Prominent companies like Applied Materials (NASDAQ: AMAT), along with their engineers, are being lured to China, reports Keith Bradsher for The New York Times. The Chinese market is thirsting for electricity, cars and assorted other symbols of economic prosperity, and companies are finding that their researchers need to be closer to both factories and consumers. [ETFs to Access the Tech Boom.]

For example, Applied Materials set up its newest solar research lab in Xi’an after estimating that China could produce two-thirds of global solar panels by the end of the year. General Motors (NYSE: GM) has a large and growing auto research center in Shanghai. Intel Corporation (NASDAQ: INTC) has opened semiconductor and server network research labs in Beijing. [Top 10 ETFs Investors Are Trading.]

Western companies are also drawn to China because of its reservoirs of cheap, highly skilled engineers and subsidies offered by many Chinese cities. Xi’an has 47 universities and other institutions for higher learning, which are churning out engineers with master’s degrees who can be hired at $730 a month. [Two ETFs for the Networking Renaissance.]

China is also becoming a hot spot for clean energy, with cutting edge ways to burn coal at a minimum carbon footprint and building thinner solar panels that require less toxic materials to produce.

For more information on the tech sector, visit our technology category.

• Semiconductor HOLDRs (AMEX: SMH): AMAT is 11.7%, INTC is 23.8%

• iShares S&P North Amer Tech-Semicondctrs (NYSEArca: IGW): AMAT is 7.6%, INTC is 8.4%

• Ultra Semiconductor ProShares (NYSEArca: USD): AMAT is 4.2%, INTC is 26.8%; this is a leveraged ETF, so be sure you understand it before you buy [Our Guide to Leveraged and Inverse ETFs.]

Max Chen contributed to this article.

Investor optimism that the sector is stabilizing and that companies are doing better in the near term has helped push up stock prices, reports Jennifer Cummings for The Wall Street Journal.

FTN Equity Capital Markets analyst JoAnne Feeney believes that the technology sector is the foundation for the ongoing economic recovery. Feeney also noted the improved outlook for the notebook semiconductor market. (What gives tech ETFs their power?)

Early Thursday, Fitch Ratings raised its 2010 outlook for the information-technology sector, expecting future growth in global spending for the industry.

This week’s gains in the sector were kicked off by Altera Corp. (NASDAQ: ALTR), with a raised fourth-quarter sales projection of 15% to 18%, compared to the previous forecast in the 6% to 10% range, according to RTTNews. Most other sector components have also shown strong upward movements so far this week after some key companies raised their future outlook. (Why semiconductor ETFs are rallying).

For more information on the semiconductor industry, visit our semiconductor category.

• iShares S&P GSTI Semiconductor (NYSEArca: IGW): up 62.7% year-to-date



• SPDR S&P Semiconductor (NYSEArca: XSD): up 81.5% year-to-date



• Semiconductor HOLDRs (NYSEArca: SMH): up 53.9% year-to-date

Max Chen contributed to this article.

The U.S. index of Leading Economic Indicators (LEI) rose 0.3% in October, marking the seventh consecutive monthly gain, while the Philly Fed regional survey of business activity rose to 16.7 in November, a bit better than expected, reports Bob Willis for Bloomberg. Claims for jobless benefits remained at a 10-month low.

Semiconductor stocks are leading technology stocks lower after a downgrade on 10 semiconductor stocks, including Intel (NASDAQ: INTC) – which is down nearly 5.5% after the Bank of America/Merrill Lynch downgrade, reported Tenzin Pema for Reuters. Merrill said the supply of chips is growing faster than the demand, putting earnings at risk. So far in today’s trading, the Semiconductor HOLDRS (NYSE: SMH) is down about 4% and the SPDR S&P Semiconductor ETF (NYSE: XSD) is also down about 4%. (For more stories on the semiconductor industry, please see our semiconductor category).

A computer glitch this morning at the Atlanta airport, the busiest in the nation, caused cascading flight delays across the nation, reported Brian Knowlton of The New York Times. Air traffic controllers were forced to program flight plans manually. So far in today’s trading, the iShares Dow Jones Transportation Average Index Fund (NYSE: IYT) is down nore than 2% and  the Claymore/NYSE Arca Airline ETF (NYSE: FAA) is down more than 3%. (For more news on the airline industry, please see our airline category).

On the corporate front, there was more downbeat employment news. AOL, which is being spun off from Time Warner (NYSE: TWX), is asking their employee base of about 6,900 for 2,500 volunteers to be laid off, reports Nat Worden of the Dow Jones Newswires. If the voluntary program is unsuccessful, there will be involuntary layoffs announced by AOL. (For more stories on the media industry, see our media category).

Tony D’Altorio contributed to this article.

