Wall Street beat: Traders jumpy, five years after the high

Merger news and the processor sector were at the top of technology investors’ minds this week, as the Nasdaq Composite Index passed a poignant anniversary: On March 10, 2000 the index (ticker symbol: COMPX) hit its highest point, 5048.62, compared to 2059.72 Thursday.

The index has rallied in the last couple of years: On March 10, 2003, it was at 807. But gains over the past two years have not consoled investors, as the Nasdaq has flattened out in the last few months. Investors may be cautious since various market research firms have forecast corporate IT spending to grow between 6 percent and 9 percent this year — not bad for spending on products in a mature industry but still depressed compared to the heady days of the dot-com bubble.

“We may never see that again in our lifetime. You have to think of that as a one-time event,” said Microsoft  Chairman and Chief Software Architect Bill Gates, speaking in an interview with Bloomberg Television Wednesday, the five-year anniversary of when the Nasdaq first hit 5000. Gates was generally upbeat, saying that the low dollar helps sales of U.S. products abroad, and Microsoft plows the incremental earnings back into research and development.

Nevertheless, events this week showed that traders remain jumpy, promptly taking whatever gains they can and pulling back investments at the shadow of bad news, as the high-tech sector continues to mature and consolidate.

For example, the Nasdaq rose at the beginning of the week, following broad gains in the Dow Jones Industrial Average, and ahead of mid-quarter updates from chip makers Texas Instruments  (TI) and Intel. But TI (ticker symbol: TXN) cut its profit and revenue forecasts for the quarter, and its share value promptly dropped Tuesday by $0.92 to $26.45. The TI report and concerns about rising oil prices Tuedsay were said to have dragged down the whole Nasdaq index, which fell by 10.05 to 2080.16.

On its part, Intel giving its own guidance after the market closed Thursday, offered some good news for the sector by raising the low end of its revenue forecast. The company now expects first quarter revenue to hit between $9.2 billion and $9.4 billion, up from a prior forecast of between $8.8 billion and $9.4 billion.

Though telecommunications industry consolidation has been the center of attention during the past month, this week the spotlight shone on a takeover battle for retail inventory-management software company Retek. One week after SAP AG agreed to buy Retek, Oracle Tuesday announced plans to outbid its ERP (enterprise resource planning) rival. Oracle is offering $9 per share, while SAP agreed to $8.50 per share. Wednesday, Retek (RETK) shares jumped $2.04, to $10.63. The Oracle bid comes in the wake of the company’s successful $10.3 billion hostile takeover of PeopleSoft last year.

Meanwhile, Verizon Communications has given MCI  until the end of next week to consider a takeover bid from rival Qwest Communications International. Verizon and MCI announced their own $6.7 billion merger agreement on Feb. 14, but Qwest came in with a counteroffer of $8 billion. MCI (MCIP) closed Thursday at $23.73, up 13.75 percent for the month.