TECH STOCKS: Tech Stocks Join Rally Fueled By Yellen's Comments

By Rex Crum, MarketWatch

SAN FRANCISCO (MarketWatch) -- Tech stocks joined in a broad market rally Tuesday with most of the sector closing with gains as investors reacted positively to the latest comments on U.S. monetary policy from Federal Reserve chief Janet Yellen.

However, big losses from network-equipment maker Infoblox Inc. and Web-hosting company Rackspace Hosting Inc. stood out in the tech sector after both companies gave weaker-than expected earnings outlooks late Monday.

The tech-heavy Nasdaq Composite Index (RIXF) rose almost 43 points, or 1%, to close as 4,191 after Yellen said volatility in the global market doesn't prove to be a major risk to the U.S. economy and that the Fed will keep with its ongoing low-interest-rate monetary philosophy.

Among leading tech stocks, gains came from Apple Inc. (AAPL), Yahoo Inc. (YHOO), Hewlett-Packard Co. (HPQ), Microsoft Corp. (MSFT) and IBM Corp. (IBM).

However, Infoblox (BLOX) plunged by more than 48%, to close at $17.19 a share after the company said late Monday that it expects to report a second-quarter profit of 10 to 12 cents a share on revenue between $60 million and $61 million. Wall Street analysts had forecast Infoblox to earn 10 cents a share on $65.7 million in sales for the quarter. Infoblox Chief Executive Robert Thomas said the company suffered a shortfall of business in January, with fewer deals worth $1 million or more than had been expected.

Needham & Co. analyst Alex Henderson cut his rating on Infoblox to hold, and Sterne Agee analyst Alex Kurtz lowered his rating on the company's stock to neutral from buy saying evidence suggests that "lack of projected [2014] growth is a deeper issue internally than merely a few key deals slipping during the quarter."

Rackspace (RAX) shares fell by 19%, to close at $32.65 after the Web-hosting company on Monday said Chief Executive Lanham Napier would retire and be replaced by co-founder and former CEO Graham Weston. Rackspace also said it would continue with shifting toward being a cloud-software developer. Rackspace also forecast weaker-than-expected revenue for all of 2014.

Groupon Inc. (GRPN) also ended the day in the red, falling more than 6% to close at $10.40. The daily deal and e-commerce company said in a Securities and Exchange Commission filing on Monday that Jeff Holden, its senior vice president of product management, will leave the company on March 18.

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