Techs Continue to Fuel Nasdaq; Dow Also Gains
Another encouraging earnings report in the computer industry sent technology stocks shooting higher again Tuesday. The powerful rally lifted the Nasdaq composite index to its fourth straight record and brought its gains to 6.3% in less than two weeks.
A jump in oil prices helped lift the struggling Dow Jones industrial average.
The Dow industrials rose 23.85 points, mostly on gains in its three oil stocks, to close at 5,588.59. The Dow spent much of the session with a gain of less than 10 points, once again lagging the broader market’s record-setting trend over the past week.
Technology stocks, which have resumed their leadership role after a sharp sell-off that began late last year, rallied strongly after Digital Equipment issued the latest in a series of strong earnings reports that indicate the industry is not as bad off as feared. Digital added 5 1/8 to 60 1/2.
The Nasdaq composite, heavily laden with technology issues, plowed further into record territory, rising 13.26 to 1,166.76.
Advancing issues outnumbered decliners by about 9 to 7 on the New York Stock Exchange, where volume was heavy at 452.69 million shares, well above Monday’s pace.
The NYSE composite index and the Standard & Poor’s 500 list--both dominated by larger companies that surged earlier this year before sputtering in recent weeks--posted modest gains. The NYSE composite rose 1.79 to 349.60 and the S&P; 500 rose 3.69 to 651.58.
The continuing rise in long-term bond yields has created an uncertain outlook for blue-chip stocks, said Thom Brown, market strategist, Rutherford, Brown & Catherwood in Philadelphia.
The yield on the 30-year Treasury bond rose to 6.77% from 6.74% Monday. Stock prices often fall with bonds because higher interest rates raise corporate borrowing costs and slow consumer spending.
Higher rates “mean trouble for basic industry issues” like the Dow industrials, Brown said.
The Dow was bolstered by its three oil-stock components--Chevron, Texaco and Exxon--which rose with crude prices amid news the United States and Britain have pushed the United Nations to toughen its negotiating position with Iraq over a possible oil-for-food deal.
Despite strong earnings reports, energy stocks struggled Monday amid indications of progress in the Iraq talks. An increase in world crude supplies could lower prices, hurting oil company profits.
In commodities trading Tuesday, short-term contracts for crude oil jumped 5%, and oil stocks followed suit. Exxon rose 2 5/8 to 84 5/8, Chevron rose 1 3/4 to 57 1/2, and Texaco rose 1 3/4 to 85 5/8 as the Dow’s three biggest gainers.
Also, Mobil added 3 1/4 to 116, Amerada Hess gained 2 to 57 1/2, Amoco was up 1 5/8 to 73 3/4 and Atlantic Richfield rose 3 to 118 5/8.
But higher oil prices hurt airline stocks. The Dow Jones transportation average fell nearly 1%.
Among the market highlights:
* Among technology issues, Motorola rose 2 1/4 to 61 3/4, Compaq Computer gained 1 3/4 to 44 1/8 and Texas Instruments rose 2 to 57 3/8. But IBM, down 1/4 to 107, continued to struggle in the aftermath of a cautious outlook issued by the company last week. Intel gained 23/64 to 68-7/64; Microsoft lost 1/8 to 112 5/8.
Cisco Systems rose 1 3/4 to 48 5/8 and StrataCom added 1 3/16 to 49 1/8 a day after Cisco said it will pay $4 billion for StrataCom.
Netscape Communications gained 3 7/8 to 61 3/4 on stronger-than-expected earnings.
* Travelers/Aetna Property Casualty Corp., a unit of Travelers Group Inc., rose 2 1/2 to 27 1/2 in its first day of trading.
* Readers Digest slumped 3 to 42 3/8 as its quarterly results fell below expectations. Also slumping on disappointing quarterly earnings reports were Ralston-Purina, off 2 1/2 to 59 1/4, Walt Disney, down one to 61 5/8, and Southwest Air, off 2 1/8 to 30 3/4.
Overseas, Frankfurt’s 30-share DAX index scraped to a new record high but dealers said the market lacked fresh impetus to drive prices further up. The DAX ended at 2,550.18 points, up 4.27 points. London’s FTSE 100 index closed down 19.7 points at 3,833.0. Tokyo’s 225-share Nikkei average finished down 4.01 points at 22,119.88.
