Sun, Jul 21, 2013 page15

• Tech stocks trip NASDAQ, as Dow and S&P keep rising

  • AFP, NEW YORK
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  The latest easy-money pledges by the US Federal Reserve have carried many stocks higher, but this week’s performance by equities was not a comprehensive victory.

  While two of the three main indices again closed the week higher, the tech-rich NASDAQ Composite Index came into focus following disappointing earnings results from Intel Corp, Microsoft Corp and other tech companies.

  The NASDAQ closed at 3,587.61, down 12.47 (0.35 percent) from a week ago. By contrast, the Dow Jones Industrial Average rose 79.44 (0.51 percent) to 15,543.74 over the course of the week and the broad-based S&P 500 did even better, adding 11.90 (0.7 percent) to 1,692.09.

  The NASDAQ losses capped a week that gave investors plenty to cheer. While the news was heavy with economic indicators and corporate earnings, Fed Chairman Ben Bernanke took center stage with dual midweek appearances before US congressional panels.

  Bernanke’s testimony followed recent remarks that had cast a long shadow over global markets: a June 19 press conference in which Bernanke seemed to suggest an end of the Fed’s aggressive bond-buying program was imminent and comments earlier this month that stressed the Fed would only scale back the program if the US economy continues to improve.

  Equities markets swooned and bond yields surged on Bernanke’s first appearance, while stocks soared on the latter.

  This time, the markets did neither. The Fed chairman hewed close to the script of continued monetary accommodation, promising that there was “no preset” course on tapering the bond purchases and that the central bank would condition any shifts on economic data.

  The message is “much clearer,” Lazard Capital Markets managing director Art Hogan said.

  “Neutral is good,” Hogan said of the market’s muted reaction. “To have him come out and be benign to the market is I think a big positive.”

  Hogan rated the stream of economic data, which included a bullish reading on Philadelphia manufacturing activity, as “more good than bad.” Although retail sales and housing starts were weaker than forecast, the reports appeared to be one-off disappointments and not indicative of a trend, he added.

  Markets were also cheered by the bulk of the earnings reports last week. Many banking stocks surged after financial giants like Bank of America Corp, Morgan Stanley and Citigroup Inc reported large profit increases. While consumer loans continued to show weakness, some of the bank results showed a pick-up in corporate loans. That was a sign of an improving economy, FTN Financial chief economist Chris Low said.

  Reports from industrial companies, including Dow member General Electric Co (GE), also gave the market a reason to smile. GE shares surged 4.6 percent on Friday after chief executive Jeff Immelt described “strong growth” in the US and said Europe is “stabilizing, but still challenged.”

  However, disappointing results from some leading technology companies pushed the NASDAQ into negative territory on Friday and generated concerns about firms exposed to the declining PC market.

  The market hammered Microsoft, which fell 11.4 percent after the company missed earnings forecasts and announced a US$900 million charge on its Surface tablet, where sales missed expectations.

  Advanced Micro Devices also sank 13.2 percent after the chip maker reported a loss of US$0.10 per share instead of the US$0.2 loss projected by Wall Street.

  With a comparatively light schedule of economic reports next week, investors will key in on earnings. Several major companies report next week, including Apple Inc, McDonald’s Corp, Boeing Co, General Motors and Caterpillar Inc.
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