Tech Stocks Take Nasdaq to Another Record
Technology stocks surged again Monday, lifting the Nasdaq market to its third straight record finish, but the broader market struggled to modest gains, as did bond prices.
The Dow Jones industrial average rose 29.26 points to close at 5,564.74. The Dow gained more than 50 points in the morning, gave up most of the gains by late afternoon, then jumped in the final half-hour of trading.
Broader-market measures also rose, but only the Nasdaq composite index, heavily weighted with technology issues and smaller companies, posted a significant gain, rising 14.80 points to 1,153.50.
The American Stock Exchange’s market value index also benefited from the recent interest in technology and smaller companies, setting its fifth straight record with a gain of 1.49 points to 587.37.
“There’s a continued shift into some of the mid-caps instead of the large-cap stocks” such as the Dow industrials, said Robert Streed, senior investment advisor at Northern Trust in Chicago. “Large-cap” refers to the biggest companies with the highest stock market values.
Advancing issues outnumbered decliners by about 11 to 7 on the New York Stock Exchange, where volume totaled 394.01 million shares as of 4 p.m., down from Friday’s 419.96 million.
The NYSE’s composite index rose 1.42 points to 347.82. The Standard & Poor’s 500-stock index rose 2.82 points to 647.89. Both indexes retreated from stronger gains in the morning, but rebounded in the last hour of trading.
Two big mergers have helped boost the technology sector, which has been surging over the last two weeks amid encouraging earnings reports that suggest the sector is not as bad off as feared earlier this year.
Before the market opened, Bell Atlantic and Nynex announced the largest merger ever in telecommunications, a $22-billion deal that will create the nation’s second-biggest phone company behind AT&T.;
Nynex shares fell 2 5/8 to 50 3/8. Bell Atlantic rose 2 1/8 to 67 1/8, and other telephone stocks advanced on speculation about continued consolidation in the industry. Two other Baby Bells, SBC Communications and Pacific Telesis Group, announced merger plans early this month.
Energy stocks rallied early after companies reported surprisingly strong first-quarter profits because of higher fuel prices and strong winter demand. But the stocks retreated amid new signs that Iraq will indeed reach a deal with the United Nations to export some oil. An increase in world crude supplies could lower prices, hurting oil company profits. Most oil stocks ended the day little changed.
Treasury yields fell Monday as the dollar rose against the German mark. The yield of the Treasury’s main 30-year bond fell to 6.74% from 6.79% late Friday.
The German mark continued to be battered by the Bundesbank’s interest rate cut, made last week. As of 4 p.m. in New York, the dollar traded at 1.5168 marks, up from 1.5120 at the same time Friday.
Among stock market highlights:
* Cisco Systems announced an agreement to buy StrataCom for $4 billion in the largest takeover ever in the computer network equipment business. StrataCom shot up 9 3/16 to 47 15/16; Cisco fell 7/8 to 46 7/8. Both trade on Nasdaq.
* Among other technology stocks, Hewlett-Packard rose 1 5/8 to 101 1/4, Microsoft rallied 3 to 112 3/4, International Business Machines rose 1 7/8 to 107 1/4, Intel added 2 1/2 to 67 3/4 and Digital Equipment rose 1 to 55 3/8.
* CUC International, a membership services company, agreed to buy Ideon Group, a credit-card protection company, for $375 million in stock. CUC shares eased 3/8 to 30 3/4 and Ideon rose 7/8 to 13 1/8.
Overseas, Tokyo’s Nikkei-225 stock average rose 1.1%, Frankfurt’s DAX index rose 0.4% and London’s FTSE-100 fell 0.1%.
Market Roundup, D8
