Bernstein Grows Cautious

The Nasdaq hit a new 16-month closing high Wednesday even as one of the better research firms turned cautious on tech.

Bernstein reduced its exposure to the tech sector to market weight. Third-quarter estimates are too aggressive, the firm said, and the strengthening dollar is taking away one of they key pillars of the rebound in technology earnings.

With valuations too high for near-term risks, Bernstein reduced its holdings in names like IBM , Agere and Harris Corp. while increasing exposure to STmicroelectronics and Atmel .

The broader market was once again restrained by rising interest rates.

The Nasdaq rose 11 to 1782, the S&P 500 was unchanged at 996, and the Dow slipped 6 to 9333. Volume declined to 1.05 billion shares on the NYSE, and 1.36 billion on the Nasdaq. Advancers led 19-12 on the NYSE, and 19-11 on the Nasdaq. Upside volume was 62% on the NYSE, and 75% on the Nasdaq. New highs-new lows were 118-17 on the NYSE, and 169-6 on the Nasdaq.

After the close, Tech Data missed earnings estimates but beat revenue estimates.

During the day, Semtech and CNT soared after beating estimates.

National Semi surged 6% on a Lehman Brothers upgrade, pacing a strong chip sector.

Roxio and NetIQ rose more than 7% each on takeover rumors.

Westell gained 8% on a deal with Cincinnati Bell . The Baby Bells slipped on a negative research report by Standard & Poors.

Intel rose on plans to expand in China.

And former MCI execs face criminal charges.

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