Tech Stocks Gain Strength, but Energy Shares Recede
Technology stocks boosted the broad market to records Thursday, but worries that oil prices will fall if Iraq resumes oil shipments limited the Dow Jones industrial average to a slight gain.
The Dow 30 edged up 1.81 points to close at 5,551.74 after meandering throughout a relatively calm session largely dominated by reactions to news of corporate earnings.
Broader-market measures--with a heavier weighting of technology shares--advanced more sharply as key industry issues resumed their market leadership after a one-day interruption.
The Nasdaq composite index, the American Stock Exchange market value index and the Russell 2,000 list of smaller companies all set records.
Advancing issues outnumbered decliners by about 9 to 7 on the New York Stock Exchange, where volume totaled 497.84 million shares, down from Wednesday’s pace.
The NYSE composite index rose 0.83 point to 345.39, and the Standard & Poor’s 500-stock index gained 2 points to 643.61.
The Nasdaq composite rose 15.43 points to 1,136.30, setting a record high for the second time this week. The Amex market value set its third-straight record high, gaining 2.70 points to 583.08.
Oil stocks weighed down the Dow industrials, with Exxon, Chevron and Texaco among the blue-chip average’s top losers. Analysts said uncertainty about the outcome of U.N. talks to allow some Iraqi oil shipments continues to rattle energy stocks. Those companies could see lower profits if increasing crude supplies cause prices to fall. Exxon fell 1 5/8 to 81 7/8, Chevron fell 1/2 to 55 1/2 and Texaco fell 5/8 to 84 3/8.
“As long as this sideshow between the U.N. and Iraq goes on and on and on, the oil stocks may keep failing one day and rallying the next,” said Robert Stovall, president of Stovall/Twenty-First Advisers in New York.
Bellwether technology stocks rose again amid renewed confidence generated by several strong earnings reports. On Nasdaq, Intel gained 1 9/16 to 65 3/4 and Microsoft rose 3 1/16 to 109 ahead of its earnings report. Chip makers rose on the NYSE, with Motorola adding 2 5/8 to 60 1/8 and Texas Instruments rising 1 3/4 to 55 3/4.
Among market highlights:
* McDonald’s, down 1/4 to 46 3/4, posted one of its smallest quarterly earnings increases in years, as stiff domestic competition and unusually bad weather hurt its bottom line.
* Sears, down 1/2 at 51 3/4, said its first-quarter earnings rose 21.8%, in part because of strong sales during the early Easter shopping season. Sears said customer credit problems were increasing, however.
* General Electric, up 1 to 79 1/4, reported an 11% increase in first-quarter earnings. It cited improved sales for 10 of its 12 businesses.
* Drug stocks rose on news of several strong earnings reports. Merck, a Dow component, rose 1 1/8 to 61 3/8, Eli Lilly rose 2 3/8 to 58 7/8 and Johnson & Johnson rose 1 to 91 5/8.
* IBM shares, which tumbled more than 10 points on Wednesday after the computer maker spooked investors by expressing caution regarding future quarters, gained 1/4 to 105 1/2.
Some of the day’s softness in blue-chip issues was attributed to another weak day in the bond market.
Bond interest rates rose, with long-term rates climbing toward 6.85% after the Federal Reserve Bank of Philadelphia released a report showing business conditions improving in the mid-Atlantic region. Higher borrowing costs can slow corporate and consumer spending and hurt profits.
The yield of the Treasury’s main 30-year bond rose to 6.83% from 6.81% late Wednesday.
Bond traders have been concerned that recent signs of economic strength may fuel inflation, which hurts the value of fixed-income investments such as bonds.
