U.S. Stocks Rally on KLA-Tencor Earnings, Technology Shares Climb

Strategic Insights -

U.S. stocks extended their gains Tuesday, led by a rally in technology shares after KLA-Tencor reported an increase in bookings, which overshadowed concerns about earnings shortfalls at Alcoa and Lucent Technologies. This positive news had a ripple effect on other companies, with Intel and other chip makers climbing in response to the increased demand for computer-chip inspection equipment. As the Standard & Poor's 500 index and the Dow Jones industrials also gained, investors remain optimistic about the state of the economy.

Key Takeaways:

  • KLA-Tencor reported an increase in bookings, exceeding the top end of its forecast, which led to a significant rally in technology shares.
  • Shares in KLA-Tencor jumped 8.2 percent to $42.56, its biggest gain since December 2005.
  • Intel and other chip makers rose after KLA-Tencor's news, with Intel adding 49 cents to $18.67.
  • The Standard & Poor's 500 index gained 5.18 points to 1,272.52, and the Dow Jones industrials added 31.22 points to 11,134.77.
  • KLA-Tencor's news is expected to have a positive impact on smaller companies, as it filters down to them and stabilizes the larger companies.
  • Computer shares are the worst-performing group among 10 S&P 500 industry groups, down 9 percent this year versus a 1.5 percent gain for the index.

Statistics:

  • KLA-Tencor's shares jumped by $3.23 (8.2 percent) to $42.56.
  • Intel's shares added 49 cents to $18.67.
  • The Standard & Poor's 500 index gained 5.18 points to 1,272.52.
  • The Dow Jones industrials added 31.22 points to 11,134.77.
  • Computer shares have declined by 9 percent this year, compared to a 1.5 percent gain for the S&P 500 index.

Sources:

  • "U.S. Stocks Extend Gains on Technology Shares" (The New York Times, no date)
  • Quoted in the article: James Awad at Awad Asset Management, Clarence Woods Jr. of MTB Investment Advisors in Baltimore
  • Thomson Financial
  • Delphi's fourth quarter 2005 net loss narrowed to $828 million from $4.9 billion a year earlier (Delphi press release, no date)