There was no real news provoking today's semiconductor rally -- and that may be just the reason for it.
"There's an absence of bad news" today, said Doug Myers, the vice president of equity trading at
. "There's just nothing out there that looks like it's going to derail" a rally, so individual investors and money managers are buying in, he said.
Dow Jones U.S. Semiconductor Index
rallied 5.3% by midday, a bit stronger than the tech-heavy
Nasdaq 100 Index
, which was up 4.6% as tech stocks gain ground. The
Philadelphia Stock Exchange Semiconductor Index
, known as the
, had picked up 5%.
"Right now the market's trying to tell you that the worst is over," Myers said.
Applied Micro Circuits
both soared 15.1% by about midday.
PMC-Sierra was slightly helped by the announcement earlier today that it would develop chips for advanced metropolitan "ethernet" networks. But there was no such additional news to raise
11.9% to $34.67. "There's an absence of sellers in the marketplace today," said Myers, indicating that the buyer-driven market typically boosts prices. The lack of any earnings news that could potentially hinder the markets is also providing for upward movement in the sector, he indicated.
Semiconductors have "the greatest upside potential of the tech stocks, so that's why the money tends to flow into them first," the trader said. Of course, money tends to flow out of them first when the market is slipping, he noted.
On the shorter end of today's gain spectrum were
Advanced Micro Devices
, still up a strong 5.5% to $31.66, while chipmaking powerhouse
had managed a 4% gain to $31.40.
, weighted down by the only negative news in the sector, was up 2.9% to $45.39. A note on Micron from
Credit Suisse First Boston
this morning said that "until we begin to see substantive and consistent signs of a pick-up in end-market demand, we believe the stock will likely be limited to a trading range."
, meanwhile, had risen 5.7%, a gain of $2.11, to $39.08.
The semi stocks are "up a pretty good amount here," Myers said. "I think they're starting to stretch their legs a bit."