By Dan Gallagher, MarketWatch
SAN FRANCISCO (MarketWatch) -- Apple Inc. posted solid gains on
Wednesday, fueling the Nasdaq and the rest of the tech sector
despite notable dips by Google Inc. and Dell Inc.
The Nasdaq Composite (RIXF) rose 7 point, or 0.2%, to close at
3,118, while the Philadelphia Semiconductor Index (SOX) added 1.2%.
The Morgan Stanley High-Tech Index was up a fraction.
Apple (AAPL), which has a heavy weighting on the Nasdaq, jumped
4.2% to close at $506.09. The stock has been under heavy selling
pressure of late, losing nearly 7% over the last two trading
sessions on worries about potentially slowing sales of its iPhone
5.
Several brokers issued positive notes on Apple before the open,
pointing to strong results expected for the first fiscal quarter
that the company will report next week. Katy Huberty of Morgan
Stanley wrote that recent concerns about iPhone sales "are
overblown," and she reiterated her overweight rating and $714 price
target on the stock.
That helped to offset a downgrade by Pacific Crest -- the second
notable downgrade the highly favored stock has seen over the past
month.
Analyst Andy Hargreaves lowered his rating on Apple to sector
perform, or neutral, citing "evidence of high-end market
saturation" as the primary reason for the move. "We believe the
high ends of the smartphone and tablet markets are quickly becoming
saturated, which is likely to limit Apple's growth by pressuring
unit volume and driving a mix shift to lower-margin product."
Google Inc. (GOOG) slipped 1.3% to close at $715.19. Following
the introduction of Facebook's "graph search" tool the previous
day, some analysts speculated on the potential impact to Google's
core Web search business.
"As of now, we do not see Graph Search as a threat to Google Web
search," wrote Justin Post of Bank of America/Merrill Lynch in a
note to clients, adding that "looking forward, Facebook Graph
searches could be competitive with certain categories of Google
searches, such as Places and Maps."
He said Facebook remains "a small overhang" on Google's shares.
He lifted his price target on Facebook (FB) to $35 from $31.
Facebook shares were last trading down a fraction as other analysts
issued mixed reactions on the new graph search feature.
Yelp (YELP) shares fell 1.2% to close at $20.36 after Northland
Capital downgraded the stock to an underperform rating, saying the
new Facebook feature is "highly competitive" to Yelp's core
business.
Dell (DELL) shares fell 4.3% to close at $12.61 after gaining
more than 20% over the previous two session on rumors that the PC
maker may go private.
EBay Inc. (EBAY) was up a fraction closing at $52.90, ahead of
its fourth-quarter earnings, scheduled for after the closing bell.
Analysts are expecting a 17% gain in revenues for the period.
Yahoo Inc. (YHOO) shares jumped 2.8% to close at $20.07,
possibly on speculation about IPO plans by Alibaba, though the
Chinese company flatly denied a Bloomberg report that it is making
such plans.
Shares of Hewlett-Packard(HPQ) also rose 4.1% to close at $17.21
after The Wall Street Journal reported, citing unnamed sources that
potential buyers have expressed interest in acquiring Autonomy
Corp. An H-P spokesman said the company doesn't comment on
speculation.
Also in the red were shares of Netflix Inc.(NFLX) which shed 4%
to close at $97.48.
Subscribe to WSJ: http://online.wsj.com?mod=djnwires