Blue Chips Rise; Nasdaq Soars 9.76 Points
Blue chip stocks, helped by a rising dollar, advanced Wednesday but were unable to keep pace with the Nasdaq index, which soared more than 9 points on a sharp rally in technology stocks.
The Dow Jones industrial average closed at 3,704.28, up 1.62 points on Big Board volume totaling 266.34 million shares.
The blue chip average gained as much as 20 points after a Labor Department report said consumer prices were in check. It gave back most of those gains by late morning, dipped briefly into negative territory late in the day as sell programs kick in, then popped back up near the closing bell.
In the broader market, advancing issues outnumbered decliners by more than 5 to 4 on the New York Stock Exchange.
Technology stocks extended Tuesday’s rally, boosting broad market indexes. The Nasdaq composite index of mostly smaller companies added 9.76 to 719.35, its best level since June 20. The NYSE’s composite index rose 0.38 to 247.85. The Standard & Poor’s 500 composite gained 0.78 to close at 448.73.
The market opened on a positive note after the Labor Department said consumer prices rose 0.3% in June, about in line with economists’ projections. The data came just one day after the Labor Department said prices at the manufacturing level were flat in June.
Wall Street also rose in response to the dollar, which sold off directly after the consumer price data was released but then recovered against the yen and the mark in midmorning.
Thomas Gallagher, head stock trader at Oppenheimer & Co., said the recovered dollar was keeping the Dow above a critical support level of 3,700.
“The improvement in the dollar helped bonds a little bit, and that took some of the pressure off the stock market,” he said.
The dollar rose from a 20-month low compared to the German mark and strengthened against other European currencies. But analysts said economic fundamentals and overall market sentiment remain negative for the U.S. currency.
After rising in Asia and Europe, the dollar continued to gain when trading shifted to the United States. Buying accelerated on rumors that the Federal Reserve Board will raise short-term U.S. interest rates by half to a full percentage point, market participants said.
The dollar closed in New York at 98.30 Japanese yen, up from 97.50 yen on Tuesday. It finished at 1.54 marks, up from 1.529.
Stocks got a little encouragement from the bond market, where the 30-year bond yield ended the day at 7.67%, down slightly from Tuesday’s 7.68%. Its price, which moves in the opposite direction, rose 5/32 point, or $1.56 per $1,000 in face value.
The bond market was subdued, dealers said, because market participants are waiting to see what economic data due out today and Friday suggests about inflation.
Among the market highlights:
* IBM rose 7/8 to 56 3/4, Compaq rose 1 7/8 to 36 7/8, and Digital Equipment added 3/8 to 21 3/8. In Nasdaq trading, Intel rose 1 3/8 to 61 1/2, Apple advanced 1 5/8 to 30, Wellfleet Communications rose 2 1/4 to 22, and 3Com surged 3 7/8 to 55 3/4.
CBS swung widely, first falling 10 1/2 points after the broadcast company ended its agreement with QVC in response to a surprise bid for the home shopping channel operator by Comcast. It then rose as much as 9 points after announcing a stock buyback and stock split, closing up 8 at 308.
* Comcast K series issues fell 1 3/8 to 15 1/4, but QVC rose 5 7/8 to 41 7/8.
Tokyo’s 225-share Nikkei average rose 139.93 points to 20,540.41, and Frankfurt’s 30-share DAX average ended up 5.95 at 2,054.0.
Mexico City’s Bolsa index closed 23.31 points lower at 2,264.97.
