Tech Rally Paces Rise; Dow Adds 16 to 3,461 : Market Overview
* Stocks recovered after three down days, boosted by bargain hunting in technology issues and by computer-driven buy programs.
* Long-term bond yields jumped again, though yields on shorter-term securities were mostly unchanged as the Treasury sold new five-year notes.
Stocks
The market’s recovery was broad-based but may have been largely technical, some analysts warned: After taking a drubbing in recent days, many issues were ready to bounce up.
Small-company stocks, which have been hit hardest since last week, led the rally. The NASDAQ composite index surged 6.65 points, or 1%, to 681.01.
The Dow industrials, in contrast, rose 15.94 points to 3,461.32 after losing 16.48 points Wednesday. Trading volume was moderate at 251 million shares on the New York Stock Exchange.
In the broad market, winners topped losers by 11 to 7 on the Big Board and 11 to 9 on NASDAQ.
“We’ve had some rather aggressive buying,” said Trude Latimer, chief market strategist at Wayne Grayson Capital. Some of the buying, however, was linked to computerized trading strategies.
Also, Latimer said some money managers may be engaging in end-of-quarter “window dressing”--shedding some bad performers and making sure some stocks perceived to be rising stars are in their portfolios, for clients’ review.
“The main trend is still generally favorable,” added James Schroeder, analyst at MMS International in Chicago. Stock mutual funds continue to receive massive cash inflows, which have to be invested, he pointed out.
Also, many investors remain convinced that the economic recovery is on track, which should lead to higher corporate earnings this year. First-quarter earnings reports will begin to roll out in about two weeks.
Among the market highlights:
* Computer networking stocks led the tech sector higher, after Cabletron Systems reported a sharp surge in quarterly earnings. Networking companies are booming as computer users seek to link their often disparate computer systems.
Among networkers, Cabletron soared 4 7/8 to 87 5/8, Cisco Systems jumped 3 1/2 to 45, Newbridge Networks gained 1 to 59 3/4 and Synoptics surged 3 1/4 to 88 1/2.
* Among other tech leaders, Compaq rose 1 7/8 to 50 5/8, Hewlett-Packard added 1 3/4 to 74 1/2, Digital Equipment jumped 3 to 45 1/8, Motorola gained 1 3/4 to 65 3/4 and Sybase leaped 2 1/2 to 57 3/4.
But IBM slipped 5/8 to 50 1/2 after tumbling 3 1/8 on Wednesday. Investors continue to show disappointment with the apparent choice of Louis V. Gerstner Jr. of RJR Nabisco as IBM’s new chief. The announcement is expected today.
* Retail issues were strong. Penney gained 2 5/8 to 89, Sears rose 7/8 to 52 7/8, Home Depot leaped 2 1/8 to 63 3/8 and Price Co. added 1 3/8 to 34.
* Banking stocks, leaders for much of this year, resumed their rise. Citicorp added 1/2 to 29 1/4, Wells Fargo rose 1 1/4 to 107 1/4, First Interstate gained 7/8 to 55 1/2 and Zion jumped 1 to 49.
* Drug stocks staged a modest rebound after taking a beating Wednesday, when Merck became the latest big drug firm to warn of disappointing 1993 earnings. Merck, down 2 1/4 on Wednesday, rose 3/4 to 35 1/2. Elsewhere, Johnson & Johnson gained 1 1/2 to 41, Pfizer jumped 2 to 59 5/8, Upjohn added 5/8 to 28 3/4 and Alza was up 1 3/8 to 32 3/8.
* Westinghouse led the most-active issues on the NYSE, rising 1 to 15 3/8. The company said it will team up with Mitsubishi Heavy Industries Ltd. on a contract, worth more than $100 million, to build three combustion generators for San Diego Gas & Electric Co.
Overseas, stocks ended sharply higher once again in Tokyo on buying fueled by growing prospects of an improvement in the economy. The Nikkei average rose 314.23 points to 18,764.92.
In London, prices closed lower, with the FTSE-100 average losing 7.8 points to 2,852.8. In Frankfurt, the DAX index slipped 2.30 points to 1,657.15.
In Mexico City, the Bolsa index added to Wednesday’s rally, rising 35.44 points, or 2.1%, to 1,737.54. Optimism is growing that interest rates have peaked in Mexico.
Credit
The yield on the 30-year Treasury bond jumped to 6.86% from Wednesday’s 6.82%, as traders continued to bail out of that bellwether issue.
But yields on shorter-term securities were mostly unchanged for a second day. Strong demand for $11.01 billion in new five-year T-notes enabled the Treasury to offer investors the lowest yields on record: The high yield was 5.19%, down from 5.23% at the last auction Feb. 24.
Demonstrating the brisk demand, the bid-to-cover ratio, a measure of demand that compares the number of bids offered to those accepted, was 2.64 to 1 on the five-year notes, up from an average of 2.37 to 1 in the six previous auctions.
The federal funds rate, the interest on overnight loans between banks, rose to 3% from 2.938% late Wednesday.
Other Markets
The dollar ended higher against most major foreign currencies except the yen, as traders bought the Japanese currency to take advantage of a plunge the previous day.
Activity was thin on the eve of important new developments in Russia’s power standoff and was broadly influenced by heavy cross-selling of German marks for yen.
The dollar rose overseas against the yen, but fell in domestic trading. In New York the dollar closed at 117.30 yen, down from Wednesday’s 117.65.
The dollar also closed at 1.642 German marks in New York, up from 1.638 on Wednesday.
Meanwhile, lumber futures continued their slide from record highs in the commodities market, as dealers cut prices to spur demand clipped by the March blizzard.
Spruce two-by-fours for May delivery plunged the permitted daily limit of $10 on the Chicago Mercantile Exchange to $411.10 per 1,000 board feet.
Elsewhere, oil rose as the market showed anxiety about the Russian situation and weekly figures that showed a sharp drop in crude inventories. Light, sweet crude for May rose 17 cents to $20.41 a barrel on the New York Merc.
Near-term gold rose on the Comex in New York, closing at $332.70 an ounce, up 20 cents. Silver gained 2.2 cents to $3.70.
