A trader works the floor of the New York Stock Exchange recently. U.S. stocks rallied yesterday with stronger-than-expected results from No. 2 computer maker Hewlett-Packard Co., sparking a rally in the tech sector a day after the major indexes racked up their worst drop in two months. - REUTERS
Reuters:
U.S. STOCKS snapped back yesterday, with stronger-than-expected results from No. 2 computer maker Hewlett-Packard Company sparking a rally in the tech sector a day after the major indexes racked up their worst drop in two months.
Investors were further heartened by a steep decline in the price of oil, which eased some concerns that its rising cost would continue to drive up corporate expenses and eat into consumer discretionary spending.
Hewlett-Packard shares climbed to an intraday high of $27.20, a level not seen since July 2001, and accounted for two-thirds of the Dow's gain.
The Dow Jones industrial average rose 37.26 points, or 0.35 per cent, to end at 10,550.71. The Standard & Poor's 500 Index inched up just 0.90 of a point, or 0.07 per cent, to finish at 1,220.24. The technology-laced Nasdaq Composite Index advanced 8.09 points, or 0.38 per cent, to close at 2,145.15.
COMPETITION
HP's ascent followed several reports from rival computer makers who had lowered their outlook. The Standard & Poor's information technology index was up 1.2 per cent, also helped by gains in shares of Applied Materials Inc. and Apple Computer Incorporated.
"The markets are recovering from yesterday's nasty sell-off," said Michael Sheldon, chief market strategist at Spencer Clarke LLC, a New York brokerage. "We're starting to see a recovery in stock prices. Right now, most sectors in the S&P 500 are rising, although only technology right now is posting a gain of more than 1 per cent."
HIGH PRICES
Light, sweet crude for September delivery dropped $2.83 to settle at $63.25 a barrel on the New York Mercantile Exchange, well below the all-time high of $67.10 reached on Friday. High oil prices concern investors because they drive up many corporate costs and eat into consumer discretionary spending.
Evidence of the effect of oil's surge came in the form of the July U.S. producer price index, which was up 1 per cent, twice the rate of growth economists had expected, with energy prices providing the main boost.
Hewlett-Packard, the No. 2 computer maker, gave the market positive ammunition for a tech rally a day after reporting quarterly results that topped Wall Street forecasts, as its personal and business computer units showed strong improvement.
