NEW YORK (Bloomberg) Investors are preparing to snap up shares of telephone, health-care and computer companies after last week's $2.1 trillion global stock market rout left US equities the cheapest in 16 years.

"The window for buying is starting to open," said D.A. Davidson & Co. chief market strategist Frederic Dickson, who oversees $23 billion. His Great Falls, Montana-based firm plans to buy drug and technology stocks as long as bond market losses don't worsen.

D.A. Davidson, LPL Financial Services and Credit Suisse Group, which manage a total of $771 billion, are bullish after the biggest decline in the Standard & Poor's 500 Index since September 2002. The benchmark for American equity is valued at 15.4 times estimated profit, the lowest since January 1991, according to data compiled by Bloomberg.

Only 33 companies in the S&P 500 gained and the index slumped to a 3 ½-month low last week. The index plunged 4.9 percent on concern mortgage defaults caused by the steepest US housing slump in 16 years will reduce corporate loans and end the boom in leveraged buyouts that pushed the measure to a record high earlier this month.

Merck & Co., based in Whitehouse Station, New Jersey, and AT&T Inc., in San Antonio, were among just four Dow Jones Industrial Average members to advance last week after their earnings grew faster than the S&P 500 average. The Dow average dropped 4.2 percent last week and the Nasdaq Composite Index lost 4.7 percent. Earnings among the 313 members of the S&P 500 that reported second-quarter results rose 9.7 percent, twice the average of analysts' estimates on July 13. One hundred and one members are scheduled to report results this week.

Average profit among S&P 500 members is forecast to rise nine percent this year and 11 percent in 2008, according to analysts surveyed by Bloomberg. They estimate phone companies will grow this year by 27.8 percent, health care by 15.8 percent and technology by 10.5 percent.

"The fundamentals in my opinion are quite strong," said Lincoln Anderson, who helps manage $150 billion as chief investment officer of LPL Financial in Boston. "The second-half earnings outlook is pretty dog-gone good. I look at this period as more of a buying opportunity."

Anderson said he added to holdings in telephone, health- care, technology and industrial shares during the slump.

Phone stocks fell the least among S&P 500 industries last week, losing 1.3 percent. AT&T, the largest US telephone company, reported a 61 percent increase in second-quarter profit. Its shares trade for 14.4 times estimated earnings after rising 31 percent in a year.

Jeffrey Mortimer, who manages almost $40 billion as chief investment officer of equities at Charles Schwab Investment Management in San Francisco, bought Palo Alto, California-based Hewlett-Packard Co. and Armonk, New York-based International Business Machines Corp., whose profits have topped analysts' estimates the last six quarters.

"They are still under-owned by people who have been burned by them and their underlying fundamentals are stronger than the investment public is giving them credit for," Mortimer said.

Michael Cuggino, who manages $1.2 billion as president of Permanent Portfolio Funds in San Francisco, purchased shares of Santa Clara, California-based Intel Corp., the world's biggest computer-chip maker, and Symantec Corp., the No. 1 seller of security software. Symantec is based in Cupertino, California.

Technology shares gained 8.1 percent from 2005 through 2006, the least among 10 industry groups in the S&P 500. They have climbed 9.7 percent this year.

Rising defaults in the housing industry prompted Kevin Caron, who helps oversee $20 billion as market strategist for Ryan Beck & Co. in Florham Park, New Jersey, to be "defensive" and keep 35 percent of his clients' assets in cash.

"We've had a real struggle in the last year finding things that make sense to us," said Caron. "The falloff in credit, you're seeing it show up in the housing market and in the results from homebuilders and the automakers."