Street is far more concerned with what Intel will say about the third and fourth quarters than with anything that might be said regarding the second quarter.

So far this confession season, earnings news from big corporate names has been weighted to the downside.

Sun Microsystems

(SUNW) - Get Report

last week warned that it would miss its second-quarter targets.

Hewlett-Packard

(HWP)

cautioned that a global slowdown in information technology could hurt its revenue.

J.P. Morgan Chase

(JPM) - Get Report

said yesterday that it expects trading revenue for each of the next three quarters to be weaker than its first-quarter results because of poor market conditions.

But investors have been concentrating on an earnings bottom and on some good news. Earlier this week, chipmaker

Xilinx

(XLNX) - Get Report

and telecommunications equipment provider

Lucent

(LU)

made positive affirmations about the state of their finances. Xilinx closed up by 9.2% to $49.37, while Lucent gained 0.1% to $8.50.

In April and early May, investors bet that corporate earnings would begin accelerating again in the third quarter of this year, and they bid stocks up significantly. But a consensus now seems to be forming that a recovery won't happen until the fourth quarter of this year or early next year.

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