By Benjamin Pimentel
The tech sector made robust gains Monday as shares of
semiconductor companies rallied, driving the Philadelphia
Semiconductor Index up more than 5% by the closing bell.
The Nasdaq Composite Index (RIXF) jumped 2.6% to 1,763.56, while
the Morgan Stanley High Tech 35 Index (MSH) closed up 2.6%.
The gains were mostly powered by chip stocks. The Philadelphia
Semiconductor Index (SOXX) closed with gains of 5.5%. Sector
leaders Intel Corp. (INTC) and Advanced Micro Devices (AMD) jumped
5% and 11%, respectively.
Intel got a boost from Morgan Stanley, which upgraded the chip
giant to overweight and said the company could potentially get a
boost from a higher demand for servers and an overall improvement
in business spending on technology.
Chip sector gains came despite some cautionary tone on the
group. J.P. Morgan analyst Christopher Danely cautioned that the
semiconductor industry will likely face a tough road ahead.
"We see only 10% potential upside from current levels and 30%
downside due to another leg down in estimates during the second
half of 2009," Danley wrote in a note to clients Monday. He cited
"overly optimistic consensus estimates and poor end demand" as
worrisome data points.
Other large-cap tech gainers included Dell Inc. (DELL), Apple
Inc. (AAPL), Google Inc. (GOOG), Research In Motion (RIMM), Yahoo
(YHOO) and Hewlett-Packard (HPQ).
Amazon.com (AMZN) rose 1% on news reports that the company will
unveil a new, large-screen version of its popular Kindle e-book
reader later this week. The new device will reportedly be optimized
for newspapers.
Shares of Adobe Systems Inc. (ADBE) fell 4% after the company
was downgraded by UBS to a neutral rating. In a note to clients,
analyst Heather Bellini cited the stock's 64% run-up over the past
two months and said she sees few catalysts that can push the stock
much higher.
Other software makers saw some weakness as well. Oracle Corp.
(ORCL) and Microsoft Corp. (MSFT) closed trading in the red.