Nasdaq Steals the Spotlight - TheStreet

Updated from 4:07 p.m. EST

Chip shares powered the


while the


run at 11,000 stalled Monday, as several big mergers kept buyers interested.

The blue-chip index closed 3.69 points, or 0.03%, lower at 10,936.86, having traded within 15 points of the 11,000 level for the first time since June 2001. The

S&P 500

added 3.19 points, or 0.26%, to 1225.31. Both indices closed at near four-year highs Friday. The Nasdaq, meanwhile, rose 19.60 points, or 0.95%, to 2090.21, its best level since mid-February.

Trading volume on the

New York Stock Exchange

was on the light side at 1.49 billion shares, with advancers beating decliners by a ratio of 6 to 5. Volume on the Nasdaq was 1.95 billion shares, with advancers virtually matching decliners.

In other markets, the 10-year Treasury bond, which rallied along with stocks on Friday's employment data, was again up 2/32 in price to yield 4.30%. The dollar was higher against the yen and euro.

"We're seeing a slight follow-through from Friday's strength," said John Hughes, equity strategist with Shields & Co. "The question is if you will see lagging groups advance or leading groups pull back."

Strong sectors Monday included semiconductors, hardware, biotech and transportation. Weakening sectors included energy, steel and homebuilding, which helped lead the rally last week and for much of the past year.

"The one thing that you like to see is the rotational flow of funds moving away from stronger sectors into the laggers," said Barry Hyman, equity market strategist with Ehrenkrantz King Nussbaum. "It's a sign of money still moving into the market and opportunistic investors taking advantage of perceived bargains."

Some analysts, such as Phillip Roth, chief technical market analyst with Miller Tabak & Co., felt the slight dip in the Dow was due to the rotation in and out of different sectors.

"I think you're just getting some profit-taking," said Roth. "You had new highs on the Dow and S&P 500 without much vigor. The leading sectors were off and the lagging sectors were bouncing, showing people were bargain-hunting. It gives signs to an overbought market, which could've bothered some traders. The bond market and oil have been relatively flat, so there's not much else to rely on."

Oil closed higher despite OPEC's president reportedly signaled that the cartel plans no further production cuts before its next regular meeting on March 16. The April crude future, which had flirted with record highs last week, added 11 cents to $53.89 in Nymex floor trading.

Chip stocks were on the rise. The Philadelphia Semiconductor Sector index added 1.9% Monday, helping to boost the Nasdaq. Both


(INTC) - Get Report


Texas Instruments


, which are components of the index, will be giving midquarter updates this week.

National Semiconductor


, another component, will report quarterly earnings Thursday.

"One of the disappointments has been that the technology stocks have not enjoyed the rally," said Michael Sheldon, chief market strategist with Spencer Clarke LLC. "So far today, we're seeing some catch-up in some tech-related names. In terms of the overall market picture, the Dow and S&P 500 broke out to multiyear highs, while the Nasdaq index remains range-bound.

"This week will be an important week for the Nasdaq, mainly because a number of semiconductor stocks will provide midquarter updates," Sheldon said. "A decline in inventories and a growing final demand could provide the catalyst for the index to move higher. The rally in tech is coming from investors looking for stocks that haven't participated in the recent rally."

Wall Street was rocked Monday morning by news that


(BA) - Get Report

has fired CEO Harry Stonecipher after determining he was having an affair with a female executive of the company. The 68-year-old Stonecipher, who is married, was brought out of retirement last year and had mostly succeeded in righting Boeing's ship.

Boeing named CFO John Bell to succeed Stonecipher on an interim basis. The stock was down 8 cents down, or 0.1%, to close at $58.30.


(SNE) - Get Report

has named Sir Howard Stringer chairman and chief executive. Stringer replaces Nobuyuki Idei, and Ryoji Chubachi takes over as president from Kunitake Ando. Shares of Sony added 77 cents, or 2%, to $39.31.

In merger news,

Capital One

(COF) - Get Report

is jumping into retail banking with the acquisition of



for cash and stock worth about $5.35 billion. And European defense contractor

BAE Systems

will acquire Virginia-based

United Defense Industries


for about $4 billion in cash and stock. The deal, which values shares of UDI at $75, helped boost shares $15.09, or 25.9%, to finish at $73.35. Hibernia added $5.67, or 21.3% to $32.24.

Marvel Enterprises'


fourth-quarter earnings more than doubled to $30.1 million, or 27 cents a share, on a 17% jump in revenue to $100.5 million. Backing out a gain, the company beat per-share estimates by a nickel. Still, shares were down 45 cents, or 2.4%, to close at $18.00.


(QCOM) - Get Report

raised its fiscal second-quarter earnings projection to a range of 26 cents to 28 cents a share from 25 cents to 27 cents a share. The forecast excludes the impact of the company's strategic initiatives. However, Qualcomm also revised its revenue outlook and now sees $1.35 billion to $1.40 billion, vs. $1.35 billion to $1.45 billion. Qualcomm rose $1.89, or 5.3%, to $37.39.

Cell Therapeutics

(CTIC) - Get Report

fell almost 50% after it said a late-stage trial of its experimental lung cancer drug Xyotax did not show any difference from standard chemotherapy. Shares were down $4.75, or 47.5%, to finish at $5.25.

The Wall Street Journal

reported Monday that

General Electric

(GE) - Get Report

will cut more than $1 billion off its original operating cash flow for 2003, according to its latest filings. GE gained 1 cents, or 0.03%, to $36.13.

In brokerage action, Prudential upgraded


(MCD) - Get Report

to overweight from neutral and raised its fiscal year 2005 and 2006 EPS estimates. The brokerage sees limited downside earnings risk because of the company's strength in the U.S. Prudential sees sales trends in Europe improving because of discounting, and feels the reward on a possible turnaround is greater than the risk. Shares rose 25 cents, or 0.7%, to $34.21.

Piper Jaffray downgraded

Research In Motion


to market perform from outperform, citing competition concerns for the wireless device maker. The brokerage also cut its fiscal 2006 and 2007 pro forma EPS estimates. RIM fell $5.10, or 7.6%, to $62.22.

Brokerages Merrill Lynch and CSFB downgraded shares of



to sell and underperform, respectively. Merrill cited the resignation of CFO Alan Dawes last week for the downgrade, cutting its first-quarter EPS to a loss of 35 cents from its previous estimate of a loss of 25 cents a share. The brokerage also fears more adjustments and restatements for the company. Delphi lost 31 cents, or 5.7%, to $5.15.

On the economic front, the

Federal Reserve

said Monday that U.S. consumer credit rose in January by $11.5 billion, or 6.6%, to $2.12 trillion, the fastest pace in three months. Consumer credit for December was revised to and increase by $8.7 billion.

Overseas markets were mixed, with London's FTSE 100 down 0.3% to 5022 and Germany's Xetra DAX finishing up 0.1% at 4428. In Asia, Japan's Nikkei rose 0.4% overnight to 11,925, while Hong Kong's Hang Seng gained 0.3% to 13,772.