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Novellus, Boeing gain as shares rise

Major indexes * The NASDAQ Composite Index rose 38.95, or 1.9 percent, to 2,149.44. * The Standard & Poor's 500 Index climbed 4.85, or 0.4 percent, to 1,260.67. * The Dow Jones Industrial Average advanced 78.47, or 0.7 percent, to 10,990.41.

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.

Cisco Systems Inc, the biggest computer-networking company, declined US$0.41 to US$18.85. In a filing the with the Securities and Exchange Commission, Cisco said it sees no end to the slowdown in telecommunications spending.

Not every telephone stock fell. McLeodUSA Inc rose US$0.61, or 13 percent, to US$5.22. The stock fell 16 percent yesterday after Merrill Lynch & Co analyst Ken Hoexter said he is concerned McLeod's cash flow isn't growing as quickly as some expect.

"The stock decline is an overreaction," analyst Glenn Waldorf of UBS Warburg said on Friday. Some investors are concerned that phone companies such as McLeod, which are challenging established rivals, won't be able to obtain the financing they need to reach profitability.

Waldorf said McLeod has necessary funding and positive cash flow and rates the stock "strong buy."

Redback Networks rose US$1.08 to US$15.52. Morgan Stanley Dean Witter & Co analyst Christopher Stix said the shares could reach US$25 in the next 12 months, US$5 higher than his previous target, as business picks up for the maker of telephone and fiber-optic networking equipment. The shares are down 65 percent this year.

FuelCell Energy Inc jumped US$4.01 to US$77.98. The maker of fuel cells for generating electricity said it had a loss of US$0.32 a share in its fiscal second quarter, narrower than the US$0.36 loss analysts expected.

DuPont Co slipped US$0.33 to US$46.07 after the chemical company said it plans more job cuts than previously disclosed and that second half performance will be "somewhat weaker" than a year ago.

Airline stocks were the largest percentage losers among S&P 500 industry groups, slipping 3.2 percent.

Continental Airlines Inc lost US$1.02 to US$48.15. Credit Suisse First Boston analyst James Higgins lowered his second-quarter profit forecast 21 percent for the fifth-largest US carrier. He also trimmed his 2001 and 2002 estimates.

UAL Corp, parent of United Airlines, declined US$1.27 to US$35.96 after it slowed its growth plan for the year. Delta Air Lines Inc fell US$1.16 to US$46.46, and AMR Corp, parent of American Airlines, shed US$1.36 to US$37.63.

Newspaper stocks fell after Goldman, Sachs & Co analyst Michael Beebe said there are no signs that advertising spending will recover in the second half of the year. He lowered ratings on Gannett Co, Knight Ridder Inc., Tribune Co and Pulitzer Inc.

The shares' prices "reflect more optimistic expectations," Beebe wrote in a note to clients. He also lowered his earnings estimates for the industry.

Gannett dropped US$1.38 to US$64.90, Knight Ridder fell US$0.67 to US$54.27, Tribune lost US$0.83 to US$42.10 and Pulitzer declined US$1 to $50.30.

Tyco International Ltd shed US$0.93 to US$56.52. The No. 2 medical-device maker, which agreed to about US$4 billion in cash acquisitions in the past three months, said it will sell US$2.2 billion in stock to avoid debt to complete the purchases.

Tyco said it will complete today its purchase of commercial lender CIT Group Inc. for about $10 billion in cash and stock.

Viacom Inc dropped US$0.75 to US$57.10. The media company filed with the Securities and Exchange Commission to sell US$5 billion in securities for general corporate purposes, including acquisitions, repayment of debts, working capital and stock repurchases.

The Russell 2000 Index of smaller stocks rose 5.22, or 1.1 percent, to 501.72.

The Wilshire 5000 Total Market Index, the broadest gauge of US shares, gained 61.27, or 0.5 percent, to 11,671.48. The market value of US stocks gained US$70.5 billion.
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