Dow Rises 8.67; Small Stocks Hit Record
Market Overview
U.S. stocks ended mostly higher Monday in quiet holiday trading. Smaller-stock indexes rose to new peaks, while utilities continued to lose ground.
* In foreign markets, German and Hong Kong stocks hit new highs; the Mexican market surged.
* The government bond market was closed for Columbus Day. In other markets, the dollar edged up, and oil prices advanced for a fourth consecutive session.
Stocks
Trading was sharply slowed by the holiday, and only 183 million shares changed hands on the New York Stock Exchange, the lightest volume so far this year.
The Dow Jones industrials reflected the lethargic mood, adding just 8.67 points to 3,593.41.
But investors continued to pour into smaller stocks, which have led Wall Street higher since mid-July.
The Russell 2000 index of small stocks gained 1.07 points to a record 255.03.
The Nasdaq composite index leaped 3.38 points to a record 767.65, despite weakness in computer chip giant Intel.
“There is nobody in to fight the tape” trend, said analyst Nelson Gold at Interstate Johnson, Lane. “A lot of professionals who might sell stock are not around,” he said, referring to bank and insurance company money managers, who had the day off.
Traders said investors continue to clamor for small stocks on the expectation that those issues offer greater earnings growth potential than bigger names.
Meanwhile, overseas, the global bull market showed no signs of slowing.
In Hong Kong, the Hang Seng index rocketed 186.62 points, or 2.3%, to a record 8,192.18, driven by foreign buyers.
In Frankfurt, the DAX index added 6.01 points to 2,011.02, its fifth consecutive record high.
Mexican stocks also surged, with the Bolsa index breaking through the 1,900 barrier for the first time since Sept. 10. Traders cited optimism over upcoming third-quarter corporate earnings reports. The Bolsa rose 40.14 points to 1,905.62.
Elsewhere, profit taking hit London, where the FTSE-100 index eased 6.4 points to 3,102.2.
Tokyo’s market was closed for a national holiday. Trading resumed today.
Among U.S. market highlights:
* Intel stock was slammed after the company failed to beat Wall Street earnings expectations in its third-quarter report released Monday. The stock dove 4 3/4 to 65 1/2, pulling other semiconductor stocks down as well.
Texas Instruments lost 3 3/4 to 64 3/4, Advanced Micro Devices gave up 3/8 to 20 1/8, Micron Technology fell 1 1/2 to 47 1/4 and Motorola fell 2 to 98 1/2.
But after the market closed, Motorola reported third-quarter earnings of 92 cents a share, well ahead of analysts’ expectations of 67 cents to 83 cents.
* Technology stocks in general were higher. Apple rose 1 1/8 to 23 3/4, Hewlett-Packard gained 1 7/8 to 69 3/4, Autodesk added 1 3/8 to 45 1/2, Lotus jumped 2 to 49 1/4 and Creative Technology leaped 2 3/8 to 23 1/8.
But Rainbow Technologies slumped 5 to 20 1/2 after warning that third-quarter earnings will be 21 cents to 24 cents a share, down from 25 cents a year ago.
* Drug stocks stirred to life, after Hoechst Celanese said it would buy a controlling interest in generic drug firm Copley Pharmaceuticals and after Eli Lilly announced deep cost cutting to boost earnings.
Copley lost 2 7/8 to 46 7/8 in profit taking, but, among other generic drug makers, Mylan Labs surged 1 5/8 to 30 1/2 and Biocraft Labs jumped 3 1/2 to 33 3/8.
Among major drugs, Lilly rocketed 3 1/2 to 53 5/8, American Home Products added 1 7/8 to 61 3/4, Bristol-Myers gained 1 3/4 to 57 7/8, Warner-Lambert rose 2 1/4 to 68 1/4 and Amgen leaped 1 1/4 to 41.
* Airline stocks advanced on hopes for decent third-quarter earnings. Delta rose 1 to 53 1/2, United parent UAL jumped 1 5/8 to 145 1/2 and American Airlines parent AMR added 5/8 to 64 1/2.
* Among industrial issues, Alcoa fell 7/8 to 66 7/8. It reported disappointing quarterly earnings. Merrill Lynch analyst Daniel Roling said he had “given up hope” on a near-term earnings recovery for the company, citing in part the glut of aluminum in the world market.
Commodities
Oil prices rose, continuing an upward trend of the last two weeks and drawing support from expectations of stronger demand and tighter OPEC supplies.
There was little news to move the market, and traders largely rested on oil futures’ recent momentum. Underlying the technical trend, said Peter Beutel, specialist with Brody, White & Co., a commodity brokerage, were indications of bigger demand and less supply.
“There’s a growing realization that the market is stronger than people had realized,” Beutel said.
Light, sweet crude oil for delivery next month settled at $18.77 a barrel, up 22 cents at the New York Mercantile Exchange.
Gold prices also inched higher. On New York’s Comex, gold for current delivery closed at $360.20 an ounce, up 30 cents from Friday. Silver closed at $4.31, off 2.9 cents.
Currency
Traders said the market was focused on a decision due today from Germany’s top court regarding the constitutionality of the Maastrict Treaty, the European Community’s attempt to unify the economic, monetary and foreign policies of its members.
“Some people think the court is going to rule against Maastrict,” said Andrew Busch, vice president of foreign exchange at Harris Trust & Savings Bank. “That’s why there has been a buying of marks over the past week.”
A negative decision by the court could doom the treaty. Traders said investors would then flee to the German mark, considered the strongest European currency.
Market Roundup, D8
FINANCIAL MARKETS
