The Nasdaq rose on Tuesday after an improved outlook from Texas Instruments lifted technology stocks, but gains on other indexes were limited as plans by big banks to repay government bailout funds raised concerns whether the move would help the economy recover.
Shares of Texas Instruments Inc
The PHLX semiconductor index <.SOXX> climbed 4.5 percent.
With Texas Instruments being the largest analog player, it is a confirmation that we have started to see some inventories worked down and the channel to distributors beginning to get flushed as well, said Bennett Gaeger, managing director at Stifel Nicolaus in Baltimore.
This has taken some of the fears off the market and actually confirmed some of the data points we've seen with regards to technology names.
The Dow Jones industrial average <.DJI> gained 14.74 points, or 0.17 percent, to 8,779.23. The Standard & Poor's 500 Index <.SPX> gained 4.59 points, or 0.49 percent, to 943.73. The Nasdaq Composite Index <.IXIC> gained 20.25 points, or 1.10 percent, to 1,862.65.
Stocks initially moved higher after the Treasury Department said 10 big banks will pay back $68 billion received under the Troubled Asset Relief Program, or TARP, to the government, but quickly fell back on concerns the money could be better served by lending to boost the economy.
These banks want to pay back the TARP money almost immediately. What does that do to their balance sheet and their loaning capability? said Carl Birkelbach, chairman and chief executive of Birkelbach Investment Securities in Chicago.
If they were more concerned about the public, they would keep the cash and start loaning out money.
An auction of three-year Treasury notes in the early afternoon was met with solid demand, easing concerns that an oversupply of government debt could push interest rates still higher and increase the cost of borrowing to consumers and businesses.
General Electric Co
Boeing shares fell 1.8 percent to $51.89, while United Technologies shares fell 1.3 percent to $55.76 as the top drags on the Dow. Shares of conglomerate GE were unchanged.
The S&P 500 <.SPX> has rallied 39.5 percent since hitting a 12-year closing low on March 9, leading analysts to speculate a correction was looming, although recent dips have been short-lived.
(Additional reporting by Rodrigo Campos; Editing by Leslie Adler)