Wall Street Beat: Tech stocks hang on to gains despite mixed reports

Concerns about the economy and IT spendng hit tech stocks, but the sector remains up for the year

By , IDG News Service |  IT Management

Buffeted by concerns about the economy and IT spending, tech stocks have gone on a roller coaster ride lately, but on the whole they've managed to hang on to gains they made earlier in the quarter.

The Nasdaq Computer Index, which tracks more than 390 tech-related stocks on the exchange, was up about 1 percent in midday trading Friday, on a generally up day for markets. That brought it up to its level of a month earlier, after 30 days of ups and downs. The Nasdaq Computer Index is on track to close Friday up about 7 percent for the year.

In midday trading, major indexes looked good Friday on news from the U.S. Department of Labor that the U.S. added 175,000 jobs in May. Although the unemployment rate increased slightly to 7.6 percent, market observers looked at the news was looked with favor.

The general consensus seems to be that the numbers were good enough to show that businesses are hiring, but not so good that it would cause the U.S. Federal Reserve bank to stop its "quantitative easing" program of buying up securities in order to prop up markets.

The Dow Jones Industrial Index rallied in midday trading, rising 1.12 percent. All five tech stocks included in the index were up: Cisco, Microsoft, IBM, Intel and Hewlett-Packard -- even though most of them are affected by the flagging PC market.

Slumping PC sales were implicated in yet another research report calling for IT spending to decline this year. JPMorgan Chase analyst Mark Moskowitz, in a research note, said that global IT spending will increase 0.6 percent this year, down from his prior forecast of 1.2 percent. Moskowitz forecast spending on PCs to decline 8.3 percent, down from the previous estimate of a 1.8 percent drop. The server and storage market will also flag this year, Moskowitz wrote.

Gartner, meanwhile, issued some worrying news about a segment of the software market, which usually gets credit for propping up IT spending.

The growth rate for revenue generated by worldwide business intelligence, corporate performance management and analytics applications/performance management software revenue declined in 2012, Gartner said.

"After a few historic banner years of spend in the BI software market, which culminated in more than 17 percent growth in 2011, growth was more subdued in 2012, at seven percent," said Garter analyst Dan Sommer in the report. Spending in this software category totaled $13.1 billion in 2012, according to Gartner. Tough macroconditions and confusion related to emerging technology terms led to "more muted market growth" than in previous years, Gartner said.

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