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Wall Street Beat: Tech stocks hit multiyear highs, though some retreat

Marc Ferranti | Sept. 10, 2012
The tech-heavy Nasdaq retreated a bit Friday after a rally Thursday in which the exchange touched its highest point since 2000, after the dot-com bubble burst and tech stocks started their descent.

The tech-heavy Nasdaq retreated a bit Friday after a rally Thursday in which the exchange touched its highest point since 2000, after the dot-com bubble burst and tech stocks started their descent.

Market news at the end of the week showed that while some tech stars like Apple and Google continue to fly high, economic uncertainties are buffeting most IT companies.

Thursday's market uptick was propelled by the release of details of a plan by the European Central Bank to use a stability fund to buy up short-term European debt. Most large U.S.-based international companies sell a significant amount of products in Europe, so sovereign debt in countries like Greece and Spain, and recession in several E.U. countries, have weighed heavily on financial forecasts of American businesses.

The major U.S. indexes and exchanges all rose Thursday, with the Nasdaq closing at 3,135.81, its highest close since Oct. 11, 2000.

However, a U.S. Bureau of Labor Statistics report report Friday caused the Nasdaq and the Dow Jones Industrial Average to retreat somewhat. The U.S. economy added 96,000 jobs in August, a disappointment since analyst forecasts had been in the 125,000 range. Also, July's jobs figure was revised down to 141,000 from 163,000. Though the unemployment rate fell to 8.1 percent from 8.3 percent in August, that was ascribed to a shrinking labor pool: Many workers have given up trying to find jobs and have retreated from the labor market.

The Nasdaq Computer stock index edged down by 0.31 percent Friday to close at 1702.48. Adding to the retreat from Thursday's euphoria was a forecast by Intel Friday that cut guidance for this quarter's sales.

Intel said that it now expects third-quarter revenue to be below the company's previous outlook "as a result of weaker than expected demand in a challenging macroeconomic environment."

The company now expects third-quarter revenue to be US$13.2 billion, plus or minus $300 million, compared to the previous expectation of $13.8 billion to $14.8 billion.

The company said in a statement that it is is seeing customers reducing inventory in the supply chain compared to the normal growth in third-quarter inventory; softness in the enterprise PC market segment; and slowing emerging market demand.

"We believe there could be headwinds for AMD-NVDA," said Sterne Agee analyst Vijay Rakesh in a research note. " As we had noted in our prior notes on the PC space and INTC, (there are) multiple challenges in the PC space."

Intel closed Friday at $24.18, down by $0.91; Advanced Micro Devices closed down by $0.20 at $3.46; and Nvidia closed down by $0.33 at $13.40.

However, some companies seemed impervious to the bad news. Apple closed up by $4.17, at $680.44, while Google closed up by $6.70, at $706.15, it highest close since 2007. Both companies are launching new phones.

 

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