September 14, 2012, 4:13 PM — Tech stocks rallied Friday as markets rode a wave of euphoria over the U.S. Federal Reserve's commitment to buy bonds to boost the economy and as excitement over Apple's iPhone 5 got industry analysts talking about an "iPhone stimulus."
Other factors involved in the jump in tech shares included Facebook CEO Mark Zuckerberg's vow to generate revenue from mobile devices and advertising and reports that, despite economic pressures, IT sales would still show an overall gain this year.
Tech stocks on the Nasdaq rose in aggregate in afternoon trading by 1.07 percent. Apple was responsible for the lion's share of that gain, in the afternoon closing in on a new record high for company as shares rose by $9.27 to $692.16. Facebook rose $1.08 to $2.27.
Industry bellwethers including Microsoft, IBM, Oracle also posted share gains.
The good news was not contained to the Nasdaq. In afternoon trading, the Dow Jones Industrial Average rose by 31.45 points to 13,573.94, and the broad S&P 500 rose 5.37 to 1,465.28.
The U.S. Federal Reserve's announcement Thursday that it would launch the so-called "QE3," a third round of "quantitative easing," was widely perceived to be the immediate cause of the general run up in stocks. The Fed essentially said it would buy mortgage bonds and possibly other assets until the unemployment picture looks better. This was the first time the Fed announced such an open-ended initiative to boost the economy.
For the tech sector specifically, there also was news this week that cheered IT market watchers. Apple's launch Wednesday of the iPhone 5, due to go on sale next Friday, spurred hope that it will not only fuel the market for mobile devices and services, but also help the overall economy.
"We believe the release of iPhone 5 could potentially add between 1/4 to 1/2%-point to fourth quarter annualized GDP growth," said Michael Feroli in a JPMorgan Chase Bank research note. JP Morgan forecasts that 8 million of the new iPhones will be sold in the fourth quarter alone.
The forecast on the effect of the sales on U.S. gross domestic product caused a stir, and elicited some ridicule. But Nobel Prize-winning liberal economist Paul Krugman, a New York Times editorial page writer, supported the basic logic of the concept. Though iPhones are made outside the U.S., "most of the price you pay when you buy one is domestic value-added -- retailing and wholesaling, advertising and profits -- all of which counts as part of G.D.P.," he noted in an opinion piece Friday, adding, "It's all pretty straightforward."