With President Bush preparing for a second term, reassured investors boosted the Nasdaq 1.2% in recent trading. The Nasdaq Composite gained 23 points to 2008.Among the gainers were Yahoo! ( YHOO), up 1.5% to $38.30; Cisco ( CSCO), up 1% to $19.48; and Dell ( DELL), up 1.7% to $36.22. Intel ( INTC) showed a smallerrise, adding 0.7% to $22.73. The rise in tech closely mirrored an upward movein the S&P 500, which climbed 1.4% to1146. In tech as well as the broader market, the storywas similar: Investors seemed relieved to have avoidedthe uncertainty that blemished the 2000 election, saidGabriel Erdi, an analyst for Skye Investment Advisors."I think that's a big thing that was basically removedin investors' eyes. It was somewhat of a worry withhow close the polls were." As an added benefit, Republicans snaggedadditional seats in the House and Senate, lending thempolitical momentum in both houses of Congress as wellas the White House. Although conventional wisdom holdsthat the market prefers a divided government, becausegridlock tends to mean few new laws are passed, Erdisaid he believes that may no longer be the case. "Withterrorism
a worry, I think it's very important thatwhatever administration is in office be able to pass the laws that need to be passed," he said. Others agreed that the gains in tech reflected thesame broader sentiments helping the stock market inWednesday trading. "If you look at the two administrations, not thateither is particularly anti-business, the market'sconclusion is that the Bush administration is probablyslightly more pro-business than Kerry," said OzanAkcin, chief investment strategist for Puglisi & Co.He said that likely reflects Bush's push for reductionsin capital gains and dividend taxes during his prior stintin office. Though gains in tech were broad-based, most nameswere up relatively modestly. Analysts said thatreflected ongoing fundamental concerns about thebusiness outlook for technology companies heading into2005.
Indeed, the benchmark Philadelphia Stock ExchangeSemiconductor Index was recently down 0.4% to 413.Later today the lead chip trade group, theSemiconductor Industry Association, is expectedto rein in its near-term revenue growth outlook whenit delivers its twice-yearly forecast for theindustry. Just this week, wireless chipmaker NationalSemiconductor ( NSM) issued an
earnings warning and Maxim ( MXIM) said new orders for chips fell sharply. "Fundamentals have been slowing down for two orthree months, I'd say, and usually high beta stocks like chips tend to suffer the most," said Akcin. "Ithink there's been a little confidence coming backlately, but at the same time people are reconcilingthat with a softer fundamental picture. That'sprobably why tech is somewhat more muted today than atthe super high end." That said, Erdi thinks there's the potential for asustained rise in the Nasdaq. "Traditionally speaking,it's a positive time of the year going into January.Now that we've removed the elections as an issue, themarket can look primarily at earnings. It remains tobe seen how that will be. But a lot of these nameshave been pretty stagnant valuation-wise. I could seea little bit of a run-up from here through January." Investors will get further information on theshape of near-term growth when Dell ( DELL), Hewlett-Packard ( HPQ) and Applied Materials ( AMAT) report earnings in the upcoming weeks.Erdi said he expects no big surprises. He thinks a more humble outlook may already bepriced into the shares of companies like AppliedMaterials, given increasing gloom oncapital spending expectations.