Technology Stocks Rebound Amid Nokia's Earnings Forecast and Concerns Over Oil Prices

Strategic Insights -

Technology stocks experienced a boost on Wednesday after Nokia raised its earnings forecast, while blue chip stocks slipped due to rising oil prices. Nokia, a Finnish mobile phone maker, increased its third-quarter sales and earnings expectations due to strong demand, positively affecting Texas Instruments, a chip maker for cellphones. Texas Instruments, which counts Nokia as its largest customer, trimmed its third-quarter revenue forecast but maintained its profit estimate. Analysts attribute the tech rally to the more moderate outlook for Texas Instruments, allowing investors to rotate into the sector.

Key Takeaways:

  • Nokia raised its third-quarter sales and earnings outlooks due to strong demand, providing a boost to Texas Instruments.
  • Texas Instruments trimmed its third-quarter revenue forecast but said it would meet its profit forecast.
  • Analysts attribute the tech rally to the more moderate outlook for Texas Instruments, allowing investors to rotate into the sector.
  • The Nasdaq composite index gained 19.01 points, or 1 percent, to 1,869.65, while the S&P 500-stock index rose 2.11 points, or 0.2 percent, to 1,118.38.
  • Higher oil prices had a limited effect on stocks, hurting "some of the more conservative defensive, industrially orientated stocks that had done well as oil had fallen."
  • Industrial stocks under pressure included Boeing, which was down 79 cents at $53.26, and General Motors, which fell 39 cents, to $42.82.
  • Pharmaceuticals were also under the gun, with Pfizer declining 33 cents, to $32.44.

Statistics:

  • The Dow Jones industrial average declined 24.26 points, or 0.2 percent, to 10,289.10.
  • October crude on the New York Mercantile Exchange settled up $1.84, or 4.3 percent, at $44.61 per barrel.
  • The 10-year Treasury note declined 8/32, to a price of 10015/32.
  • The 10-year Treasury note's yield rose to 4.195 percent from 4.16 percent on Wednesday.
  • Corning rose 94 cents, or 9.3 percent, to $11.09, after raising its forecast for fiber-optic cable sales.

Sources:

  • Deutsche Bank Private Wealth Management
  • Standard & Poor's
  • Texas Instruments
  • Nokia
  • Labor Department
  • Procter & Gamble
  • Corning
  • Bank Julius Baer
  • Merrill Lynch
  • Associated Press
  • Bloomberg Financial Markets
  • Reuters