A Solid Beginning for Wall Street

Wall Street began the first full week of the new year with a solid advance Monday as stocks rose on a strong semiconductor sales report and an upbeat forecast from software firm Siebel Systems.

Analysts noted that Wall Street also was following its tendency to rise during the first weeks of the year and that the market’s momentum has carried over from 2003.

“The big picture is still the bull market,” said Alfred E. Goldman, chief market strategist with brokerage A.G. Edwards & Sons Inc. in St. Louis.

Stocks shook off another jump in energy prices, and a further decline in the dollar failed to worry traders.

The Nasdaq composite index closed up 40.68 points, or 2%, at 2,047.36, after a gain of 50% last year. It was Nasdaq’s highest close since Jan. 8, 2002.

The Dow Jones industrial average, which rose 25.3% in 2003, added 134.22 points, or 1.3%, to 10,544.07. It was the Dow’s highest close since March 19, 2002. And the Standard & Poor’s 500 index, which climbed 26.4% last year, gained 13.74 points, or 1.2%, to 1,122.22, for its highest close since April 19, 2002.

Advancing issues outnumbered decliners by almost 2 to 1 on the New York Stock Exchange and Nasdaq. Volume was heavy as many traders got back to work after the Christmas and New Year’s holidays.

The sharp rise in the tech-dominated Nasdaq index reflected the growing sentiment that consumers and corporations alike are poised to upgrade their computer systems after several years of tight spending.

The Semiconductor Industry Assn. said global sales rose 25.7% in November to $16.13 billion from $12.83 billion the same month a year before, led by rising sales of personal computers and growth in wireless markets. The group expects total sales for the year to exceed current forecasts.

The SOX index of semiconductor stocks jumped 3.6%, with industry leader Intel adding 75 cents to $32.91.

Also Monday, the Commerce Department reported that construction spending rose by 1.2% in November.

Investors and traders were encouraged by remarks from Federal Reserve Governor Ben Bernanke on Sunday that there was room for the central bank to leave interest rates at rock-bottom levels for the near future.

The federal funds rate, the Fed’s main lever for influencing economic activity, now stands at 1%, a 45-year low.

Unemployment remains a concern, but inflation is in check and many forecasters estimate that the economy will grow at a brisk 4% this year, a rate Bernanke said was reasonable.

Bernanke’s comments helped push the dollar down again, on the assumption that the Fed wouldn’t try to bolster the currency by raising interest rates.

His views also may have helped support the bond market, despite the day’s upbeat economic reports. Treasury bond yields were little changed.

Some analysts sounded a cautious note, warning that the big stock market gains of the last several weeks were likely to be met with pullbacks once fourth-quarter corporate earnings reports start coming in later in the month.

“I think personally we’re a little overextended, and everything is going to have to be righted when the earnings come in,” said Todd Leone, managing director of equity trading at S.G. Cowen Securities.

“But for now, you’ve got all this fresh money flowing into the market and everything looks rosy.”

Cowen researchers issued a report Monday that was broadly bullish on the tech sector and included upgrades on 11 stocks, including Dell, which closed up 93 cents at $35.22, and Microsoft, which gained 69 cents to $28.14.

Siebel rose $1.40 to $15.39 after it predicted better-than-expected profit and sales for the fourth quarter. Analysts saw it as a sign that business spending on software was on the upswing.

In other trading, crude oil climbed $1.26 to $33.78 a barrel on a forecast that the Northeast would be hit by another cold snap this week. Natural gas prices also jumped.

In other highlights:

* The Dow was led by Alcoa, up $1.23 to $38.78; Caterpillar, up $2.25 to $84.90; and 3M, up $1.59 to $84.96.

* Energy shares gained on higher crude and natural gas prices. The Amex oil index rose 2.2%, led by Total, up $2.21 to $95.46, and ConocoPhillips, up $1.77 to $67.25.

* Health-plan operators declined after Goldman Sachs cut its rating on the industry to “neutral” from “in-line,” citing increasing price competition in 2004.

Humana dropped $1.54 to $21.39, for the biggest decline in the S&P; 500. Cypress-based PacifiCare lost $4.60 to $63.92 and its larger rival UnitedHealth Group fell $2.84 to $56.20. Anthem shed $2.57 to $73.71, and Thousand Oaks-based WellPoint Health Networks fell $2.68 to $95.34. Aetna, the No. 2 health insurer, lost $1.64 to $66.03.

* Cattle prices at the Chicago Mercantile Exchange rose for a second day after losing about 20% when the first U.S. case of mad cow disease was discovered Dec. 23. That news shut down U.S. beef exports, but traders cited hopes that bans on U.S. beef shipments would be lifted sooner than expected. February live cattle rose 1.50 cents a pound to 75.30.