Wednesday's Market: Buyers Take Tech Stocks Higher

Nasdaq tacks on fourth day of gains. Some blue-chip winnings get cashed in.

Author:: Diane Hess
Publish date:: May 2, 2001 5:17 PM EDT

Nasdaq tacks on fourth day of gains. Some blue-chip winnings get cashed in.

Driven by continuing optimism the economy is pepping up from its slowdown, investors snapped up tech stocks for the fourth day in a row, while they took some fresh profits from blue-chips.

The

Nasdaq Composite Index finished up 52, or 2.4%, to 2221 -- its highest level since March 6. Since closing at a low of 1638.8 on April 4, the Nasdaq is up 36% through Wednesday's close. A report that came out this morning saying the networking market in the U.S. was stabilizing raised Wall Street's hopes about a recovery in tech companies.

Shares of Nasdaq bellwether

Cisco

(CSCO) - Get Report

rose 12.4% to $20 after

Morgan Stanley

analyst Chris Stix said "we received some positive data points regarding North American enterprise networking spending." The

American Stock Exchange Networking Index

jumped 6%. Like the Nasdaq itself, Cisco is still significantly off its 52-week high of $71.68.

As investors continued to move back into what they view as rapid growth sectors, the

Dow Jones Industrial Average flip-flopped late in the trading day. It finished down 22 points, or 0.2%, to 10,877. Yesterday, the blue-chip index ended at its highest level since Feb. 13. Since touching an intraday low of 9100 on March 22, the Dow is up 19.5%, but still off its record high.

Within the context of recent gains, traders weren't worried about today's losses on the Dow. "We were up 165 points yesterday, and we gave back 22 points today," said Art Hogan, market analyst at

Jefferies

. "We shouldn't get ahead of ourselves in being concerned about this."

Dragging on the industrials were shares of

ExxonMobil

(XOM) - Get Report

, which fell 2.6% to $86.50 after industry data released this morning showed a large increase in petroleum inventories. Crude oil futures took a hit this morning following the report.

Other blue-chip stocks finished lower as well: Drug company

Merck

(MRK) - Get Report

was down 0.9% to $74.91, while manufacturing conglomerate

(MMM) - Get Report

was lower by 0.8% to $116.55.

After a few light volume days, trading activity was heavier on both the

New York Stock Exchange and the Nasdaq. "What's happening is that investors don't want to be left out," said Peter Green, market analyst at

Gerard Klauer Mattison

. "So, they're buying tech aggressively."

But despite today's run-up in technology, experts observed a pullback in companies that have helped led the recent rebound. "Both Microsoft and IBM couldn't hold their opening prices today," Green said. "After such a large advance, we're seeing some profit taking in those names." Shares of

Microsoft

(MSFT) - Get Report

finished off 0.6% to $69.76, while

IBM

(IBM) - Get Report

closed down 2.6% to $115.40.

Among stocks in the news,

Brocade Communications

(BRCD)

jumped 16.3% to $49.94 after the networking equipment provider said it would

meet or exceed third-quarter expectations. And name-your-own-price e-tailer

priceline.com

(PCLN)

advanced 5.6% to $6.96 after it reported first-quarter results that showed a narrower loss and higher revenue. (

TheStreet.com's

Tim Arango discusses why analysts think the recent surge in priceline's stock

has left it pricey.)

Looking at the sectors driving today's action, drug, retail and oil sectors finished lower, while semiconductor, computer hardware, dot-com and networking stocks moved higher.