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Stocks near session highs with tech leading rebound

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After a somewhat mixed opening of trading, the major market averages are near their session highs with the Dow Industrials (INDU) 8,408 reversing a 61-point loss and turning it into a 40 point gain.

Dow gains are being lead by semiconductor bellwether Intel (NASDAQ:INTC) $17.04 +3.84%, while other technology components have IBM (NYSE:IBM) $78 +1.64%, Hewlett Packard (NYSE:HPQ) $15.15 +1% and Microsoft (NASDAQ:MSFT) $52.94 +1.65% also posting gains.

The tech laden NASDAQ-100 Index (NDX.X) 989 +2.95% is breaking above yesterday's highs of 982.62, which now has bears assessing near-term upside risk to Monday morning's open of 1,007. Tech sector's show the Networking Index (NWX.X) 116 +9.8%, Fiber Optic (FOP.X) 35.95 +7.2% and the Semiconductor Index (SOX.X) 6.62% showing strong gains in the early session.

Telecom-relates sectors are getting a boost from French telecom company Alcatel (NYSE:ALA) $5.12 +32.98%, which said it has reduced its debt with positive cash flow and expects to turn to profitability in 2003.

Bullishness in the semiconductors is being spurred after Microchip (NASDAQ:MCHP) $24.74 +9% was said to have raised its fiscal year 2004 EPS guidance to $0.92 from $0.84 per share at the Prudential Technology Conference. The company also raised its revenue forecast to $850 million from $801 million.

Sector action is bullish across the board, with marginal weakness in the retailers as depicted by the S&P Retail Index (RLX.X) 288.97 -1.46%, Forest & Paper Products (FPP.X) 259.90 -1.35% and Gold/Silver Index (XAU.X). The Forest & Paper products sector is seeing some sympathetic weakness after Prudential cut Bowater (NYSE:BOW) $33.45 -7.85% to "sell" from "hold" citing the poor rate of recovery in the lumber and coated groundwood business.

In the drug sector, shares of Teva Pharmaceuticals (NASDAQ:TEVA) $76.32 +7.4% are surging to a 52-week high on heavy volume of 4 million shares after the company received FDA approval for its generic Augmentin. Yesterday, TEVA traded a triple-top buy signal at $71 on strong volume of over 2 million shares.

Treasuries are finding some selling today, with the bulk taking place in the longer-dated 30-year December futures (us02z) 109'30 -0.56%, compared to the 10-year (ty02z) 114'010 -0.31% and 5-year (fv02Z) 113'060 -0.25%, which has the YIELD curve flattening a bit today and helping provide a lift to equities.

Jeff Bailey

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