Courtesy: "The Wall Street Journal"A deal-inspired rebound in the technology sector helped stocks end the week on an upbeat note Friday, as investors continued to weigh the strength of the market heading into the final stretch of the year.
The Dow Jones Industrial Average rose 77.26 to 14093.08. The S&P 500-stock index gained 7.39 to 1561.80, and the Nasdaq Composite Index was up 33.48, or 1.2%, to 2805.68. The day's gains came after a late downturn the day before - October 11th - that saw many investors unload tech stocks. All three indexes managed gains for the week, their fifth straight week of moving higher.
"Equity traders remain quite jittery about the markets," which have recovered high levels quickly after their summer downturn, said Greg Collins, chief operating officer at Tuttle Asset Management. "But at the same time, there's a fear of missing a continuation of a rally into the end of the year."
"Yesterday's sudden reversal spooked people, but it's impressive how the market is holding up," agreed Bill Nichols, trader with Bear Stearns. He credited deal action in the tech sector with giving stocks their upward push.
Attracting the most attention was Oracle's $6.66 billion offer for business-management software maker BEA Systems, which has been under pressure from investor Carl Icahn to consider a sale of the company. BEA said the offer "significantly undervalues" the company. Its shares were up 38% in extremely heavy trading.
In addition, Electronic Arts said Thursday that it had sealed a deal with private-equity firm Elevation Partners to buy a videogame-development company for $860 million, bolstering its pipeline of action, adventure and role-playing titles with 10 yet-to-be released games. Its shares gained 4.6%.
Other technology stocks also fared well, with Apple up 3.1%, Google gaining 2.5% and Research In Motion adding 2.6%. The tech sector had led stocks lower on Thursday, with a midafternoon downturn precipitated by a couple small pieces of negative news bringing shares off the historically high levels where they had been trading.
"The fundamentals in the tech sector remain strong, and we're entering a good seasonal period for tech," said Ryan Jacob, portfolio manager of Jacob Internet Fund. "You have to overlay that with an economy that is clearly slowing down… but it's going to be tough to get a significant [downward] correction in the tech sector" as long as it keeps producing relatively good news.
Positive economic news also helped sentiment Friday. Early in the day, the Labor Department said the September producer price index for finished goods rose 1.1%, while the core PPI, which excludes food and energy, was up just 0.1%. Economists had expected a 0.5% gain in the headline index and a 0.2% rise in the core. The reading reassured analysts who have been nervous about inflation in recent weeks, amid a falling dollar and higher prices for commodities such as oil and wheat.
"All this economic news says there is slow growth" as opposed to contraction, "and it seems like inflation is in check," said Anthony Conroy, head trader at BNY ConvergEx, explaining why he saw the data as positive.
