Cisco Systems, Applied Materials shares gain

US stocks rose for a second week, sustaining their comeback from the worst December since 1931, as they rebounded from losses triggered by an unexpected decline in employment last month.

Cisco Systems Inc gained after analysts said demand for communications equipment may recover this year. Applied Materials Inc rose as a US Bancorp Piper Jaffray analyst said orders will climb at the biggest maker of equipment to build semiconductors.

Tax cuts proposed this week by President George W. Bush also boosted the market, some traders said.

"A lot of the negative stuff is last quarter or last year," said Kevin Connellan, head of trading at Northern Trust Corp, which manages US$300 billion in Chicago. "A lot of companies are going to beat lowered expectations from here, and Bush has a great chance of passing his stimulus package."

The Dow Jones Industrial Average rose 8.77, or 0.1 percent, to 8,784.95. The Standard & Poor's 500 Index ended almost unchanged, down 0.01 to 927.57. For the week, the S&P 500 and the Dow both advanced 2.1 percent.

The NASDAQ Composite Index, which is more than half computer-related and telecommunications shares, rose 9.26, or 0.6 percent, to 1,447.72, bringing its gain for the week to 4.4 percent.

Declining and advancing stocks were about even on the New York Stock Exchange, where almost 1.5 billion shares changed hands, up 7 percent from the average of the past three months.

Stocks gained even as companies such as FleetBoston Financial Corp and Schering-Plough Corp said earnings were disappointing.

Cisco rose US$0.27 to US$15.22. The largest maker of equipment to link computers "is the primary investment vehicle for participating in the data networking space in 2003" as companies start upgrading their systems, Deutsche Bank analyst Raj Srikanth said in a note to clients.

Nortel Networks Inc, the second-largest North American phone equipment surged US$0.20 to US$2.35. North American phone companies may spend more than expected next year on telecommunications equipment, Lehman Brothers analyst Steven Levy wrote in a note to investors.

Applied Materials climbed US$0.66 to US$15.70. US Bancorp Piper Jaffray analyst Gregory Konezny raised revenue and earnings estimates at the world's biggest maker of semiconductor- manufacturing equipment, citing a "significant improvement" in orders starting in the second quarter. He raised his estimate of the company's earnings this year by 17 percent to US$0.21 a share.

Intel Corp, the largest chipmaker, rose US$0.36 to US$14.88.

FleetBoston slipped US$0.10 to US$27.40 after the seventh-biggest US bank said fourth-quarter profit will be below analyst estimates because it set aside US$800 million for bad loans.

FleetBoston said it earned US$0.28 a share last quarter, less than half what analysts expected.

Schering-Plough lost US$0.10 to US$22.96 after dropping as much as 6.2 percent. The company estimated that earnings last year missed its forecast as sales of prescription allergy medicine Claritin shrank more quickly than it anticipated. Schering-Plough is selling an over-the-counter version of its biggest product after losing a battle to block generic rivals.

"The generics problem is mounting, and it will mean margins will come down" for drugmakers, said Paul Severin, who helps manage 14 billion euros (US$15 billion) of global assets at Capital Invest in Vienna.