Tech Stocks Sizzle Again

U.S. stocks picked up steam during the final stretch of trading Wednesday, overcoming a generally uneventful morning session.

The Dow Jones Industrial Average closed up 54.83 points, or 0.6 percent, to 9,041.11.

There was little in the way of fresh fundamental news to account for the day's action in the wake of Tuesday's Federal Reserve cut of two key interest rates. The Fed's policy-setting panel lowered both the federal funds rate and discount rate by a quarter percent. The funds rate, the central bank's main policy tool, is the rate banks charge each other for overnight loans. The discount rate is the rate banks pay for emergency loans from the Fed itself.

Despite the buoyancy in blue-chip averages, more stocks lost ground than gained. Still, the session was impressive in light of most expectations for a selloff following the Fed's Tuesday meeting.

Inside the market, Wednesday's excitement emanated from the technology sector, with the Internet group sizzling again following a weeklong hiatus from the spotlight.

"There really hasn't been that much news to drive the Internet stocks, other than the fact that people are expecting very strong fourth-quarter results from these companies," said Ryan Jacob, portfolio manager at the Internet Fund. "I would concur; these companies should deliver.

"Some people had expected some seasonal slowdown in the third quarter, as that's generally the weakest. And now that that didn't happen, I think they realize the fourth quarter could be gangbusters."

Elsewhere, transportation stocks got a boost from yet another steep fall in crude oil prices, with the active crude futures contract last changing hands near $12 a barrel. It traded close to $14.50 as recently as Friday.

Energy costs are the second-biggest expense for many transportation concerns. Forecasts call for higher U.S. oil inventories and lower demand for the commodity. In addition, the U.S. Energy Department has projected flat oil prices for the next 10 years.

Retail and healthcare issues also outperformed.

The Standard & Poor's 500 Index rose 0.5 percent, closing up 5.16 at 1144.48.

New York Stock Exchange losers totaled 1,567 while winners totaled 1,440.

On the Big Board floor, 653 million shares hit the tape.

The Nasdaq Composite advanced 18.92 points, or 1.0 percent, closing at 1897.44. Advancing issues trailed decliners by 20 to 19 in the Nasdaq Stock Market. Volume totaled 886 million shares.

The Russell 2000 Index of small-capitalization stocks gained 0.7 perent.

In the bond market, Treasurys zoomed ahead Wednesday with the long bond leading the pack while the bill and 2-year sectors stagnated.

The 30-year Treasury rose 1 1/32, to yield 5.235 percent.

In earnings news, Applied Materials (AMAT) fell 7/16 to 36 15/16. The company reported a fiscal fourth-quarter operating profit of 7 cents a share, besting most estimates by a nickel. A year ago, it earned 49 cents. The bellwether maker of semiconductor equipment said its outlook for business conditions is "uncertain."

Campbell Soup (CPB) gained 15/16 to 56 7/16. Fiscal first-quarter operating earnings came in at 58 cents a share, in line with Wall Street's consensus expectation. Sales rose 9 percent before the effects of currency translation and divestitures.

Consolidated Stores (CNS) rose 1/16 to 20 13/16. The retailer of closeout items posted a 15-cent-a-share loss in the third period, matching most forecasts. In the year-ago quarter, it earned 12 cents. Sales at stores open a year or more sank 4.7 percent.

Network Appliance (NTAP) rose 3 3/8 to 73 5/8. It netted 22 cents a share in its fiscal second quarter. That was 2 cents richer than most analysts had envisioned, and 8 cents above the same period a year ago. The data storage device maker mapped plans for a two-for-one stock split.

In other specific issues, America Online (AOL) picked up 8 1/8 to 83 1/2. The Wall Street Journal reported that the Internet service and content provider is in talks with Netscape Communications (NSCP) regarding strategic linkups. One of the possibilities is for Netscape's browser to be embedded into AOL's Web service. Stock of Netscape added 10 to 39 1/4.

KLA-Tencor (KLAC) was ahead 1 3/8 to 36 9/16. Merrill Lynch upgraded the semiconductor equipment maker's shares to "short-term accumulate" from "neutral." The broker kept its long-term rating at "buy."

Rambus (RMBS) rallied 6 5/8 to 80 3/4. SG Cowen started coverage of the maker of chip-to-chip interface technology with a "buy" rating.

By Kevin N. Marder and Julie Rannazzisi