Wall Street Technology shares close higher ahead of Greenspan speech

SAN FRANCISCO (AFX) - Prices of technology shares closed higher in thin trade with investors optimistic that a speech this evening from Federal Reserve chief Alan Greenspan's speech will yield positive news on the U.S. 

economy, dealers said.

At the 4.00 pm close, the Nasdaq composite added 38.45 points to 2,281.93. Volume came in at 1.84 bln shares, with 2,123 issues closing higher, 1,668 declining, and 377 remaining unchanged.

The Nasdaq 100 gained 45.77 points to 2,003.33 and the Philadelphia semiconductor index (SOX) lost 1.37 to 658.77.

The DJIA was up 14.83 at 11,120.3, with the S&P 500 rising 4.12 to 1,293.17.

According to Barry Hyman, equity strategist at Ehrenkrantz King Mussbaum, investors are wagering that Greenspan's speech before the Economics Club of New York will indicate that the U.S. economy is poised for a recovery.

"Greenspan tends to use this dinner to flag important leading events ...and there has been some presumptive buying ahead of expected positive news," said Hyman. 

"People are saying that it would be unlikely for Greenspan to intimate that things are still bad after the rate cuts this year."

Investors largely overlooked comments from Fed governor Laurence Meyer, who warned that inflation is higher than is acceptable in the long run, said dealers.

Meyer said the Fed should be cautious in its approach to further rate cuts "to avoid overshooting in the other direction in a way that ends up adding to price pressures as growth strengthens."

News of Senator James Jeffords' decision to quit the Republican Party to become an independent - a move that gives de facto control of the Senate to the Democratic Party - also had limited impact on technology shares, dealers said.

Analysts said political issues raised by Jefford's defection have little bearing on investor decisions in the tech sector.

Among stocks in focus, IBM rallied 2.20 usd to 119.60 after it announced a contract win from UK group NTL.

News that Vodafone awarded a contract to Hewlett Packard gave a lift to the computer hardware group's shares, which gained 0.51 to 30.09.

Microsoft added 2.02 to 71.72 after it announced a joint venture with defence company Lockheed Martin to bid for government contracts.

Oracle's upcoming fourth-quarter and 2002 earnings and sales estimates were trimmed by analysts at Dain Rauscher Wessel. The stock gained 0.47 to 17.30. 

Meanwhile, EDS fell 2.85 to 61.93 as the company's acquisition of Structural Dynamics Research and Unigraphics Solutions for 1.12 bln usd underscores its needs to issue more debt.

In the internet sector, eBay added 2.36 to 63.26, after Goldman Sachs said the company is "on track to meet or exceed" its second-quarter sales estimate of 163.4 mln usd and earnings estimate of 7 cents a share.

Palm fell 0.14 to 6.23 after Merrill Lynch warned the handheld device maker could run out of cash by the end of November, dealers said.

In a note to clients, the broker said the group's cash reserves will shrink to 200-250 mln usd by the end of May -- enough to see it through only two more quarters.

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