FINANCIAL MARKETS : Nasdaq Sets Record; Gold Bounces Back : Market Overview
Small-company stocks soared into record territory Thursday on the strength of technology issues, but the Dow industrials eased.
* Bond yields closed mixed after an early rally faded late in the day.
* Gold bounced back as speculators bought it as a hedge against the risk of a Russian uprising.
Stocks
The Nasdaq composite index of mostly smaller stocks staged a strong rally for a second day, catching some traders by surprise.
The index rose 6.72 points, or 0.9%, to a record 752.26. That surpassed the previous high of 749.71 set Sept. 3.
The Russell 2000 index, considered a more accurate measure of small stocks than the broader Nasdaq index, rose 1.46 points, or 0.6%, to 247.94, just shy of its record high of 248.67.
Meanwhile, blue-chip stocks continued to lag. The Dow industrials eased 7.27 points to 3,539.75, and remain well below the peak of 3,652.09 set Aug. 25.
Analysts noted that the small-stock surge was again led by technology issues. The tech group has been buoyed this week by reports of better than expected earnings from two key companies, the software giant Oracle Systems and computer networker 3Com.
Overall, investors are searching for reasonably fast earnings growth in a sluggish economy, and that is inevitably leading them to smaller companies that are leaner and can react quicker to market changes, analysts say.
By contrast, the Dow stocks and other big, blue-chip issues are being dogged by doubts about third-quarter earnings, largely because of perceived weakness in their overseas operations this summer.
A. C. Moore, market analyst at Argus Investment Management in Santa Barbara, said the Dow’s basic problem now is “the lack of any issues in there that are really exciting,” compared to prospects for less well-known companies.
Among the market highlights:
* Technology stocks leading the Nasdaq higher included Intel, up 1 1/8 to 68 3/8; AST Research, up 1 3/8 to 18 1/8; Filenet, up 1 1/4 to 15; Lotus Development, up 1 3/4 to 43 3/4; Newbridge Networks, up 2 3/8 to 68 3/4, and Sybase, up 3 7/8 to 66 1/2.
* Telecommunications issues also helped boost Nasdaq. IDB Communications rose 2 1/4 to 52 3/4, DSC Communications gained 1 5/8 to 61 1/4, Peoples Choice TV zoomed 2 to 41 and Spectrum Information jumped 1 1/16 to 5 1/2.
* Auto stocks rallied on news of strong September sales. Ford rocketed 2 1/4 to 56 7/8, an all-time high. Chrysler jumped 1 to 47 3/8 and GM gained 1/2 to 46 1/8.
* Retailers gained on hopes for increased consumer spending on smaller-ticket items. Dillard Department Stores shot up 2 5/8 to 37 3/8, Dayton Hudson rose 1 3/8 to 68 5/8, J.C. Penney added 1 1/8 to 46 5/8, Ann Taylor leaped 2 to 25 1/2 and TJX soared 2 3/8 to 30 1/4.
* In the health care sector, many beaten-down issues rallied in the wake of President Clinton’s speech Wednesday outlining his reform plan. Among the drug firms, Pfizer gained 2 1/4 to 62 5/8, Schering-Plough rose 2 to 65 1/4, Amgen rocketed 2 1/2 to 41 5/8 and Chiron jumped 5 to 71 1/2.
Among HMOs, U.S. Healthcare zoomed 3 3/8 to 49 1/8; Wellpoint Health added 7/8 to 27 7/8 and Pacificare A shares rose 1 1/4 to 32 1/2.
Overseas, Frankfurt’s DAX index rebounded 23.51 points to 1,916.51 as concern about Russia ebbed. In London, the FTSE-100 index eased 6.2 points to 3,001.3.
In Mexico City, the Bolsa index jumped 34.83 points, or 1.9%, to 1,837.24, snapping back for a second day after nine days of losses.
The Tokyo market was closed for a holiday.
Credit
Bond yields fell broadly early in the day, but closed mixed as fears of a strengthening economy got the best of some traders.
The 30-year Treasury bond yield closed at 6.06%, down from 6.09% on Wednesday but well above its low for the day.
Bond buyers were encouraged early by news that first-time claims for U.S. jobless benefits rose sharply in the latest week. That appeared to signal new weakness in the economy.
But that report was offset later in the day by word of strong mid-September car and truck sales. Some traders dumped bonds on that news. A spate of rumors about the power struggle in Russia also contributed to a volatile session, analysts said.
The steepest rise in yield was posted by the five-year Treasury note, which jumped to 4.83% from 4.76% on Wednesday on rumors that billionaire speculator George Soros had sold $1.5 billion of the notes.
He purportedly used most of the proceeds to buy $1 billion in 30-year bonds. If true, it suggests Soros sees a continuing decline in long-term yields. He rarely comments on his trading, however.
Other Markets
A general rise in commodity prices--oil, soybeans, corn, coffee and livestock futures all advanced--stimulated additional interest in gold.
Gold for current delivery rose $4.10 to $358.00 an ounce on New York’s Comex, one day after plunging $9. Silver jumped 11.8 cents to $4.16 an ounce.
Traders said reports of a gun battle at the military command center in Moscow prompted some investors to head back into gold as a safe haven.
In energy markets, light, sweet crude oil for November ended 4 cents higher at $17.63 a barrel.
Meanwhile, the dollar rose against European currencies amid the Russian unrest.
Market Roundup, D6
