Google, Software Lead Stocks Higher

A Goldman Sachs upgrade of the software sector and speculation that Google could be added to the S&P 500 sent the Nasdaq to its seventh straight gain on Monday.

Goldman upped the software sector to “attractive” from “neutral,” saying the adoption of Web services standards will benefit companies like Microsoft , Oracle , SAP and Siebel . In the near-term, the sector could gain from second-half strength, the firm said.

“If these stocks benefit as we would expect from a typical second-half rally, it is not clear that valuations of these better-positioned companies will come back down to these levels, even in the seasonally slower first half next year, if there is a strong secular story building for 2006 and 2007,” analyst Rick Sherlund wrote.

Google’s shares hit $255 — up 200% from its $85 IPO price last August — on speculation that the stock could be added to the S&P 500. Google CEO Eric Schmidt will present at the Goldman Internet conference on Wednesday.

The Nasdaq rose 10 to 2056, the S&P 500 added 4 to 1193, and the Dow climbed 51 to 10,523. Volume rose to 1.67 billion shares on the NYSE, and 1.66 billion on the Nasdaq. Advancers led 21-11 on the NYSE, and 16-13 on the Nasdaq. Upside volume was 69% on the NYSE, and 68% on the Nasdaq. New highs-new lows were 102-12 on the NYSE, and 81-32 on the Nasdaq.

Apple gained 6% on reports that it may switch from IBM to Intel chips.

Ciena rose 6% on a Merrill Lynch upgrade.

BMC slipped 2% on a Legg Mason downgrade.

Sonus jumped 11% on a Pacific Growth upgrade.

Boston Communications plunged 63% after losing a patent case.

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