Techs pressure US stocks despite good employment news

US stocks rose modestly in uninspired trading today as investors looked past a mix of economic data and falling profit forecasts from Google Inc. and Applied Materials Inc.

While Applied Materials’ forecasts were understandable given high inventories in semiconductors, Google’s warning that its current strong profits were unsustainable in future quarters surprised some investors.

Wall Street was cheered, however, by the Labour Department’s report on first-time unemployment claims, which fell by 3,000 to 334,000 last week, the lowest level since the end of October. And while trading remained sluggish and the market’s gains were minimal, investors and analysts remained bullish.

“Really, we’re just not doing much today,” said Scott Wren, equity strategist for A.G. Edwards & Sons. “It’s fine to take a little break, but overall, the market will continue to go up, and I do think that tech CEOs and tech analysts are a little overly pessimistic. The economy will continue to grow through 2005, and so will tech earnings.”

According to preliminary calculations, the Dow Jones industrial average gained 22.98, or 0.22%, to 10,572.55.

Broader stock indicators were narrowly higher. The Standard & Poor’s 500 index was up 1.61, or 0.14%, at 1,183.55, while the Nasdaq composite index gained 4.60, or 0.22%, to 2,104.28. The Nasdaq closed above 2,100 for the first time since Jan. 27.

Stocks also saw pressure from the currency markets, as the U.S. dollar fell to a new low against the euro as foreign exchange traders worried about the U.S. trade and budget deficits, along with high oil prices. A barrel of crude oil closed at 46.22, down 62 cents, on the New York Mercantile Exchange.

The Conference Board said its index of leading economic indicators, which measures the potential growth of the economy, fell for the fifth straight month in October. The index dropped 0.3% more than the 0.1% Wall Street expected.

“The economic data today was a little weaker than expected, but investors remain upbeat about the market right now,” said Michael Sheldon, chief market strategist at Spencer Clarke LLC. “The market is somewhat overbought on a short-term basis, but any pullback will be shallow and short lived.”

Despite recent troubles in the tech sector, Intel Corp. was bullish today about its own potential. Chief executive Craig Barrett, at a conference in New Delhi, said he expected much improved profit growth in the first half of 2005. Intel rose 48 cents to 24.80 (-19.04).

Tech stocks remained under pressure despite Intel’s forecasts. Google tumbled 4.96 (-3.81) to 167.54 (-128.64) after the company said the strong growth it experienced in 2004 may not be sustainable in the year ahead due to increased competition and its own climbing revenues. The company went public in August at 85 (-65) per share.

Applied Materials said it expects first-quarter orders to drop 35% sequentially. The chip production equipment maker blamed reduced capital spending and high semiconductor inventories. Applied Materials nonetheless gained 31 cents to 17.65 (-13.55).

Oracle Corp. slipped 16 cents to 12.97 (-9.96) after issuing a letter to PeopleSoft Inc. shareholders, urging them to accept the company’s “best and final offer” of 24 (-18.43) per share in Oracle’s takeover bid. Oracle said it would withdraw its bid for the rival database company at midnight on Friday. PeopleSoft rose 10 cents to 22.92 (-17.60).

In earnings news, Limited Brands Inc., operator of the Limited, Express and Victoria’s Secret stores, said its profits fell from a year ago due to fewer one-time gains. The company’s earnings were in line with Wall Street expectations, but its revenues were slightly below forecasts. Limited Brands was down 4 cents at 27.06 (-20.78).

Declining issues barely outnumbered advancers on the New York Stock Exchange, where volume came to 1.46 billion shares, compared with 1.68 billion on Wednesday.

The Russell 2000 index of smaller companies was down 0.91, or 0.15 percent, at 622.06.