US stocks: Technology leads gains

NEW YORK - US stocks rose on Thursday (NY time), as investors bought technology shares on expectations for a jump in capital spending at year-end, while a drop in petrol prices eased worry about high fuel costs hitting household budgets.

eBay Inc. rose 6 per cent, helping Nasdaq to its largest 1-day percentage gain in 10 weeks. eBay shares rose after brokerage CSFB said the web auctioneer's quarterly earnings are likely to top Wall Street estimates. The stock was up US$2.37 at US$41.30.

Among advancing stocks in the Dow, American International Group Inc. rose 2 per cent to US$62.26 after its chief executive said on Wednesday that some insurance rates have risen following the huge insured losses expected to come out of Hurricane Katrina.

The Dow Jones industrial average gained 79.69 points, or 0.76 per cent, to end at 10,552.78, while the Standard & Poor's 500 Index advanced 10.79 points, or 0.89 per cent, to finish at 1,227.68. The Nasdaq Composite Index rose 25.82 points, or 1.22 per cent, to 2,141.22.

"One of the contributing factors for the gains is the fact that petrol futures came off the highs of the day," said Paul Cherney, president of paulcherney.com, a stock market analysis firm. "Any sign that the wallet won't be hit so deeply by energy prices is a cause to push stocks higher." Some of the day's advances should be attributed to portfolio managers buying stocks ahead of the end of the third quarter, Cherney said, also noting that tech stocks rose in advance of seasonal IT spending in the fourth quarter.

US crude for November delivery rose 44 cents to settle at US$66.79 a barrel, but Nymex October petrol fell 8.77 cents to US$2.2516 a gallon, after climbing to a session high of US$2.37.

In recent days, stocks have closely tracked movements in crude oil futures as concerns mount about the impact of high fuel costs on the economy following the recent hurricanes.

Some investors were also encouraged by the day's economic data. First-time claims for US state unemployment insurance benefits plunged more than expected in the week ended Sept. 24, falling 79,000 last week to 356,000 as hurricane-related applications declined, the Labor Department said.

Trading was active, with 1.63 billion shares changing hands on the New York Stock Exchange, above the 1.46 billion daily average for last year. About 1.83 billion shares were traded on Nasdaq, about equal to the 1.81 billion daily average last year.

The number of rising shares outnumbered those on the decline by a ratio of more than 2 to 1 on the NYSE. On Nasdaq, advancers led decliners by about 2 to 1.

PepsiCo Inc. rose 2.6 per cent, or US$1.44, to US$56.50 on the New York Stock Exchange after the soft drink maker reported a quarterly profit that topped Wall Street expectations.

E*Trade Financial Corp. gained 5.5 per cent, or 89 cents, to US$17.22 on the NYSE after the online brokerage said it would buy BrownCo from JP Morgan Chase & Co. for US$1.6 billion.

Red Hat Inc. jumped almost 30 per cent, or US$4.93, to US$21.44 on the Nasdaq. Red Hat, the largest distributor of Linux computer software, on Wednesday reported quarterly profit and revenue that topped Wall Street estimates.

Among decliners, Cypress Bioscience Inc. shares plunged 56.5 per cent, or US$7.17, to US$5.53 on Nasdaq after Cypress and Forest Laboratories Inc. said on Wednesday their experimental treatment for fibromyalgia failed to meet the primary goal in an important late-stage trial.

Forest shares fell 9 per cent to US$38.50 on the NYSE.

The latest revision of government figures for second-quarter US gross domestic product showed the economy expanded at an annual rate of 3.3 per cent, in line with economists' forecasts in a Reuters survey.

- REUTERS