Morning MoneyBeat: Old Tech Heats Up

Morning MoneyBeat is the Journal’s pre-market primer packed with market updates, insights and must-read news links. Send us tips, suggestions and complaints: steven.russolillo@wsj.com

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MARKET SNAP: At 6:20 a.m. ET, S&P 500 futures up 0.2%. 10-Year Treasury yield flat at 2.46%. Nymex up 6 cents at $102.45. Gold 0.2% higher at $1310.40. In Europe, FTSE 100 up 0.4%, DAX up 0.7% and CAC 40 up 0.6%. In Asia, Nikkei 225 down 0.1% and Hang Seng (0011.HK) up 0.8%.

WATCH FOR: MBA Weekly Purchase Applications (7:00 a.m. Eastern Time). EIA Petroleum Status Report (10:30). Angie’s List, AT&T (T), Boeing (BA), Cheesecake Factory, Delta, Dow Chemical (DOW), Facebook (FB) Freeport McMoRan (FCX), Hanesbrands, Norfolk Southern (NSC), Northrop Grumman (NOC), Pepsi (PEP), Qualcomm (QCOM), Weatherford and Whirlpool (WHR) are among companies scheduled to report quarterly results.

THE BREAKFAST BRIEFING

A bunch of old, stodgy tech stocks that were popular during the dot-com craze 15 years ago have quietly paced the market higher this year.

As Internet and social-media stocks have attracted attention for their recent struggles, investors have flocked back to more mature tech stocks. Companies ranging from Intel Corp.(INTC) and Hewlett-Packard Co.(HPQ) to Microsoft Corp.(MSFT) and Apple Inc.(AAPL) have seen their stock prices rally by at least 20% this year.

The 33 stocks in the S&P 500 tech sector that were also in the index in 1999 are up 8.5% this year, according to Bespoke Investment Group. That rally has outperformed the year-to-date gains of the Dow Jones Industrial Average, S&P 500, Nasdaq (NDAQ) Composite and small-cap Russell 2000.

Many of these tech companies either just recently reported earnings or are set to report their quarterly results this week. Apple late Tuesday reported 12% profit growth, driven by strong iPhone sales. Shares were little changed in pre-market trading, but the stock is up more than 25% over the past three months following strong quarterly results in April, a big buyback announcement and a stock split.

“We’re thrilled with the results, and we’re thrilled with where we are going,” Apple Chief Executive Tim Cook told WSJ on Tuesday. “The momentum is really strong.”

Microsoft also struck a positive cord following its quarterly report late Tuesday. The company said sales of Windows, Office, database and other products to companies rose 10.5%, a faster clip than in prior quarters. Microsoft also generated more profit out of those sales than it had in earlier periods. Shares rose 1% in pre-market activity, adding on to the stock's 20% rally this year.

The company has been changing how it sells software to companies to pitch more of its Web-friendly software such as Office 365

“We’re feeling quite proud of the aggressive move we’ve made here,” Amy Hood, Microsoft’s chief financial officer, said in an interview.

The rallies for these stocks come as social-media stocks continue to struggle. The Global X Social Media ETF (SOCL) is down 10% this year after gaining more than 60% in 2013. Wall Street analysts, and even Federal Reserve Chairman Janet Yellen, have warned investors that valuations of social-media stocks have gotten pricey and could be due for tougher times ahead.

Old tech, meanwhile, continues to chug along.

"While the speculative names have certainly found a bottom since the March-May pullback period, the old Tech stocks have continued to act well," Bespoke Investment Group said on its website.

Mature tech stocks will need to keep up the pace if the market is going to be able to keep hovering around record levels.

Morning MoneyBeat Daily Factoid: On this date in 2000, Tiger Woods won the British Open. At the time, the 24-year-old Mr. Woods earned the distinction of becoming the youngest golfer to complete a career Grand Slam.

-By Steven Russolillo; follow him on Twitter @srussolillo.

–Daisuke Wakabayashi and Shira Ovide contributed to this report.

STOCKS TO WATCH

Apple reported third-quarter earnings of $1.28 a share vs. $1.07 a year ago, on revenue of $37.4 billion, vs. $35.3 billion in the same period a year earlier. Analysts had forecast the iPhone maker would earn $1.23 a share in the fiscal third quarter on revenue of $37.98 billion.

Microsoft reported a fiscal fourth-quarter profit of $4.6 billion, or 55 cents a share, on revenue of $23.4 billion. During the year-ago period, the world's largest software company earned $4.97 billion,or 59 cents a share, on $19.9 billion in sales. Analysts surveyed by FactSet had forecast Microsoft to earn 60 cents a share on $23 billion in revenue.

Boeing is expected to report earnings of $2 a share on sales of $22.3 billion ahead of the opening bell on Wednesday, while Delta is expected to report earnings of $1.03 a share on sales of $10.6 billion on Wednesday.

PepsiCo is expected to post earnings of $1.23 a share on revenue of $16.8 billion on Wednesday.

MUST READS (LINKS)

U.S.’s Kerry Arrives in Israel for Cease-Fire Talks in Gaza: “U.S. Secretary of State John Kerry said Wednesday there have been ‘steps forward’ in the diplomacy aimed at ending the fighting between Israel and the Palestinian group Hamas, as he arrived in Jerusalem for talks with Prime Minister Benjamin Netanyahu and Israeli officials.”

U.S. Lays Out Case Against Russians: “U.S. intelligence officials presented their most detailed case yet Tuesday that Russian-backed Ukrainian separatists shot down a Malaysia Airlines (3786.KU) jetliner last week.”

Deutsche Bank Suffers From Litany of Reporting Problems, Regulators Said: “A regulatory exam found Deutsche Bank 's(DBK.XE) giant U.S. operations suffer from a litany of serious financial-reporting problems that the lender has known about for years but not fixed, according to documents reviewed by The Wall Street Journal.”

Five Reasons the New York Fed Isn’t Happy With Deutsche Bank: “The Federal Reserve Bank of New York has given Deutsche Bank a talking-to – which went unreported until Tuesday – over a range of problems the regulator says compromise the bank's ability to meet toughening reporting standards.”

Courts Issue Split Rulings On Subsidies In Health Law: “Two U.S. appeals courts issued conflicting rulings on subsidies for health coverage purchased on federal insurance exchanges, clouding a major part of Obama’s health law.”

SEC Set to Approve Money-Fund Rules: “Some prime funds would be required to float the share price, while the plan would allow all funds to temporarily halt redemptions.”

Herbalife Rallies in Face of New Attack by Ackman: “William Ackman had promised a ‘death blow’ against Herbalife (HLF). Wall Street instead gave new life to the nutritional-supplement company’s stock.”

For Apple, iPad Roars and iPad Whimpers: “Apple reported a 13% jump in iPhone sales as it heads into a major refresh of the company’s flagship product, but iPad sales slid for the second consecutive quarter.”

Heard on the Street: Winding Up Apple for Its Next Act: “Apple’s ho-hum quarter gives little insight into coming products, but investors have charged ahead anyway.”

Bet on Failed Bank Creates Windfall: “An investment group backed by John Paulson, George Soros, Michael Dell and Christopher Flowers stands to gain more than $3 billion from a bet made on failed lender IndyMac during the financial crisis.”

Heard on the Street: CIT 's(CIT) Thain Travels Road to SIFI-Dom: “CIT scores a hat trick with its proposed acquisition of OneWest.”