US technology shares rose on Wednesday after solid earnings from Micron Technology and Red Hat, but an unexpected drop in new home sales kept a lid on the broader market's gains. The Dow and S&P 500 were little changed as data showed new home sales dropped 11.3 percent, sinking to a seven-month low in November. Volume was light on the last full trading day before the Christmas holiday.
Better-than-expected results boosted Red Hat Inc shares 5.2 percent to $31.43 on the NYSE and lifted the stocks of other business software companies. Tibco Software Inc gained 7.4 percent to $9.73 on the Nasdaq after results that beat the Street's expectations, and bellwether Oracle Corp 1.1 percent to $24.73. Micron Technology Inc climbed 6.2 percent to $9.99 after posting its first quarterly profit in nearly three years.
"Tech is the canary in a coal mine. It's one of the first sectors that turns up," said John Canally, investment strategist and economist for LPL Financial in Boston. "Valuations on tech aren't too stretched. We think in general right now, tech is the place to be."
The housing figures were a disappointment because of the sector's crucial role in the economic recovery. Home improvement chain Home Depot Inc shed 1 percent to $29.00 and ranked among the Dow's worst drags. Though it achieved only a modest gain, the S&P 500 closed at the key technical level of 1,120. Market technicians have said a breakout above 1,120 could be a harbinger for more gains into year-end. The S&P 500 reached a fresh 14-month high, while the Nasdaq set a 15-month high.
The Dow Jones industrial average inched up 1.51 points, or 0.01 percent, at 10,466.44. The Standard & Poor's 500 Index added 2.57 points, or 0.23 percent, to 1,120.59. The Nasdaq Composite Index climbed 16.97 points, or 0.75 percent, to 2,269.64. The New York Stock Exchange will close at 1800 GMT on Thursday for Christmas Eve and will be closed on Friday for Christmas. Energy stocks moved higher, as US oil futures jumped more than 3 percent to $76.67 per barrel after data showed US crude oil inventories fell more than expected last week as imports declined.
The PHLX Oil Service index shot up 1.5 percent, lifted by Schlumberger Ltd, which rose 2 percent to $65.23. Barclays Capital raised its rating on shares of the oilfield services company to "overweight" from "equal-weight." The dollar lost 0.4 percent against a basket of major currencies, lifting exporters like Caterpillar Inc, which was up 0.7 percent at $58.32, and helped limit declines in the Dow and the S&P 500.