Tech Stocks Finish Strong

The shadow of Greenspan can't prevent a surge in the Nasdaq.
Publish date:

Updated from 4:05 p.m. EDT

Stocks closed mixed Monday as general cautiousness ahead of

Federal Reserve

Chairman Alan Greenspan's testimony before Congress couldn't weigh down the


, which posted its best single-day gain in two weeks.

The Nasdaq ended up 24.67 points, or 1.24%, at 2020.41; the

Dow Jones Industrial Average

closed down 14.12 points, or 0.14%, to 10,437.85; and the

S&P 500

turned positive in the final hour of trading to finish up 1.23 points, or 0.11%, at 1135.84. The 10-year Treasury note was trading down 8/32 in price to boost the yield 4.37%, while the dollar was lower against the euro but stronger against the yen.

The Nasdaq was powered by strength in telecommunications and biotechnology stocks. The Amex Biotech Index closed up 2.8% as investors searched for safe havens in the face of interest rate risk. The Philadelphia Semiconductor Index rebounded from last week's selloff to finish up more than 1.4%.

With Monday's surge, the Nasdaq finished above its 50-day simple moving average and put itself back in positive territory for the year.

Volume on the

New York Stock Exchange

stayed under 1.2 billion shares, and decliners outnumbered advancers by a tiny margin. On the Nasdaq, almost 1.7 billion shares changed hands, and advancers edged out decliners by about 5 to 4.

"We're sort of between a rock and a hard place," said Peter Dunay, chief market strategist at Wall Street Access. "Earnings look good, but we know they're slowing down. The economy is strong, but people know it's going to slow down, so investors just sit on their hands here."

Dunay attributed strength in the Nasdaq to the recent dominance in the markets of financial professionals who are buying shorter-term movements. "The Nasdaq got torn up pretty good last week," he said. "So, they see a sector that's down, they hope to buy into it quickly and then start selling, just playing for short-term movement. I think that's a driver here."

Hugh Johnson, chief investment officer with First Albany, said he thinks things have stabilized since concerns about higher interest rates roiled the markets last week, and investors are now waiting for a signal from the Fed.

"There are a lot of questions out there about the future of interest rates that have not been answered, and that has stalled the market," he said. "We'll get some clarity when we listen to Alan Greenspan. That's the most important event of the week along with earnings, and that's what people are waiting for."

Greenspan will testify before the Senate Committee on Banking, Housing and Urban Affairs about the state of the banking industry on Tuesday at 2:30 p.m. EDT, and the other on Wednesday at 10 a.m., when he testifies before the Joint Economic Committee about the economic outlook.

Johnson added that concerns about the future of the U.S.-led occupation of Iraq, and instability in the Middle East, lay behind some of the market's weakness. "It's a big problem for George Bush, which is bad news for investors," he said, pointing out that a failure to re-elect the president in November could jeopardize tax rates that have helped Wall Street.

In Iraq, local leaders in the town of Falluja joined with American officials in calling for rebels to surrender their weapons and permit the resumption of American and Iraqi patrol, according to media reports. At least 10 American Marines and soldiers were killed in Iraq over the weekend, as violent insurrections continued. That brings American troop deaths in April to more than 90, higher than the 82 killed in November -- the largest number until this month. Nearly 700 American soldiers have been killed since the invasion of Iraq began 13 months ago.

Overseas markets were mixed. London's FTSE 100 closed up 0.2% to 4546, and Germany's Xetra DAX lost 0.2% to 4025. In Asia, Japan's Nikkei fell 0.5% to 11,764, while Hong Kong's Hang Seng was flat at 12,450.

Shares of


(MCD) - Get Report

lost 2.6% after the fast-food icon reported that its Chairman and Chief Executive

Jim Cantalupo had died of an apparent heart attack. The company named President and Chief Operating Officer Charlie Bell as its new chief executive. The stock closed down 71 cents to $26.75.

In earnings news,

Eli Lilly

(LLY) - Get Report

reported operating earnings of 70 cents a share, 4 cents better than the Thomson First Call consensus estimate. Its shares ended up 95 cents, or 1.3%, to $73.40.

Fannie Mae


said first-quarter net income fell to $1.9 billion, or $1.90 per share, from $1.94 billion, or $1.93 a share, last year. Stripping out charges related to its hedging instruments, Fannie Mae said it had earnings of $2.03 a share in the latest quarter, easily beating the analyst consensus estimate of $1.91. Its shares closed down 38 cents, or 0.5%, to $73.83.

Shares of


(MMM) - Get Report

ended flat after the industrial giant reported higher earnings and raised its outlook for the year. It reported net income of $722 million, or 90 cents a share, compared to $502 million, or 63 cents a share, a year earlier. The results beat Wall Street's consensus estimate of 87 cents a share. The company now expects to earn $3.60 to $3.70 a share in 2004 instead of the $3.52 to $3.62 a share forecast earlier.

On the tech front,



said it earned 91 cents a share in the first quarter of 2004, about 3 cents a share better than forecasts, and predicted second-quarter earnings roughly in line with estimates. Its shares closed up $2.31, or 2.5%, to $96.16.

Also, the Conference Board's index of leading indicators met expectations for March, rising 0.3% after staying flat in February.

Earnings season kicks back into high ear Tuesday, with more than 50 companies reporting first-quarter results before the opening bell. Among some of the notable names scheduled to make announcements,

General Motors

(GM) - Get Report

is expected to report profit of $1.79 a share, down from last year's $1.81.


(MO) - Get Report

is expected to say it earned of $1.13 a share, up from last year's $1.07 a share.


(PFE) - Get Report

is expected to report profit of 51 cents a share, up from last year's 45 cents a share, and

Wells Fargo

(WFC) - Get Report

is expected to report 98 cents a share, up from last year's 88 cents a share.

In addition, investors will be digesting mostly positive earnings reports from Monday's post-close news rush, namely those from




Kraft Foods



No major economic news is scheduled for release Tuesday.