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Stocks extend rally after Apple report

Investors drove stocks higher Monday, thanks to bullishness in the technology sector fueled by analyst upgrades and Apple Computer Inc.’s reported talks to use Intel Corp. chips in its computers.
/ Source: The Associated Press

Investors drove stocks higher Monday, thanks to bullishness in the technology sector fueled by analyst upgrades and Apple Computer Inc.’s reported talks to use Intel Corp. chips in its computers.

Wall Street was buoyed by the Apple report as such a change could be the biggest shift in the Mac’s makeup since it came out in 1984 and could make the machines less expensive. Software stocks also received a boost from analysts at Goldman Sachs, who upgraded the entire sector.

However, while many investors remained optimistic after last week’s rally, may remained on the sidelines ahead of the release of the Federal Reserve’s May 3 meeting minutes and the latest reading on the gross domestic product, due later this week.

“I think these economic stats will be what generates turnover in this market, but for right now, it’s good to see last week’s rally continuing here,” said Brian Williamson, an equity trader with The Boston Company Asset Management.

The Dow Jones industrial average rose 51.65 points, or 0.5 percent, to its highest level since April 7. The Standard & Poor’s 500-stock index added 4.58 points, or 0.4 percent, while the Nasdaq composite index rose 10.23 points, or 0.5 percent.

The good mood on Wall Street helped stocks to overcome a surge in oil prices — a barrel of light crude rose 51 cents to settle at $49.16 on the New York Mercantile Exchange.

Volume was light in stock trading — a sign that there’s still money on the sidelines that has not yet been invested. But the fact that the stock market failed to sell off Friday after the four previous sessions’ gains helped renew confidence in the market despite a lack of economic news.

“I think this is a great show of resiliency in the marketplace,” said Michael Palazzi, managing director of equity trading at SG Cowen Securities. “I don’t think that people are sitting there thinking that this is the start of a real bullish run higher, but to get up to these levels and hold here is a good sign.”

An Apple move to Intel’s chips would make Macs far less expensive — a major hurdle in Apple’s ongoing battle with cheaper PCs already using Intel processors and Microsoft’s operating system. The possible deal, reported in The Wall Street Journal, could spell trouble for International Business Machines Corp., Apple’s current supplier.

Intel rose 15 cents to $26.50 and Apple gained $2.21 to $39.76, while IBM gained 10 cents to $76.51.

Western Wireless Corp. slipped 9 cents to $39.31 after the company hired Deutsche Bank to explore options for selling its international mobile phone assets, a strong revenue generator but a lower-margin business.

PalmSource Inc. President and Chief Executive David Nagel resigned from the company Monday. The mobile software maker named licensing executive Patrick McVeigh as interim CEO while a permanent successor is sought. PalmSource dropped 12 cents to $8.89.

Shares of Campbell Soup Co. added 48 cents to $30.82 after the company beat Wall Street’s profit expectations by 2 cents per share, lifted by strong domestic bakery and snack sales. The company also reiterated its profit forecasts for the year, but said it would spend less on expansion.

Generic drug maker Able Laboratories Inc. said it was recalling its entire product line of drugs and withdrawing seven drugs that were up for regulatory approval. The move comes after the company suspended product shipments on Thursday due to quality control issues. Shares of Able plunged 29.8 percent, or $2.14, to $5.05 and have lost nearly 80 percent of their value since closing at $24.63 on Wednesday.

Overseas, Japan’s Nikkei average surged 1.1 percent. In Europe, Britain’s FTSE 100 was up 0.36 percent, France’s CAC-40 gained 0.54 percent and Germany’s DAX index rose 1.06 percent.