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That's it. The third quarter of 2014 is over.

It will go down as a winning quarter for the information technology sector, which soared 4.3% versus a more modest 0.6% gain for the S&P 500.

The significant outperformance can be attributed in large part to Apple (AAPL 101.50, +1.39), which gained 8.6%. Fittingly, Apple, which said the iPhone 6 and iPhone 6 Plus will be available in China on October 17, ended Tuesday on a winning note that helped the sector (+0.2%) outperform the S&P 500 (-0.3%).

IBM (IBM 189.83, +0.19) posted a small gain that also helped.  The company announced a three-year extension to its IT infrastructure management services agreement with AmerisourceBergen (ABC 77.30, -0.33).

The story stock of the day, though, was eBay (EBAY 56.63, +3.97). It gained 7.5% after the company announced its plan to separate eBay and PayPal into two separate publicly traded companies in 2015.

The decision to do so was a complete 180 by the Board of Directors, which said in March that, "...taking them apart would destroy value by reducing their considerable synergies." Apparently, the changing competitive landscape that got mowed over recently by Apple Pay forced the change in position that activist investor Carl Icahn thought was necessary back in March.

In any event, shareholders responded favorably to the news and the perception that the two companies -- but particularly PayPal -- will do better as stand-alone companies.

eBay was the biggest percentage gainer in the sector on Tuesday followed by Computer Sciences (CSC 61.15, +1.53), which gained 2.5% on the back of a Raymond James upgrade to Outperform from Market Perform, and Accenture (ACN 81.32, +1.40), which increased 1.8% after Credit Agricole started the stock with an Outperform rating and the company said AIG had selected it to transform AIG's software platform.

TE Connectivity (TEL 55.29, -2.58) was the sector's biggest loser. It dropped 4.5% on heavy volume and no news.

In other developments, Microsoft (MSFT 46.36, -0.08) unveiled its newest operating system, Windows 10, skipping the Windows 9 labeling altogether to reflect the number of changes it has made.

A primary aim of Windows 10 is to have an OS that improves the user experience across all devices. The messaging was good, yet Microsoft's stock, which shot up 11% in the third quarter, took a breather.

A basket of stocks that not only took a breather, but were left gasping for air were the Chinese Internet stocks.

Continued unrest in Hong Kong and disappointing economic data out of China pressured the group. Leading the losses were Qihoo 360 Technology (QIHU 67.47, -3.15), YY, Inc. (YY 74.89, -2.93), Weibo (WB 18.68, -0.52), and Sohu (SOHU 50.23, -1.32).

Alibaba Group (BABA 88.85, +0.10) rose above the China-related weakness and finished the day with a small gain, helped we suspect by some window dressing by fund managers at the end of the quarter. BABA, though, ended well below its intraday high of 90.88.

( has a business relationship with Microsoft)


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