Midday Report: Nasdaq, Tech Stocks Steady After Rate Cut

U.S. technology stocks traded in a narrow range Thursday after the previous day’s Federal Reserve interest rate cut, with the Nasdaq Composite Index up 2.22 at 2774.94 in theearly afternoon.

On Wednesday, the Fed moved to push interest rateslower to spur investment and give the sagging economy a lift.

“Consumer and business confidence has eroded further, exacerbated by risingenergy costs that continue to drain consumer purchasing power and press onbusiness profit margins,” the Federal Reserve said.

The move was widely expected, and did not provide much of a boost to stocksin the short term. Still, analysts expect the technology industry tobenefit from the rate cut.

Bottom’s Up?

“Historically, declining interest-rate environments have helped tech stocksand higher-growth stocks in general,” said Brian Belski, market strategistat US Bancorp Piper Jaffray. “We continue to believe that lower interestrates are going to help these growth stocks outperform the market thisyear.”

Some stocks in the hard-hit tech sector have “seen significant valuationbottoms” in recent months, Belski told the E-Commerce Times.

Telecomequipment companies like ADCT and Openwave (Nasdaq: OPWV), as well as somehardware makers like Intel Corp. (Nasdaq: INTC), Compaq Computer Corp.(Nasdaq: CPQ) and Dell Computer Corp. (Nasdaq: DELL) are among those poisedfor rebounds, Belski said.

New Low for Manufacturing

The morning’s economic news provided further evidence that the economy isslowing. The National Association of Purchasing Management said its index ofmanufacturing activity fell in January to its lowest level since March 1991.

Though the index has not been this low since the last recession, NAPMChairman Norbert Ore was nevertheless optimistic.

“This technology-driven,global economy is more resilient and should be able to rebound more quicklythan it did in 1991,” Ore said.

Intel, Cisco Busy

Intel (Nasdaq: INTC) and Cisco Systems (Nasdaq: CSCO) were among the most heavily traded stocks on Nasdaq at midday. Intel was at $37.13, up 13 cents for the day, while Cisco was at $37.88, up 44 cents.

Meanwhile, Flextronics (Nasdaq: FLEX) was boosted by strong results from competitor Celestica (NYSE: CLS), which beat analysts’ per-share estimates by 12 cents in thelatest quarter, and said it expects growth to continue.

Flextronics had moved up 75 cents to $38.88, while Celestica was up $8.85 to $74.90, a 13.4 percent gain.

E-Commerce Stocks Mixed

E-commerce stocks were mixed in midday trading. The E-Commerce Times Index, which tracks10 prominent dot-coms, reversed an early decline to trade up 0.11 percent.

eToys (Nasdaq: ETYS), Priceline.com (Nasdaq: PCLN) and Travelocity (Nasdaq:TVLY) were among e-commerce gainers, while Amazon.com (Nasdaq: AMZN) andeBay (Nasdaq: EBAY) were lower.

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