Tech Stocks Take Nasdaq to Another Record
A fresh rally in technology issues helped boost small-stock indexes to record highs Monday, and blue chips went along for the ride.
Meanwhile, bond yields fell ahead of the Treasury’s auction of two-year notes today, even though grain prices rocketed again.
On Wall Street, the Nasdaq composite index jumped 14.80 points, or 1.3%, to a record 1,153.50, fueled partly by technology stocks gaining in the wake of Cisco Systems’ surprise takeover bid for rival computer networker StrataCom.
Also, the long-expected merger between Baby Bell companies Bell Atlantic and Nynex was officially announced Monday, and that helped drive some telecommunications issues higher.
In the blue-chip sector, the Dow industrial average added 29.26 points to 5,564.74, after surging more than 50 points early in the day, fading in afternoon, then rebounding in the final minutes.
“There’s a continued shift” away from blue chips and into smaller stocks, noted Robert Streed, senior investment advisor at Northern Trust in Chicago. Indeed, small-stock indexes like the Nasdaq and the Russell 2,000 have been hitting record highs in recent weeks while the Dow has lagged behind.
In the broad market Monday winners topped losers by 15 to 9 on the New York Stock Exchange and by 22 to 16 on Nasdaq.
The bond market helped stocks, as yields fell across the board despite worries about the heavy supply of new bonds for sale this week. The Treasury will auction two-year notes today, five-year notes on Wednesday and one-year bills on Thursday.
The yield on the 30-year Treasury bond dropped from 6.79% Friday to 6.72% at midday Monday before rising to close at 6.74%--still the lowest since April 4.
Bonds seemed only slightly disturbed by the latest surge in grain prices. At the Chicago Board of Trade wheat futures closed up the 20-cent-per-bushel daily limit, corn prices set record highs and soybeans seven-year highs, on news of crop damage and planting delays because of more unfavorable Midwest weather.
The Commodity Research Bureau index of 17 key commodities jumped 1.6% to 261.74, an eight-year high.
As for stocks, analysts said the continuing bullish tone derives from a mix of merger news, first-quarter earnings reports and the general sense that the U.S. economy is in decent shape.
Among Monday’s highlights:
* Cisco’s stock-swap bid for StrataCom sent the latter up 9 3/16 to 47 15/16, while Cisco eased 7/8 to 46 7/8. Among other networking firms, Cabletron Systems rose 1 1/2 to 69 1/8, Xylan gained 1 3/4 to 66 1/4, Newbridge Networks surged 4 to 63 and Novell added 1/8 to 12 7/8.
The Cisco offer “tells you that these technology stock valuations aren’t really too expensive,” said James Broadfoot, money manager in charge of $300 million at Ivy Management in Boca Raton, Fla.
* Elsewhere in the tech sector, Hewlett-Packard rose 1 5/8 to 101 1/4, Microsoft rallied 3 to 112 3/4, IBM rose 1 7/8 to 107 1/4, Intel added 2 1/2 to 67 3/4 and Adobe Systems jumped 2 13/16 to 37 13/16.
* Bell Atlantic gained 2 1/4 to 67 1/4 on news of its deal with Nynex, while Nynex fell 2 1/2 to 50 1/2 on apparent disappointment over the terms. Among other Baby Bells, Ameritech gained 1 3/8 to 59 3/4, US West Communications added 1/4 to 32 3/8 and BellSouth rose 7/8 to 40. SBC Communications, which plans to buy Pacific Telesis, gained 3/4 to 50 1/2; PacTel rose 3/8 to 34 3/8.
* Some beaten-down multinational issues rebounded, including Coca-Cola, up 1 7/8 to 80 5/8, Procter & Gamble, up 1 3/8 to 85 1/8, and Boeing, up 1 1/8 to 82 1/4.
In foreign trading, Tokyo’s Nikkei 225 index jumped 1.1% to a 51-month high of 22,123.89. But Mexico City’s Bolsa index fell 1% to 3,251.23 in profit taking after last week’s surge. In Europe the Paris CAC index rose 1.2% on hopes for lower interest rates.
Market Roundup, D8
