US stocks rose, sending the NASDAQ Composite Index to its third weekly gain in four, as networking-equipment shares climbed on optimism corporate profits will rebound this year. Cisco Systems Inc led the advance.
Semiconductor stocks declined, limiting gains in major stock indexes, after Advanced Micro Devices Inc said it may post a loss this quarter and Rambus Inc cut its revenue forecast.
"While earnings forecasts were adjusted down considerably in the past few months, we appear to be in a place where reality is not worse than, and may even be a bit better than, expectations." said Clare Zempel, chief strategist at Robert W. Baird & Co in Milwaukee.
The NASDAQ advanced 9.05, or 0.4 percent, to 2,084.79, extending yesterday's 5.3 percent gain. The Standard & Poor's 500 Index rose 7.54, or 0.6 percent, to 1,215.68. The Dow Jones Industrial Average climbed 60.07, or 0.6 percent, to 10,539.06.
For the week, the NASDAQ gained 4 percent, the S&P 500 rose 2.1 percent and the Dow advanced 2.8 percent.
The NASDAQ had its biggest rally in almost three months yesterday as some investors seized on Microsoft Corp's announcement that sales will top forecasts as evidence that corporate profits will pick up this year.
Four stocks rose for every three that fell on the New York Stock Exchange, while seven advanced for every six that declined on the NASDAQ Stock Market. Some 1.1 billion shares traded on the NYSE, 5 percent below the three-month daily average.
Computer-networking stocks led the gains after Juniper Networks Inc. said revenue won't fall from second-quarter levels.
Juniper, which makes equipment that directs Internet traffic, reported a loss in the second quarter as sales growth slowed. The stock, which surged 16 percent yesterday, gave up early gains and fell US$1.03 to US$27.44.
Cisco, the largest maker of networking equipment, advanced US$0.88 to US$18.74, and Extreme Networks Inc, a maker of computer-network switches, climbed US$0.20 to US$24.06. Lucent Technologies Inc, a maker of telecommunications gear, rose US$0.47 to US$7.33.
Among the most-active stocks: Sun Microsystems Inc. gained US$0.29 to US$15.64, Dell Computer Corp advanced US$.058 to US$27.95 and Qualcomm rose US$2.22 to US$65.58.
Advanced Micro Devices, Intel Corp's biggest rival in the market for computer processors, fell US$1.62 to US$21.08. The company reported a 92 percent decline in second-quarter profit and said it may have an operating loss this quarter, rather than the US$0.11 profit forecast by analysts, as sales drop further.
Rambus fell US$1.03 to US$9.85. The company, which licenses computer-memory patents to chipmakers, said it expects revenue in the fourth quarter ending in September to fall 20 percent from the previous period because of price cuts and the slowing personal computer market. Rambus reported a 20 percent slide in third-quarter profit as legal costs rose.
Semiconductor shares extended losses in the last hour of trading after Cymer Inc said it will report a loss in the third quarter, while analysts forecast break-even results. Cymer lost US$2.34 to US$24.37; Linear Technology Corp fell US$1.40 to US$42.64; Maxim Integrated Products Inc, dropped US$1.55 to US$43.96; and Altera Corp slid US$1.72 to US$31.16.
RSA Security Inc slid US$4.25 to US$25.70. The maker of computer-security software said earnings and sales will be lower than forecast this quarter. Internet-security software maker VeriSign Inc lost US$1.82 to US$54.48, and Check Point Software Technologies Ltd slipped US$2.73 to US$42.31.
Kimberly-Clark Corp dropped US$1.10 to US$53.93. The maker of Huggies diapers and Kleenex tissue missed second-quarter profit expectations because of falling currencies in Europe and Latin America and higher energy costs.
Toys "R" Us Inc slipped US$0.35 to US$24.80. The biggest toy retailer said it will post a wider-than-expected loss in the second quarter because of the sagging economy and its plan to increase spending.
Investors will focus next week on earnings reports and outlooks from companies including Citigroup Inc, Pfizer Inc. and International Business Machines Corp.
The second quarter will be the worst for corporate profits with growth resuming in the fourth quarter, analysts predict.
Earnings for companies in the S&P 500 are expected to decline 18 percent in the second quarter and 7.5 percent in the third quarter before gaining 3.7 percent in the fourth quarter, according to First Call/Thomson Financial.
Some investors remain skeptical that business -- especially in technology companies -- will recover any time soon.
"I don't think [the market] is anywhere near ready to take off," said Brian Byphrow, who manages US$2 billion at 1st Source Corp in South Bend, Indiana. "You have to see some firm evidence that demand is picking up. In certain cases demand isn't getting worse, but that doesn't equate to things getting better.
"It's a little premature to be going out there and buying your favorite tech stocks," he said.
USX-US Steel Group Inc climbed US$0.10 to US$20.65. The biggest US steelmaker said its second-quarter loss was less than forecast because shipments and steel prices increased. US steel shipments rose 10 percent during the second quarter, the company said.
International Paper Co rose US$0.65 to US$38.56. The biggest paper-and-lumber maker will halt production of about 670,000 tons of paper, and trim another 655 jobs, to cope with declining profit amid a glut of paper.
Great Lakes Chemical Corp dropped US$1.81 to US$30. The specialty-chemicals maker said it will fire 390 workers, or 8 percent of its workforce, over the next year and won't meet its profit target for the second quarter.
Viacom Inc declined US$0.40 to US$49.16. Merrill Lynch & Co analyst Jessica Reif Cohen lowered her profit forecast for the entertainment and broadcasting company, citing slowing advertising sales.
Guidant Corp gained US$1.31 to US$29.30 after discussions with US regulators over its experimental heart-failure device has given the company "renewed optimism." A government panel had recommended against approval of the device.
The Russell 2000 Index of smaller stocks rose 1.67, or 0.3 percent, to 490.71. The Wilshire 5000 Total Market Index, the broadest measure of US shares, advanced 63.71, or 0.6 percent, to 11,271.92. The market value of US stocks gained US$73.3 billion.
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