FINANCIAL MARKETS : Dow Again Hits Record Despite Drop in Dollar
Blue-chip stocks hit a record high for a second straight session Thursday, shaking off budget brawling in Washington that sent bond yields higher and the dollar sharply lower.
Technology stocks--trashed early in the week--rebounded smartly, leading the market up.
The Dow Jones industrial average rose 11.56 points to a record 4,864.23. The Nasdaq composite index, heavy with tech issues, shot up 17.65 points to 1,065.59, though it remained below its record high.
Apart from technology stocks, however, market action was fairly dull overall. Advancing issues had only a slim lead on decliners on the New York Stock Exchange.
Nonetheless, the NYSE’s composite index joined the Dow at a record, up 0.42 point to 315.97.
Some analysts were surprised at stocks’ relative vigor. As the clash between President Clinton and Congress over the federal debt ceiling and the budget intensified--and as Mexico’s peso plunged to a record low before recovering somewhat--the dollar suffered collateral damage.
It fell to 100.35 Japanese yen in New York from 102.55 Wednesday.
Bonds, meanwhile, also endured a modest selloff, with the yield on the 30-year Treasury bond inching up to 6.28% from 6.25%.
Congress has passed legislation raising the federal debt ceiling, but Republicans have attached provisions that Clinton opposes. Without a hike in the $4.9-trillion ceiling by next week, the government could default on its debt for the first time in history.
“The decline in the dollar and bond market clearly reflects the growing worries, particularly among foreign investors, that the U.S. government might become involved in a technical default,” said Hugh Johnson, First Albany Corp.’s market strategist.
But most investors, for now, appear either unafraid of default or disbelieving that it can actually happen. What’s more, many investors are convinced that the Federal Reserve Board will lower interest rates again before year’s end.
Among Thursday’s highlights:
* Technology stocks zoomed on news that the semiconductor industry’s widely watched book-to-bill ratio--a measure of new orders for computer chips--was stronger than expected in October.
Chip stocks, which had plunged on Tuesday after Cirrus Logic said a major customer had canceled some chip orders, rocketed anew.
Winners included Cirrus, up 1 1/2 to 30 1/8; Intel, up 3 1/6 to 69; Micron Technology, up 3 to 65; Texas Instruments, up 4 1/8 to 63 3/8, and Motorola, up 2 7/8 to 67 5/8.
* Other tech stocks surging included Hewlett-Packard, up 5 to 93 3/8; Sun Microsystems, up 3 3/4 to 85 1/8; Cisco Systems, up 2 5/8 to 86 5/8; Netcom On-Line, up 6 to 78 1/4, and Quarterdeck, up 4 7/8 to 32 3/8.
Tech issues advanced despite news that Fidelity Magellan Fund, the world’s biggest mutual fund and a major technology cheerleader, reduced its tech stock holdings to 39.9% of assets as of Sept. 30 from 41.9% on Aug. 31, according to a report Fidelity filed Thursday at the Securities and Exchange Commission.
* Many financial stocks rallied despite rising bond yields. Merrill Lynch jumped 3 to 60 1/2, Franklin Resources gained 1 3/8 to 52 3/4, American Express surged 1 3/4 to 43 3/8 and Citicorp rose 3/4 to 69 3/8.
* Gold stocks rose as gold’s price continued to inch up. Battle Mountain Gold added 3/8 to 8 7/8, American Barrick gained 5/8 to 25 1/2 and Placer Dome rose 5/8 to 24 1/4.
* In the retail sector, Gap soared 3 5/8 to 47 1/2 after it reported that third-quarter earnings jumped 25%, beating Wall Street’s expectations.
* On the down side, some industrial issues were hit by selling. International Paper eased 5/8 to 34 7/8, Deere lost 1 to 90 and Chrysler slid 1 1/8 to 47 3/4.
In overseas trading, the Nikkei index in Tokyo slipped .24%, and the CAC index in Paris lost 0.73%. But the FT-SE 100 index in London rose 0.13%.
