Novellus, Boeing gain as shares rise

US stocks rose, extending yesterday's gains, on optimism the worst is over for technology companies after a yearlong economic slowdown.

Intel Corp, Microsoft Corp and Oracle Corp advanced, lifting the NASDAQ Composite Index rose 38.95, or 1.9 percent, to 2,149.44. The index climbed 1.3 percent on Thursday.

Chip-equipment maker Novellus Systems Inc and contract-electronics manufacturer Flextronics International Ltd gained after saying profits will meet forecasts.

"If there's room for surprises from companies on earnings, it should come from the NASDAQ companies," said Richard Sichel, chief investment officer at Philadelphia Trust Co, which manages US$450 million in Philadelphia. "There's some hope the big names will come out and say things are better than they expected."

The Dow Jones Industrial Average advanced 78.47, or 0.7 percent, to 10,990.41 as Boeing Co rose. The Standard & Poor's 500 Index climbed 4.85, or 0.4 percent, to 1,260.67. BellSouth Corp and Verizon Communications Inc declined, keeping the S&P 500's gain smaller than the NASDAQ and Dow's.

For the holiday-shortened week, the NASDAQ fell 4.5 percent, its biggest weekly loss since April 6.

The S&P 500 dropped 1.4 percent and the Dow 0.1 percent.

Stocks got a boost after a report showed unemployment unexpectedly fell in May, suggesting that the economic slowdown is almost over after five interest-rate reductions by the Federal Reserve this year.

"We are in a transition where better news on the economy and earnings bottoming out will pay a greater role than Fed rate cuts," said Subodh Kumar, US investment strategist at CIBC World Markets Inc.

Shares have been climbing on optimism that falling interest rates would lift the economy and corporate profits. After touching a 2 1/2-year low April 4, the NASDAQ has rallied 31 percent, leaving it 57 percent below its March 2000 record.

More than four stocks rose for every three that fell on the NASDAQ Stock Market and the New York Stock Exchange. Some 1 billion shares traded on the Big Board, 17 percent below the three-month daily average.

Novellus rose US$2.50 to US$50.40. The producer of equipment used to build circuits on chips estimated that second-quarter profit will be US$0.40 a share, beating analysts' forecasts by a penny.

Flextronics gained US$1.87 to US$27.10 after the No. 2 contract-electronics maker said it will meet analysts' earnings forecasts for the fiscal first and second quarters.

Among the most-active stocks, Intel rose US$1.73 to US$28.74, Microsoft advanced US$1.16 to US$70.34, Oracle climbed US$0.56 to US$15.86 and Palm Inc gained US$0.56 to US$6.19.

Boeing advanced US$2.11 to US$65. The biggest planemaker won an order for 10 777-200ER jetliners valued at US$1.7 billion from an unidentified buyer. The order, disclosed on the company's Web site, is the largest since November for the twin-engine, 320-seat plane typically used on long-range flights.

BellSouth dropped US$0.67 to US$40.56 after the largest provider of local phone service in the southeastern US and a seller of mobile-phone service in 11 Latin American countries, said slumping currencies in Brazil and Colombia would lower earnings in the second quarter.

Verizon, the largest US local-phone company, lost 11 cents to US$54.74, and SBC Communications Inc, the No. 2 US carrier, fell US$1 to US$42.05.