FINANCIAL MARKETS : Dow Gains 26 on Rebound of Tech Stocks
Stocks shook off the Federal Reserve Board’s decision to hold interest rates steady and rallied to a higher close Tuesday with the help of a rebound in some technology shares.
The Dow Jones industrial average gained 26.74 points to close at a near record 5,670.60. It was the second-highest finish ever for the blue-chip indicator, which set a record close of 5,683.60 on March 18.
In the broader market, advancing issues led declines 1,226 to 1,081 on active volume of 397 million shares on the New York Stock Exchange.
Wall Street barely blinked after the central bank announced that it was maintaining a steady monetary policy after cutting interest rates in January for the third time since mid-1995.
“The market obviously anticipated the Fed would do nothing, absent any clear sign of where the economy is going,” said Peggy Farley, chief executive of Amas Securities Inc.
Larry Wachtel, a market analyst at Prudential Securities, noted that “the hemorrhaging in technology stocks stopped and that was psychologically helpful.”
On Monday, technology stocks were hammered by concerns that a slowing economy may prompt corporations to put off further investments in high-tech goods, which would hurt the companies like IBM and Intel.
The stock of International Business Machines Corp., which tumbled 6 points Monday, rose 2 1/4 to 110 5/8.
The Nasdaq Composite index, which is dominated by technology stocks, gained 1.26 points at 1,088.35 after falling 15 points on Monday.
Other gainers among technology issues included Intel, up 1-15/64 to 56 1/8, and Microsoft, up 2 7/8 to 102 3/4.
However, not all technology stocks performed well. Computer networking shares tumbled after Anixter International, a big reseller of Bay Network’s products, said Monday it would not meet Wall Street’s earnings estimates for the first quarter.
The news led three analysts Tuesday to cut their earnings projections for Bay, whose shares slid 4 1/2 to 28 1/2 in leading volume on the Big Board. Anixter’s shares rose 1/8 to 16 5/8 on the Big Board.
Other networking stocks were lower in Nasdaq trading, including Cisco Systems, down 5-16 to 42 15-16, and 3Com, down 2 3/8 to 39.
But Sun Microsystems, also a networking stock, rose 5-16 to 44 1/8 in Nasdaq trading, after the company confirmed that it is launching new products and services that will allow Internet-like communications within companies.
Hewlett Packard fell 5/8 to 93 5/8, Digital Equipment lost 1 7/8 to 50 1/4, and Compaq eased 1/8 to 36 1/2. Compaq unveiled a networking product line designed for use in branch and remote offices for small-to-medium-sized businesses.
Among other market highlights:
* Oil stocks were prominent gainers. Chevron rose 1 1/4 to 57 1/8 after the company said it had made a new oil discovery in Colombia. Exxon rose 2 1/4 to 85 7/8 and Texaco added 1 to 88 3/8. Triton surged 8 to 59 1/2 on upbeat news from its Colombia oil field.
* Gold shares turned strong as the active June contract on New York’s Commodity Exchange rose $1.50 to $403.30 an ounce, topping the key $400 level.
Barrick Gold rose 1 3/8 to 31 1/2, Placer Dome rose 1 to 29 3/8, Newmont Gold surged 3 to 58 1/2 and Newmont Mining added 2 5/8 to 59 3/4.
* Glaxo added 3/4 to 25 5/8 and Pfizer rose 1 to 68 3/4 amid market rumors that the companies would strike a merger agreement. Both companies declined comment.
* Simon Property Group slipped 1/4 to 23 5/8 and DeBartolo Realty rose 3/4 to 15 3/8. The companies announced a merger that would create North America’s largest real estate company with a total market value of $7.5 billion.
Overseas, Tokyo’s Nikkei share average closed above 21,000 points for the first time in more than a month on Tuesday after Japan’s main opposition party ended a three-week parliamentary sit-in, allowing debate on the national budget to resume. The Nikkei ended up 99.33 points at 21,014.77.
But in London, British stocks fell for a second day as the “mad cow” crisis continued to weigh on sentiment. The FTSE 100 closed 21.0 points lower at 3,660.9.
Treasury bond yields ended mostly unchanged, after see-sawing slightly in reaction to fresh economic data and the Fed decision to keep interest rates at current levels.
The price of the Treasury’s main 30-year bond held at Monday’s level as its yield stayed at 6.58%.
