Investors last week shifted money from money market funds and U.S. treasuries to technology stocks as some companies' fourth-quarter earnings beat expectations.
The average technology fund we track gained 2.5% in the five trading days ending Feb. 5, excluding inverse funds that sell short technology and Internet stocks.
Amazon.com (AMZN) (Stock Quote: AMZN), which surged 26.4% in the five trading days, had its best holiday season ever. In the latest quarter, the company increased net income by 8.7% to $225 million from a year earlier on $6.7 billion in sales, up 18%.
Adding to its sales of digital music and videos, Amazon.com has expanded its offerings to include a library of more than 600 casual games at a sub-$10 price point. The company also will begin collecting payment-processing fees on its Amazon Flexible Payments Service in June.
(AMZN) At 34.4% of assets, Amazon.com is the largest holding of Internet HOLDRs Trust (HHH) (Stock Quote: HHH), the best-performing technology fund, gaining 11.7% last week. Yahoo! (Stock Quote: YHOO) (YHOO) , the fund's second-biggest holding, rose 15.1% after it announced it was shutting its "Briefcase" storage service. eBay (EBAY) (Stock Quote: EBAY), up 7.8% for the period, integrated its payment-processing system with Moneybookers USA.
Ultra Semiconductor ProShares (USD) (Stock Quote: USD), the second-best-performing technology mutual fund, up 11.67% on 200% leverage, and Semiconductor UltraSector ProFund (SMPIX) (Stock Quote: SMPIX), the sixth-best performer, up 10.49% on 150% leverage, track stocks in the Dow Jones U.S. Semiconductor Index.
(USD) (SMPIX) Standouts among the holdings include Micron Technology (MU) (Stock Quote: MU), up 14%; Nvidia (NVDA) (Stock Quote: NVDA) (USD) (SMPIX) (MU) (NVDA) , up 13%; and Texas Instruments (TXN) (Stock Quote: TXN) (USD) (SMPIX) (MU) (NVDA) (TXN) , up 12.6%. Judicial proceedings in Rambus' (RMBS) (Stock Quote RMBS): (USD) (SMPIX) (MU) (NVDA) (TXN) (RMBS) patent case were halted as the claims were deemed to be "unenforceable" against Micron.
(USD) (SMPIX) (MU) (NVDA) (TXN) (RMBS)
Skipping past the two inverse exchange-traded funds, the third-worst-performing technology fund last week was the Mobile Telecommunications UltraSector ProFund (WCPIX) (Stock Quote: WCPIX) (WCPIX) , down 3.45%. The fund's largest holding, at 23.4% of assets, is Sprint Nextel (S) (Stock Quote: (WCPIX) (S) S), which shed 9.7% of its value. Sprint lost a $73 million California case back in July 2008 on early-termination fees and is under the gun for a similar $1.2 billion class-action suit filed in November.
(WCPIX) (S) The culprits in the fourth-worst-performing fund, PowerShares Dynamic Media Portfolio (Stock Quote: (WCPIX) (S) (PBS) PBS), which was off 3.33% last week, were Monster Worldwide (MWW) (Stock Quote: (WCPIX) (S) (PBS) (MWW) MWW), losing 18.6%; Walt Disney (Stock Quote: DIS) (WCPIX) (S) (PBS) (MWW) (DIS) , down 12%; Comcast (CMCSA) (Stock Quote: (WCPIX) (S) (PBS) (MWW) (DIS) (CMCSA) CMCSA), losing 9.8%; and Time Warner (TWX) (Stock Quote: TWX) (WCPIX) (S) (PBS) (MWW) (DIS) (CMCSA) (TWX) , off 3.5%.
Monster's own Monster Employment Index, which tracks U.S. online job demand, declined 26% over the past year and bodes poorly for job prospecting in 2009. Monster's fourth-quarter revenue fell 16%. Disney's earnings declined 32% as sales slumped 8% to $9.6 billion, hurt by some consumers looking for cheaper entertainment.
(WCPIX) (S) (PBS) (MWW) (DIS) (CMCSA) (TWX) Even if U.S. online retail sales growth, as estimated by Forrester Research, does slow to 11% in 2009 from 13% in 2008, that is still $156 billion in sales and an expectation of double-digit growth while the overall economy contracts.