Tech stocks jump with fiscal-cliff relief rally

SAN FRANCISCO (MarketWatch) � Tech stocks began 2013 with strong gains Wednesday, with firms like Hewlett-Packard and Facebook leading the sector north as part of a market-wide relief rally following a last-minute deal to avert the fiscal cliff.

Reuters Facebook was one of the top gainers among tech stocks in the market�s rally following the fiscal cliff deal.

A small handful missed the gains, however, most notably LinkedIn Corp. The professional social network was downgraded on valuation concerns following a strong run-up over the last year.

By the time the market closed, the Nasdaq Composite Index had risen almost 93 points, or 3%, to close at 3,112. It was the Nasdaq�s best close since late October. The Philadelphia Semiconductor Index �added 4% and the Morgan Stanley High Tech 35 Index �rose more than 3%. The Dow ended the day with a gain of 308 points to close at 13,412.

Investors were in an upbeat mood after the House of Representatives passed Senate-approved budget legislation late on Tuesday night. The move means that the U.S. economy will avoid the fiscal cliff of spending cuts and tax increases that threatened to push it back into recession. See: Fiscal-cliff deal passes Congress.

Among large-cap tech stocks, Hewlett-Packard Co. shares climbed 5.4% to $15.02. The gains were notable considering that H-P was the worst performer among tech stocks on the S&P 500 in 2012. Read more about the biggest winners and losers among tech stocks in 2012.

Facebook Inc. �also rose more than 5%, to close at $28 a share. J.P. Morgan analyst Doug Anmuth raised his price target on Facebook�s stock to $35 a share from $29. Anmuth said there is evidence Facebook�s advertising revenue and mobile-ad business will improve this year. Bank of America Merrill Lynch also wrote that it sees �ad revenue upside potential in 2013� for the company.

These positive comments were offset somewhat by Cowen & Co. analyst John Blackledge, who started his coverage of Facebook with a neutral rating, writing that his estimates for the company�s business for 2014 and beyond are �well below� the consensus view on Wall Street.

Apple �also rose more than 3%, to as its shares climbed nearly 3% to $549.03. A handful of analysts issued positive notes about the company�s outlook that contrasted with more downbeat comments from Wall Street over the last several weeks. Read: Apple sentiment improves with new year

Click to Play Markets rally on Fiscal Cliff deal

Stocks surges on the first day of the trading year after Congress passed a bill averting the worst of the fiscal cliff, Steven Russolillo reports on Markets Hub.

Google �rose more than 2%, to close at $723.25. Oppenheimer & Co. cut its price target on the stock to $730 from $760, with analyst Jason Helfstein saying the Web search giant �is smartly reinvesting its 83% gross margin in driving higher penetration of its Nexus Android tablets, but in the near term, the company will see margin dilution from these costs, as well as higher traffic acquisition costs (TAC) as the majority of tablet usage and mobile commerce is generated from iOS devices.�

EBay Inc. �shares rose 5%, to $53.59, as the online retailer added to gains that saw its stock rise more than 68% in 2012. See: Rex On Techs: EBay sheds underdog image with 2012 gain.

LinkedIn � shares fell almost 2% to $112.65 after Barclays analyst Mark May cut his rating on the shares to equal weight from overweight. LinkedIn�s shares jumped more than 75% in 2012, and May wrote that while he remains positive on the company�s business, �with shares now trading at a premium to peers and near our 12-month price-target of $125, we believe our bullish outlook is largely factored in.�

Headphone maker Skullcandy �fell 12.7% to $6.80 after Jefferies & Co. downgraded the shares to underperform from buy.

In a note to clients, analyst Randal Konik said he has become �increasingly concerned about promotional pressures and rising competition in the headphone market.� He noted that the in-ear segment that comprises more than 60% of Skullcandy�s total revenues is �under significant pressure from a variety of competitors, and we believe this trend will likely continue in coming quarters.