Friday October 13 5:05 PM ET Tech Stocks Post Second-Largest Gain

By Haitham Haddadin

NEW YORK (Reuters) - Technology stocks staged a spectacular rally on Friday, chalking up their second-largest percentage gain ever, as upbeat results from key high-tech companies like Web company Juniper Networks emboldened investors to snatch up battered stocks.

The technology-packed Nasdaq Composite (^IXIC - news) soared 242.09 points, or 7.87 percent, to end at 3,316.77, after Thursday's mauling took the index to its lowest closing level since early November 1999. It was the Nasdaq's second-biggest percentage gain after the 7.94 percent jump on May 30, 2000.

The Dow Jones industrial average (^DJI - news), a gauge of 30 blue-chip companies, rose 157.60 points, or 1.57 percent, to 10,192.18, as it reversed part of Thursday's 379-point slump. The broader Standard & Poor's 500 Index (^SPX - news) advanced 44.39 points, or 3.34 percent, to 1,374.17, based on the latest data.

The rally also was stoked by easing oil prices and bullish comments from Goldman Sachs' chief strategist, Abby Joseph Cohen, one of Wall Street's top analysts. The market's recent slump is overdone and makes stocks a good buy, especially because a strong U.S. economy will keep boosting corporate profits, she said.

``The fact that there's less tension in the Middle East today is 'Reason No. 1' behind the rally and then Juniper and Gateway and PMC-Sierra,'' said Uri Landemans, chief investment officer at AFA Management Partners, which manages $400 million. ''Those were three nice (earnings) calls.''

Stronger-than-expected inflation data for September cast an early shadow on stocks, but the major market indexes quickly charged into positive territory.

The market on Thursday was hit by a bombshell profit warning from home improvement retailer Home Depot (NYSE:HD - news) and turmoil in the Middle East that sent oil prices soaring. But news that the tension has subsided somewhat also helped fuel Friday's rally.

Wall Street has been plagued recently by fears that a soft European single currency, high energy prices and a softening U.S. economy will dampen corporate growth. Oil prices retreated more than $1 a barrel on Friday.

Oil shares fell sharply, among those Exxon Mobil Corp. (NYSE:XOM - news), off $3-5/8 to $90-1/2.

Three key companies -- networking chip maker PMC-Sierra Inc. (NasdaqNM:PMCS - news), Internet infrastructure company Juniper Networks (NasdaqNM:JNPR - news) and computer maker Gateway Inc. (NYSE:GTW - news) -- reported good results, which analysts said sparked a surge in several related stocks Friday.

``Juniper is one of the bellwethers for the fiber-optics space, Gateway shows that computer demand is not totally dead and PMC-Sierra says the stocks are probably oversold,'' Landemans said.

Juniper Networks Inc. (JNPR.O), which posted better-than-expected results as sales jumped more than sixfold, soared $28-57/64 to $228-1/2, for a gain of more than 14 percent. PMC-Sierra saw its shares climb more than 20 percent, or $32 to $190-7/16.

Gateway Inc. (GTW.N) rallied nearly 22 percent, up $9.48 to $53.11, after its profits and sales met analysts' expectations for the third quarter and the personal computer maker said it saw a strong fourth quarter.

Leading the gains among the sectoral indexes, the Philadelphia Stock Exchange semiconductor index (^SOXX - news) shot up a whopping 10 percent. The Nasdaq Internet Index (^IIX - news) was up 9 percent and the Nasdaq Telecom Index (^IXUT - news) gained 8.42 percent, reflecting the gains in the Web-related and telecommunications issues.

Market breadth was very positive on Nasdaq with advancers beating decliners 2 to 1 on volume of 2 billion shares.

``The market sold off dramatically over the last few days,'' said George Rodriguez, senior vice president at Guzman & Co. ''There is a feeling many of the names out there are way oversold.''

But like others on the Street, Rodriguez called it ``a cautious rebound'' as opposed to the start of strengthening.

``We run the risk something unforeseen will happen in the Middle East. We still have the euro, which can affect earnings, and we have a slew of leaders reporting bad numbers,'' Rodriguez said.

Val Kosmider, vice president of international equity trading at Handelsbanken, agreed.

``Clearly we were oversold ... but is this the bounce that is going to reverse us into a decent performance for the rest of the year? I think the jury is still very much out on that,'' Kosmider said.

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-- Carl Jenkins (Somewherepress@aol.com), October 13, 2000