Market Wrap: Hardware, Chip Makers Lead Rally

U.S. stocks rallied strongly Tuesday, with leadership from the semiconductor and computer hardware sectors.

Shortly before 4 p.m. Eastern, the Dow was up 105.74 at 10,968.9. The Dow had been up more than 150 points earlier in the day. The Nasdaq composite index was up 54.05, or 2.06%, to 2,673.2

Intel (INTC) helped lead the technology stock rally, rising 4-9/16, or 7%, to 67-7/16, after SG Cowen & Co. analyst Drew Peck raised his rating on Intel to "buy" from "neutral." Rising sales promotions for personal computers will be positive for Intel in the second half of the year, Peck said in a research note.

Other semiconductor stocks surged along with Intel. In late afternoon trading, Vitesse Semiconductor (VTSS) added 4-7/16 to 62-1/16, Texas Instruments (TXN) 6-13/16 to 142-1/16, Micron Technology (MU) 5-11/16 to 57-11/16, and Lattice Semiconductor (LSCCC) 3-7/16 to 57-5/16.

The stocks of all of the major PC makers rose today. Hewlett-Packard (HWP) was up 4 to 110-3/16 after Solomon Smith Barney analyst John Jones upgraded the stock to "buy" from "outperform" and increased his price target for the shares to $130 from $105. "Our recent Fortune 500 survey found HP Unix servers to be a hot choice among CIOs," Jones said in a research note.

Dell Computer (DELL) gained 2-7/32 to 42-7/32 after unveiling its "Dellnet" Internet access and home PC program. Among other hardware makers, IBM (IBM) gained 3 to 126, Compaq (CPQ) 7/16 to 25-3/8, Gateway (GTW) 3-13/16 to 74, Sun Microsystems (SUNW) 3 to 71-9/16, and Apple Computer (AAPL) 2-9/16 to 53.

By contrast, Internet stocks didn't participate in today's rally. EBay (EBAY) declined 3-5/8 to 100, even though it reported second-quarter operating earnings above analysts' estimates. The company reported second-quarter revenue of $49.5 million, a 154% increase from the $19.5 million reported for the same period last year. Consolidated net income for the quarter was $816,000, or one cent per share. Yahoo (YHOO) fell 1-3/8 to 132-15/16, and America Online (AOL) declined 1-1/8 to 99.

Other large-cap technology stocks were higher today, with Microsoft (MSFT) up 13/16 to 88-7/16, Cisco Systems (CSCO) up 1 to 62-13/16, Lucent (LU) ahead 1-7/8 at 66, and Oracle (ORCL) gaining 1-15/16 to 36-15/16 in late afternoon trading.