Wall Street rises as Red Hat stock lifts tech sector

Dow Jones:12,170.56 (+84.54) S&P 500:1,309.66 (+12.12) Nasdaq:2,736.42 (+38.12)

STRONG EARNINGS numbers from Red Hat yesterday, led the technology sector higher, while the wider markets rose as healthy employment data gave traders a new focus away from global political tensions.

The developer of open-source software reported net profits up 43 per cent in the fourth quarter, topping analysts expectations and sending shares soaring 18.2 per cent to $47.26.

Those gains helped the S&P 500 benchmark index finish 0.9 per cent higher at 1,309.66.

Sentiment on Wall Street was helped by employment data showing that the number of people in the US seeking jobless benefits had fallen by 5,000 to 382,000 last week.

Optimism over the domestic economic recovery in the session outweighed more global concerns.

Retail stocks saw some of the strongest gains in the session.

GameStop, a video game retailer, was up 3 per cent to $21.74 after reporting a 10 per cent jump in fourth-quarter profits.

Walmart added 1.8 per cent to $52.59 while Costco was up 1.7 per cent to $72.11.

The retail sector was weighed down by Best Buy which lost 5.3 per cent to $30.15 after the electronics retailer reported earnings down 16 per cent in the fourth quarter.

Walgreen, a pharmacy chain, said it would buy Drugstore.com, the online drug retailer, in a deal worth $429 million. The news sent shares in Drugstore.com rocketing 113.1 per cent to $3.82, while Walgreen rose 0.3 per cent to $39.96.

Bank of America lost ground for the second day as investors digested news that the Federal Reserve had “objected” to its proposed dividend hike. The stock was also hit by a number of rating downgrades and shares were down 1.3 per cent to $13.48.

Elsewhere, Regions Financial was down 0.6 per cent to $7.13, adding to a 1.8 per cent loss in the previous session, but the financial sector as a whole was up.

Imax, an operator of large-screen cinemas, climbed 12.4 per cent to $29.90.

ATT, a wireless carrier which announced a $39 billion acquisition of T-Mobile USA from Deutsche Telekom, was up 1.4 per cent to $28.54. – (Copyright The Financial Times Limited 2011)