Nasdaq Hits Record High; Dow Retreats
Blue-chip stocks ended lower Friday, but the Nasdaq market posted another record high as investors took stock of this week’s corporate earnings reports.
The Dow Jones industrial average lost 16.26 points to 5,535.48. For the week, it was up 2.89 points. The Nasdaq composite index rose 2.40 points to end at 1,138.70, surpassing Thursday’s record of 1,136.30.
In the broader market, advancing issues led decliners 1,379 to 893 on an active volume of 419 million shares on the New York Stock Exchange.
“We had the bulk of the excitement earlier this week with so many earnings,” said Jay Meagrow, an institutional trader at McDonald & Co. “We had some great ones and some bad ones, but overall the tone of earnings was better than expected.”
Analysts said investors were encouraged as a lengthening list of some of America’s biggest companies reported solid quarterly results.
Technology stocks got a lift on Friday, after Microsoft reported another quarter of better-than-expected results late Thursday. Microsoft rose 3/4 to 109 3/4.
“Microsoft’s results offset what IBM’s did to the market,” said Peggy Farley, chief executive at Amas Securities Inc.
On Wednesday, International Business Machines posted first-quarter earnings that exceeded Wall Street’s expectations, but the company’s warning that it expects narrower profit margins and lower overseas earnings in coming quarters helped push the Dow down 70 points. IBM was unchanged Friday at 105 3/8.
Farley said the earnings being reported by technology companies are better than expected and that she remains optimistic about the sector’s prospects.
A highlight in Friday’s market were the debuts of Planet Hollywood--a 10.8-million share global offering that was the biggest Nasdaq IPO ever--and CompuServe.
Planet Hollywood, the theme restaurant chain, skyrocketed 8 7/8 to 26 7/8 and was the most actively traded Nasdaq stock.
CompuServe, the second-largest online service, surged 3 to 33.
“It shows there’s some speculative froth in the market. The IPO calendar is still very big,” said David Shulman, chief equity strategist at Salomon Bros.
He said several recent IPOs have jumped at their openings only to trail off several weeks later. “That shows the underwriter valuation may be a fairer assessment of what the company is worth than what it opens at,” he said.
The yield of the benchmark 30-year bond fell to 6.79% from 6.83% late Thursday.
Among market highlights:
* Among the companies reporting stronger earnings were Iomega, up 2 55/64 to 37 1/8 and Kellogg, up 7/8 to 71 1/8.
Tribune jumped 3 5/8 to 70 1/8 on a report of improved earnings, and First Boston upgraded newspaper stocks. Times Mirror rose 1 1/8 to 39 1/4, New York Times added 1 1/2 to 32 3/4 and Knight-Ridder was up 2 to 70.
* AMR topped the NYSE actives list, losing 2 1/2 to 90 7/8. The parent of American Airlines said it will redeem all of its $1.02 billion of outstanding 6 1/8% convertible subordinated debt on May 20.
* EMC lost 2 1/4 to 18 5/8 after reporting disappointing first-quarter earnings.
* Computer and chip stocks rose on the Microsoft report, analysts said. Compaq gained 7/8 to 41 7/8, and Digital Equipment rose 1 5/8 to 54 3/8. Dell Computer rose 1/8 to 41 1/4.
Overseas, Tokyo’s Nikkei-225 stock average rose 0.3%, Frankfurt’s DAX index was almost unchanged, and London’s FTSE-100 rose 0.1% to a new high.
Wheat prices soared again Friday on concern about the deteriorating state of the U.S. hard red winter wheat crop.
The crop has been starved of moisture, and forecasts of lighter rains this weekend than some had hoped for contributed to the price rise.
Wheat futures for May delivery on the Kansas City Board of Trade set an all-time high for a KCBT wheat contract at $6.39 1/2 per bushel and closed up 17 1/2 cents at $6.34 1/2.
Market Roundup, D3
