Technology Sector Leads Stock Market Rally

Stocks posted their best performance of the new year Tuesday, led by the technology sector, as investors grew hopeful that share prices already reflect the damage to U.S. businesses from Asia’s economic turmoil.

The Dow Jones industrial average rose 84.95 to 7,732.13, the blue-chip barometer’s biggest gain in two weeks.

Broad-market indexes also rose sharply, with the technology-laden Nasdaq composite rising 34.05, or more than 2 percent, to 1,541.63. And, by contrast with Monday’s narrow blue-chip focus, smaller-companies’ shares also posted sizable gains.

“The market’s recovering from an excessive bout of selling in recent days. People are settling down about a number of issues,” said Peter Canelo, U.S. investment strategist at Morgan Stanley Dean Witter, adding that most of the latest readings on the U.S. economy suggest enough strength to help compensate for the Asian slowdown. “My guess is that we’ll muddle through this.”

A rally on several battered markets in Southeast Asia helped spur a strong opening on Wall Street, and the buying accelerated in the afternoon.

Advancing issues outnumbered decliners by a 5-to-2 margin on the NYSE, where volume totaled 648.47 million shares, down from Monday’s 705.45 million, which was the sixth-biggest tally in history.

Some of the stocks that moved substantially or traded heavily Tuesday:

NYSE

Motorola, up 3 at 57-1/2.

The telecommunications equipment maker late Monday posted fourth-quarter results that failed to meet Wall Street forecasts by a small margin. Motorola said the economic turmoil wracking Southeast Asia hurt its sales, orders, profits and pricing.

CBS, up 7/8 at 28-3/8.

The broadcaster bought its way back into NFL coverage with a $4 billion, eight-year deal to televise the American Football Conference package formerly held by NBC.

NASDAQ

Intel, up 1-1/4 at 76-7/8.

The semiconductor giant was scheduled to report after Tuesday’s close on its results for the final three months of 1997. Tuesday morning, the government declined to block Intel from buying a leading supplier of computer graphics chips but said it will continue to investigate the purchase.

Computer Language Research, up 8-7/16 at 22-3/16.

Thomson, a Toronto-based publisher, agreed to acquire the business software company for $22.50 a share, or $325 million, in cash.

Versant Object Technology, down 4-1/4 at 5-1/8.

The maker of database management systems warned that it will post an unexpected loss for the fourth quarter due to weak licensing revenues and higher-than-anticipated marketing expenses.