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 smaller rise, adding 0.7% to $22.73. The rise in tech closely mirrored an upward move in the S&P 500, which climbed 1.4% to 1146. In tech as well as the broader market, the story was similar: Investors seemed relieved to have avoided the uncertainty that blemished the 2000 election, said Gabriel Erdi, an analyst for Skye Investment Advisors. "I think that's a big thing that was basically removed in investors' eyes. It was somewhat of a worry with how close the polls were." As an added benefit, Republicans snagged additional seats in the House and Senate, lending them political momentum in both houses of Congress as well as the White House. Although conventional wisdom holds that the market prefers a divided government, because gridlock tends to mean few new laws are passed, Erdi said he believes that may no longer be the case. "With terrorism
a worry , I think it's very important that whatever 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 the same broader sentiments helping the stock market in Wednesday trading. "If you look at the two administrations, not that either is particularly anti-business, the market's conclusion is that the Bush administration is probably slightly more pro-business than Kerry," said Ozan Akcin, chief investment strategist for Puglisi & Co. He said that likely reflects Bush's push for reductions in capital gains and dividend taxes during his prior stint in office. Though gains in tech were broad-based, most names were up relatively modestly. Analysts said that reflected ongoing fundamental concerns about the business outlook for technology companies heading into 2005.
Indeed, the benchmark Philadelphia Stock Exchange Semiconductor Index was recently down 0.4% to 413. Later today the lead chip trade group, the Semiconductor Industry Association, is expected to rein in its near-term revenue growth outlook when it delivers its twice-yearly forecast for the industry. Just this week, wireless chipmaker National Semiconductor ( NSM) issued an
earnings warning and Maxim ( MXIM) said new orders for chips fell sharply. "Fundamentals have been slowing down for two or three months, I'd say, and usually high beta stocks like chips tend to suffer the most," said Akcin. "I think there's been a little confidence coming back lately, but at the same time people are reconciling that with a softer fundamental picture. That's probably why tech is somewhat more muted today than at the super high end." That said, Erdi thinks there's the potential for a sustained 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, the market can look primarily at earnings. It remains to be seen how that will be. But a lot of these names have been pretty stagnant valuation-wise. I could see a little bit of a run-up from here through January." Investors will get further information on the shape 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 be priced into the shares of companies like Applied Materials, given increasing gloom on capital spending expectations.