Microsoft Gives Tech Stocks Reason to Rally

After leading the tech sector higher during the day, Microsoft kept the rally going after hours Thursday with another quarter of better than expected results and guidance.

Microsoft shares rose 4% in late trading on top of a 4% rise during the day after the company posted a 30% sales increase to $16.37 billion, beating out the $15.95 billion that analysts expected, according to Thomson Financial.

Microsoft’s earnings of 50 cents a share were four cents better than expected, and the company’s current quarter and full-year guidance were also as good or better than Wall Street analysts anticipated.

Microsoft cited strong sales of Windows Vista for the results.

The report was welcome news for a tech sector reeling from disappointing results from bellwethers like Intel and Apple, and added to a dramatic two-day rally on hopes for an economic turnaround. Juniper Networks was another big gainer in late trading, rising 8% on a 73% jump in earnings, and that coming on top of a 7% rise ahead of the report.

The latest good news for the economy was a quick agreement by congressional leaders on a $145 billion economic stimulus package, the latest government effort to rescue the market and economy from the subprime mortgage market meltdown.

eBay was left out of Thursday’s market rally, falling 6% after lowering its current quarter outlook and announcing the retirement of CEO Meg Whitman.

Qualcomm and Symantec were big winners after beating estimates, up 10% each, and Nokia soared 12% on its results, a sharp contrast to Motorola’s 18% drop a day earlier. F5 and LSI rose more than 20% each on their earnings news, while Mercury Computing fell 32% on its results. AT&T shed 3% after the company met estimates.

Internet stocks were strong, with Yahoo, Google and Amazon up 5% or more, and HP, Dell and Cisco gained 4% each.

The Nasdaq rose 44 to 2360, the S&P gained 13 to 1352, and the Dow rose 108 to 12,378. Volume declined to 5.7 billion shares on the NYSE, and 3.05 billion on the Nasdaq. Advancers led by a 21-12 margin on the NYSE, and 17-13 on the Nasdaq. Upside volume was 64% on the NYSE, and 73% on the Nasdaq. New highs-new lows were 16-79 on the NYSE, and 43-130 on the Nasdaq.

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