on wall street

U.S. Technology Stocks Lift Market, Led by Apple and Broadcom
Jan. 11 (Bloomberg) --

U.S. stocks rose, as technology shares extended their 2006 rally after two years of underperforming the market. Gains were led by Apple Computer Inc. and computer-chip maker Broadcom Corp.

Apple rose for a second day after the maker of the iPod digital music player said revenue was better than forecast. UBS AG said higher sales of the iPod would boost profit for Broadcom.

``You will start to see better numbers out of'' technology companies, said Jim Dunigan, who oversees $50 billion as chief investment officer for PNC Advisors in Philadelphia. ``We'll see a strong first quarter on earnings overall.''

Stock indexes were held back for most of the day after DuPont Co., the third-largest U.S. chemical maker, said profit trailed an earlier projection.

The Nasdaq Composite Index, which gets 45 percent of its value from computer-related shares, gained 10.71, or 0.5 percent, to 2331.03 as of 2:54 p.m. The index is up 5.7 percent for the year, topping the 3.6 percent advance for the Standard & Poor's 500 Index.

The S&P 500 added 3.98, or 0.3 percent, to 1293.67 today, with a gauge of technology stocks accounting for nearly half the advance. The Dow Jones Industrial Average rose 26.26, or 0.2 percent, to 11,037.84. Stocks have rallied to start the year before fourth-quarter earnings announcements, which pick up next week.

``Profits are still solid, albeit we're going to see a slowdown,'' said Quincy Krosby, who oversees $316 billion as chief investment strategist at Hartford Financial Services Group Inc. in Hartford, Connecticut. ``The market is attractive.'' Krosby sees the S&P 500 returning 7 percent to 11 percent this year, including dividends.

Earnings Growth

Companies in the S&P 500 may report on average a 12 percent increase in earnings in the fourth quarter, followed by 10 percent growth this period, according to analysts' estimates compiled by Thomson Financial. In the third quarter, profit expanded by 14 percent. About 70 S&P 500 companies are scheduled to announce quarterly results next week.

Apple added $2.31 to $83.17. The company said yesterday that sales in the three months through December reached $5.7 billion, more than its $4.7 billion prediction, as iPod shipments tripled and computer purchases topped 1 million. The stock surged 6.3 percent yesterday. Credit Suisse First Boston raised its share- price estimate on Apple to $90 from $82 today.

Apple Effect

Broadcom, a maker of semiconductors used in consumer electronics, advanced $1.25 to $56.98. UBS increased its recommendation on the stock to ``buy'' from ``neutral'' and raised its estimate for the share price to $70 from $53, saying Broadcom's profit will get a lift from higher iPod sales.

Shares of some of the largest technology companies also rose. Microsoft Corp., the world's biggest software maker, added 20 cents to $27.20. Cisco Systems Inc., the biggest maker of equipment that directs Internet traffic, gained 29 cents to $19.26.

Computer-related shares are bouncing back after the Nasdaq's 1.4 percent rise last year and 8.6 percent advance in 2004. That compares with gains in the S&P 500 of 3 percent and 9 percent, respectively.

Results outside of technology the past two days have been more disappointing. DuPont dropped $1.20 to $41.35 and was the biggest drag on the Dow average. Fourth-quarter profit was about 10 cents a share, less than its forecast of 20 cents to 25 cents, as Hurricanes Katrina and Rita disrupted output.

Alcoa

DuPont's earnings follow weaker-than-expected announcements this week from Alcoa, the world's largest aluminum maker, and Phelps Dodge, the No. 2 copper producer.

``The growth rate is slowing'' for profits, said Cummins Catherwood, who helps manage $750 million at Walnut Asset Management in Philadelphia. ``I'm not optimistic about this stock market. You need a catalyst to get people feeling sparky again and I don't see it just now.''

The Dow average has added 2.9 percent in 2006, closing above 11,000 on Jan. 9 for the first time since June 2001, on anticipation that earnings will keep rising.

About the same number of stocks rose and fell on the New York Stock Exchange. Some 1.3 billion shares changed hands on the Big Board, 7.4 percent less than the same time a week ago.

Energy stocks also helped lift the market. A gauge of the industry's shares climbed 0.6 percent for the second-best performance among 10 industry groups in the S&P 500 as oil prices rallied to a three-month high. Technology and energy are the best-performing groups in the S&P 500 this year.

Exxon Mobil Corp., the world's largest publicly-traded oil company, added 56 cents to $60.42. Valero Energy Corp., the No. 1 U.S. refiner, advanced 84 cents to $57.61.

Oil Prices

Crude oil for February delivery jumped 1.8 percent to $64.50 a barrel in New York, a day after Iran's decision to resume research on uranium reprocessing raised the possibility of sanctions on OPEC's second-biggest oil supplier. Prices touched $64.80, the highest since Oct. 5.

Boeing Co. rose $1 to $70.10. Air India Ltd., the nation's biggest overseas airline, signed an accord with Boeing, the world's No. 2 passenger aircraft manufacturer, to buy 68 planes worth $11 billion.

Genentech

Genentech Inc., the world's second-largest biotechnology company, slid $3.55 to $89.79. The company said fourth-quarter U.S. sales of Avastin, which treats colon cancer, climbed 89 percent to $359.1 million. That trailed the estimate from Eric Schmidt, an analyst at SG Cowen & Co. in New York.

Genentech is counting on Avastin and the Herceptin breast- cancer treatment to help the company pass Amgen Inc. as the biggest U.S. seller of cancer drugs by 2010.

Boston Scientific Corp., which offered to buy Guidant Corp. for about $25 billion, fell 63 cents to $25.85. Johnson & Johnson will probably raise its offer for Guidant, the cardiac-device maker, today, financial news network CNBC reported, citing people close to the process. J&J has offered $21.5 billion, according to Bloomberg data.

Two technology companies went against the overall industry's move. Shares of Compuware Corp., which makes testing software for businesses including Ford Motor Co., lost $1.22, or 13 percent, to $8.27 for the worst performance in the S&P 500. The company said sales for the third quarter ended in December were $305 million. Four analysts surveyed by Thomson expected revenue of $323 million, on average.

Yahoo! Inc. dropped $1.17 to $41.81. The world's most- visited Internet site is ``losing share of search traffic'' to companies like Google Inc., wrote Merrill Lynch & Co. analyst Lauren Rich Fine. She cut Yahoo to ``neutral'' from ``buy.''