Smaller Issues Hit New High; Dow Up 16.99
Market Overview * Small stocks soared to record highs and led the broad market upward in a solid rally.
* A renewed bout of bearishness ahead of the Federal Reserve Board’s policy-making meeting next week sent long-term Treasury bond yields higher.
Stocks
Smaller stocks again paced the market’s gains, led by a charge in technology and telecommunications shares. The Nasdaq composite index of mostly smaller stocks jumped 4.86 points to a record 803.85, topping the previous peak of 800.47 set Jan. 31.
Blue chips, meanwhile, meandered for much of the session before rising late in the day. The Dow industrial average gained 16.99 points to 3,865.14, still well below its record of 3,978.36.
Winners topped losers by a strong 1,721 to 1,381 on Nasdaq and by a less impressive 1,149 to 1,015 on the Big Board.
Analysts said investors are concentrating on small-company stocks in part because of expectations of stronger earnings growth at those companies as the economy expands.
Small stocks are “becoming more and more the first call, the first source of investment ideas,” said A.C. Moore, market analyst at SBCM/Argus in Santa Barbara.
While the Dow led the market up in January, investors have been less willing to bet on those stocks since the Fed raised interest rates Feb. 4, its first credit tightening in five years.
Some investors are also wary of blue chips because of today’s quarterly expiration of key stock index futures and options, which can result in wide swings in blue chip prices.
Among Thursday’s highlights:
* Technology issues leading the Nasdaq market higher included Lotus Development, up 5 3/4 to 85 1/2 after AT&T; unveiled a long-awaited deal to supply Lotus Notes software applications to businesses over AT&T;’s public network. AT&T; rose 3/4 to 53 1/2.
Other tech gainers included Adobe Systems, up 1 3/8 to 30 7/8; Filenet, up 1 1/4 to 28 1/2; Oracle, up 1 1/4 to 34 3/4, and Software Toolworks, up 1 5/8 to 11 7/8.
* Cable TV stocks revived. Cablevision Systems gained 1 3/8 to 58 5/8, Comcast A leaped 1 3/8 to 21 1/8 and Tele-Communications shot up 1 1/4 to 24 1/4.
* Energy stocks continued to rise despite another slide in oil prices. Chevron jumped 1 3/4 to 91 1/2, Arco surged 2 3/4 to 101 7/8 and Louisiana Land zoomed 2 1/2 to 41 1/2.
* Some industrials were strong. Caterpillar leaped 3 1/4 to 119 1/2, a new high. Monsanto rose 2 5/8 to 79 7/8, Alcoa gained 1 3/4 to 75 1/2 and DuPont surged 1 5/8 to 58 5/8.
Overseas, Hong Kong shares continued to be hit by interest rate worries. The Hang Seng index dove 207.48 points to 9,513.13, and at midday today the index was off 261.59 points to 9,251.54.
In Tokyo on Thursday, the Nikkei index eased 85.61 points to 20,592.16, while Frankfurt’s DAX index eased 2.33 points to 2,175.06 and London’s FTSE-100 index lost 12.8 points to 3,255.7.
In Mexico City, the Bolsa index rose 14.44 points to 2,396.67.
Other Markets
Long-term bond yields rose despite some reassuring inflation news in a Federal Reserve Bank of Philadelphia regional economic report.
The bank’s March business survey showed that prices and economic activity moderated. The bank’s monthly assessments of business conditions in parts of the mid-Atlantic area are considered indicators of nationwide economic trends.
While bond yields fell initially on the news, sellers struck again as trading progressed. By the close, the yield on the Treasury’s 30-year bond was at 6.82%, up from 6.79% on Wednesday.
Traders said investors are mostly focused on the upcoming Tuesday meeting of the Federal Reserve Board’s policy-making committee. The Fed could decide to raise short-term interest rates again at the meeting if it judges that economic growth is too fast.
In other markets:
* Gold prices dropped on the Comex. Near-term futures closed at $382.40 an ounce, off $2.50. Silver eased 2.3 cents to $5.35.
* Oil futures sank on a wave of profit taking that set in above the $15-a-barrel level. On the New York Merc, April crude oil dropped 24 cents to $14.82 a barrel.
* In the currency markets, the dollar finished slightly higher against most currencies, rebounding from a drop induced by the German central bank’s refusal to reduce interest rates Thursday, as some analyst had expected.