Global semiconductor sales are growing, thanks to sales of laptops and netbooks. Worldwide, semiconductor sales have increased 5% from July to August. Agam Shah for PC World reports that consumers are finding the lower cost and improved capability of netbooks appealing. While laptop prices have fallen 14% year-over-year, their memory space has increased 25%.

Meanwhile, earnings season should bring more clarity to the future outlook for the sector. Ian Sherr and Clare Baldwin for Reuters reports that investors have faith that Intel (NasdaqGS: INTC) will announce that it had a standout third quarter when it announces earnings on Tuesday. Intel has benefited from growing demand in Asia and other emerging and recovering economies.

Intel is expected to report earnings of 27 cents a share, excluding items, down from 35 cents a year earlier. In August, Intel raised its forecast for third-quarter revenue to between $8.8 billion and $9.2 billion, spurring a rally in tech shares. Intel is considered a general bellwether for this industry.

• Semiconductor HOLDRs (NYSEArca: SMH): up 42.5% year-to-date

• SPDR S&P Semiconductor(NYSEArca: XSD): up 66.2% year-to-date

For more stories about semiconductors, visit our semiconductor category.

According to industry experts and analysts, the semiconductor sector is bouncing back as demand for the latest smartphones and portable computers grows. Archibald Preushcat and Maarten van Tartwijk for The Wall Street Journal report that the European tech stocks rose this week as semiconductor firms suggested a recovery is in the offing.

The uptrend is the result of a combination of factors, including re-stocking, seasonality and growing demand from Asia and the United States. The previous quarters of low inventory have somewhat helped fuel the rally, but is not the sole cause.

Meanwhile, BBC News reports that chip-making heavyweight Samsung is staying cautious despite signs of improvement. The largest chip-maker said the semiconductor sector was performing better than expected because of government help.

• iShares S&P GSTI Semiconductor (NYSEArca: IGW): up 60.6% year-to-date



• SPDR S&P Semiconductor (NYSEArca: XSD): up 74.5% year-to-date



• Semiconductor HOLDRs (NYSEArca: SMH): up 47.3% year-to-date

For more stories about semiconductors, visit our semiconductor category.

When Gary Gordon wrote about the three most impressive ETF movers in the last month, we thought we could expand on his premise and include some other areas that investors are picking up on during dips in the market place.

In Taiwan, tech companies are leading the economy. This sector in Taiwan is increasing job opportunities to grow the burgeoning firm’s global name brands such as Asustek, innovator of the “netbook,” and Acer, manufacturer of powerful yet cheap PCs that may become the world’s second largest PC maker.

• iShares MSCI Taiwan Index (EWT): up 44.7% year-to-date; up 14.4% in the last month

Turkey has some factors in its favor: the central bank has reduced rates to its lo a record low, consumer confidence is on the rise and jobless claims are declining. But the country is not completely out of the deep yet.

• iShares MSCI Turkey Invest Mkt Index (TUR): up 46.9% year-to-date; up 12.2% in the last month

Spain’s GDP will drop but not as severely compared to the first quarter, according to Reuters. The Spainish economy contracted 1.9% in the first quarter and is expected to shrink 3.6% in 2009 and 0.6% in 2010. Economic stimulus plans are likely to have increased public deficit above 10% of GDP this year.

• iShares MSCI Spain Index (EWP): up 12.3% year-to-date; up 10.5% in the last month

The semiconductor sector is on the mend with demand picking up once again, but has yet to reach numbers previously seen. Overall, the industry is still cutting back to do away with the excess fat and build up efficiency. Tech companies are lowering their forecasts.

• Semiconductor HOLDRs (SMH): up 21.8% year-to-date; up 1.7% in the last month

Homebuilders should have been elated to hear that June housing construction rose to its highest level in seven months as builders rushed to pour foundations to enable first-time homebuyers to take advantage of tax credits. Commerce Department reported that construction of new homes and apartments jumped 3.6% last month. New housing starts and permits have risen for the second straight month in June.

• iShares Dow Jones US Home Construction (ITB): up 6.8% year-to-date; up 8.7% in the last month

Max Chen contributed to this article.

Chipmaker giant Intel (INTC) earnings report boosted investor confidence, thanks to its increase in sales revenue numbers. The figures suggest that consumers are purchasing computers at a higher rate than expected.  Intel’s third-quarter revenue forecasts were higher than analysts expected, further indicating that Intel believes the personal computer market has bottomed and is on its way to a recovery.  Excluding the fine that was imposed by the European Union, Intel reported quarterly earnings of $0.18/share, smashing Wall Street’s expectations of $0.08/share.  The news sent the Semiconductors HOLDRs (SMH) up 4% in morning trading; INTC is 23.3%.

