Nasdaq Hits Another High; Yields Fall
Market Overview
* Stocks ended mostly higher Friday, with the Nasdaq market of mostly smaller stocks at record heights. Trading was moderate.
* After meandering most of the day, long-term bond yields fell on a late flurry of buying.
Stocks
Despite an early selloff related to new tensions in Russia, buyers dominated Friday.
The Nasdaq market, which is mostly smaller-company stocks, hit a new high for a second consecutive session: The composite index advanced 2.39 points to 754.65.
Another small-stock measure, the Russell 2000 index, also hit a new high, up 0.80 point to 248.74.
Blue-chips, meanwhile, continued to lag. The Dow industrials inched up 3.36 points to 3,543.11. For the week, the Dow lost 70.14 points, or 1.9%. Nasdaq, in contrast, gained 14.54 points, or 2%.
Analysts say investors are favoring smaller stocks because they expect those companies will continue to show better earnings gains than larger firms in a moderate-growth economy. That theory will be tested over the next three weeks as third-quarter earnings are reported.
Friday, the market’s tone was helped by the government’s report of a 2% rise in durable-goods orders in August. Though orders were weak outside the healthy transportation sector, analysts said the trend overall shows an economy still pushing ahead.
Among the market highlights:
* HMO stocks, which are viewed as winners under President Clinton’s health reform plan, rallied sharply, helping to fuel Nasdaq’s gains. Pacificare A jumped 2 1/4 to 34 3/4, FHP International added 1 1/4 to 21, U.S. Healthcare soared 2 7/8 to 52 and Oxford Health was up 1 1/4 to 75.
* Other Nasdaq issues advancing included Dreyer’s Grand Ice Cream, up 1 to 27 1/2; children’s clothing retailer Gymboree, up 2 5/8 to 47 1/2, and telecommunications firm Dial Page, up 5 1/4 to 44.
* TV network stocks soared after a Justice Department decision backed the networks’ rights to profit from reruns. CBS jumped 8 1/2 to 274 and Capital Cities/ABC rocketed 22 1/8 to 571.
* Industrial stocks were mixed, despite the advance in durable-goods orders. Deere leaped 2 1/2 to 70 1/8 and Caterpillar gained 1 1/8 to 78 1/8, but Eaton slid 1 3/8 to 49 and Magnetek sank 1 1/4 to 12 7/8.
* Among Southland issues, Amgen dropped 1 7/8 to 39 3/4. The biotech firm gave a much-anticipated presentation to Wall Street analysts at its Thousand Oaks headquarters, but those attending said there were no major surprises. Merrill Lynch reduced its near-term rating on the stock to “neutral” but maintained a long-term “buy” rating on it.
Elsewhere, shares of North Hollywood-based Insurance Auto Auctions, which sells automotive salvage, soared 5 1/4 to 38 after the firm said it will buy the auto salvage pool assets of Tech-Cor, a unit of Allstate Insurance.
Overseas, Frankfurt shares tumbled again, as the DAX index fell 30.65 points to 1,885.86. In London, the FTSE-100 index added 3.9 points to 3,005.2. In Tokyo, the Nikkei index finished up 132.91 points at 20,307.53.
In Mexico City, the Bolsa index rallied early on news of a U.S. court victory for NAFTA proponents, but profit taking left the index up just 4.01 points at 1,841.25.
Other Markets
Bonds were uninspired for much of the day, but rallied late on news that the Federal Reserve Board last month moved away from its bias toward higher interest rates.
The Fed report gave bond buyers hope that U.S. interest rates might be cut again.
By the close, the yield on the 30-year Treasury bond was at 6.03%, down from 6.06% on Thursday and the lowest since Sept. 16. Shorter-term yields also fell.
In other markets:
* October gold futures on the New York Comex eased 60 cents to $357.50, but were still up $6.70 for the week. Silver for October fell 4.2 cents Friday to $4.12.
* On the New York Merc, November light, sweet crude oil eased 6 cents to $17.57 a barrel.
* The dollar lost ground. It closed in New York at 1.639 German marks and 105.85 Japanese yen, down from 1.644 marks and 105.94 yen Thursday.
