Wall Street Technology shares close slightly higher; investors sidelined

SAN FRANCISCO (AFX) - Prices of technology shares closed slightly higher in broadly directionless trade, with investors choosing to remain on the sidelines, digesting the recent sharp gains across the sector, dealers said. 

At the 4.00 pm close, the Nasdaq composite was up 8.13 points at 2,313.72. Volume came in at 2.30 bln shares, with 2,153 issues closing higher, 1,757 declining, and 376 remaining unchanged.

The Nasdaq 100 slipped 9.63 points to 2,042.94, and the Philadelphia semiconductor index (SOX) lost 11.41 to 694.74.

Elsewhere, the DJIA dropped 81.53 points to 11,256.3, with the S&P 500 down down 3.50 at 1,309.33.

With a lack of significant fresh leads this morning, technology investors were happy to hold their fire today, and contemplate the steep rises posted on the Nasdaq composite in recent weeks, dealers noted.

"Yesterday we had a good day, the market was digesting its gains today. People are thinking that the worst is behind for the economy and the market," a id Jay Suskind, at Ryan, Beck & Co.

Looking forward, Suskind said there is still a lot of cash sitting in money market funds awaiting clearer signs of a recovery in the U.S. economy. 

"I still think there is some cash on the sidelines although a lot has put to work over the last few weeks. But I do sense that there is still retail money out there," said Suskind.

Another positive on the macroeconomic front were comments from Anthony Santomero, president of the Federal Reserve Bank of Philadelphia, who said the U.S. economy should be capable of achieving an annual growth rate of 3-4 pct by 2002.

Analysts said his comments added to the growing belief that the Federal Reserve's series of rate cuts since the beginning of the year will soon provide the profit recovery investors have been looking for.

Among companies in focus, Cisco rose after comments from CSFB and SG Cowen suggested that demand for the company's internet infrastructure products is poised to rebound, dealers said.

CSFB's Lissa Bogaty said a recent meeting with one of Cisco's top executives left her convinced that the Cisco's optical components business is about to stage a recovery.

According to Bogaty, carriers are starting to spend again after freezing their budgets in the first quarter, which means that contracts for Cisco's optical products that have been on hold should start to generate revenues as early as this quarter.

SG Cowen's Christian Armacost also had a meeting with Cisco management recently, which also left a positive impression. 

Cisco rose 0.59 to 23.46.

In the internet sector, AOL Time Warner slipped 0.45 to 56.15. Earlier today, the group's AOL unit increased the monthly price of its unlimited plan by 1.95 usd to 23.90 usd from July - the first price increase in three years for the plan.

Among hardware makers, Dell rose 0.10 to 25.94. The company does not expect a rebound in demand for PCs until the last three months of the year, according to Merrill Lynch's Steve Fortuna who met with Dell chief operating officer Steve Rollins yesterday. 

Apple slipped 0.06 to 23.50. The company may face an inventory problem as it starts shipping computers pre-loaded with its OS X operating system later this month as warned Salomon Smith Barney.

Among other actively traded stocks, Sun slid 0.20 to 22.76, and Oracle fell 0.55 to 17.55.

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