Drug developer and medical device maker Abbot Laboratories (ABT) reported a decline in second-quarter profit of 3% but still met Wall Street’s expectations.  Abbot earned $0.89/share, right in line with what analysts had forecast.  Additionally, AMR Corp. (AMR), parent company of American Airlines (AA) reported a loss of $1.14/share, citing a drop in travel because of the recession.  The loss was still narrower than the $1.28/share loss expected by analysts.

On a different note, the Labor Department reported that consumer prices rose by 0.7% in June, marking the biggest one-month gain in nearly a year and are down nearly 1.4% as compared to a year ago.  To add to this, core inflation, which excludes food and energy, posted a slight increase of 0.2%.

The Federal Reserve reported that industrial production fell by 0.4% in June as the global recession put a damper on output for wide range of manufactured goods, such as automobiles, machinery and household appliances.  On a positive note, this decline is much lower than the 1.4% plunge seen in May, indicating that the recession is starting to slowly loosen its grip on the economy.

Black gold continues its volatility as prices went north of $61/barrel.  Investors are eagerly awaiting the weekly crude inventory reports to see what the demand for the commodity looks like.  The United States Oil Fund (USO) was up 2% in morning trading.

All three major U.S. indexes are up in morning trading.  The Dow Jones Industrial Average is up 1.8%, the S&P 500 gained 1.8% and the Nasdaq is up 2.4%.

For more stories on semiconductors, visit our semiconductors category.

Kevin Grewal contributed to this article.

In an attempt to restore confidence in the financial system and a time of transparency, the federal government has announced that it is planning on releasing data on the health of the 19 largest banks.  All 19 are expected to pass the stress tests, but some are expected to score higher than others.

When will this information be disclosed, those who know aren’t saying. Supporters of this decision believe that transparency is king and by releasing the data it will instill investor confidence in the markets.  Opponents fear that the data will openly show which banks are still vulnerable and send the financial sector into a downward spiral, states David E Sanger and Eric Dash of The New York Times. There are some good banks out there, though.

More bad news has hit the financials as UBS (UBS) announced its plans to layoff an additional 7,500 employees, bringing staff reductions to about 20% of its workforce.  This is an attempt to cut costs and soften the blow of a huge loss.  As a result, the Financials Select SPDR (XLF), was down about 0.48% in intraday trading, despite being up 27.6% over the last month.

On a different note, the Labor Department reported that the consumer price index fell 0.4% in March, when compared to the index a year ago, and output at factories, mines and utilities dropped 1.5% as the share of industrial capacity in use dipped down to 69.3%.

These are all indicators of deflation or a prolonged price decline, states Shobhana Chandra and Courtney Schlisserman of Bloomberg.  Some believe that overall prices have gone down because of declining food and fuel costs.  In fact, most economists suggest that consumer prices will increase by about 0.1% as many companies are trying to entice consumers to buy.

On a sour note, chipmaker Intel (INTC) dropped 4.6% after releasing earnings reports indicating that a first quarter profit decline of 55%, despite beating Wall Street’s forecasts for earnings and revenues.  Intel blames this decline on a sour economy and a decline in the demand for personal computers.  This sent both the semiconductor and technology sectors down.  Take a look at the Semiconductors ETF (SMH), which was down about 3.6% in morning trading, despite being up 14.3% year to date; INTC is 24.3%.

The iShares Dow Jones U.S. Technology (IYW) was down about 1.6% in intraday trading, despite being up about 12% year to date; INTC is 6.4%.

The Dow Jones Industrial Average was up about 0.5%, the S&P 500 was up about 0.1% and the Nasdaq was down about 1% in morning trading.

Kevin Grewal contributed to this article.

Yesterday, Intel’s second-quarter profit jumped 25% on demand for laptop chips. The numbers handily beat Wall Street’s estimates, reports Jordan Robertson for the Associated Press. Intel (INTC) is the world’s largest supplier of microprocessors – the brains of personal computers.

Intel is getting help from the rising demand for laptop computers around the world, along with the processors that keep them running. Analysts feared that the company was going to be dinged by the U.S. economy.

That illustrates the point Billy Fisher for the Street makes in a recent article: the sector is reliant on consumers.

The industry had been feeling the effects of a global oversupply in the market for memory chips, and the Semiconductor Industry Association estimates that memory makes up only 20% of total semiconductor sales and says that otherwise, the industry is sound.

One technical strategist expressed optimism that the sector can deliver a market-beating performance in the second half of the year.

If Intel’s numbers are an indication, it doesn’t seem out of the question.

Among the semiconductor-centered ETFs that could benefit:

• PowerShares Dynamic Semiconductors (PSI): down 13.4% year-to-date; Intel is 4.9%
• Semiconductor HOLDRs (SMH): down 12.7% year-to-date; Intel is 21.4%
• SPDR S&P Semiconductor (XSD): down 16% year-to-date