US technology stocks rallied today after a bullish call from Wall Street house Merrill Lynch on computer chipmakers such as Texas Instruments.
"Whether or not we are at the bottom today I don't know but we are going to be pretty close," said Mr Eugene March, portfolio manager at the $1 billion Armada Equity Growth Fund.
Investors again shrugged off downbeat economic news, as one report showed that the US manufacturing sector was still shrinking and appeared to lack drivers to stimulate recovery.
The tech-laced Nasdaq Composite advanced 39.32 points, or 1.94 per cent, to 2,066.45, led by leading stocks like chip-maker and networking giant Cisco Systems.
The blue-chip Dow Jones industrial average rose 63.11 points, or 0.6 per cent, to 10,585.92 and the broader Standard & Poor's 500 added 9.49 points, or 0.78 per cent, to 1,220.72.
Merrill, noting the worst may be over for the chip companies, raised its opinion on the global semiconductor sector and upgraded the brokerage's recommendations on 12 stocks worldwide. "Industry fundamentals suggest global demand had hit a trough and supply was stabilising after strong growth," it said.
"I think the [year-on-year earnings] comparisons over this summer in semiconductors are probably going to be the worst ones in this cycle," Mr March said. "After August, the comparisons are still going to be bad but less bad and then they will turn positive next year for sure."
"The recovery will also be fueled by the lower interest rates after a spate of cuts this year by the Federal Reserve as well as the inventory corrections taking place," he said.
Among the semiconductor companies upgraded by Merrill, Analog Devices, Linear Technology,and St. Microelectronics were raised to "buy" ratings from "neutral" in the intermediate term.
Lucent Technologies, the most active stock on the New York Stock Exchange, slipped 61 cents to $6.09 for a loss of more than 9 per cent. The telecommunications equipment maker said it expects to raise $1 billion through a private offering of redeemable convertible preferred stock.