Nasdaq Rally Continues; Dow Rebounds
Stock prices roared back from some early profit taking Thursday with technology stocks extending the Nasdaq Stock Market’s two-week rally to nearly 8%. The Dow Jones industrial average rebounded from steep losses as prices neared recent lows and attracted bargain hunters.
Wheat and corn prices, meanwhile, set new highs as reports of winter-wheat crop damage continued and weather forecasters were predicting the worst possible scenario for wheat and spring planting.
The Dow gained 13.01 points to close at 5,566.91, coming back from a deficit of 45 points by early afternoon. The gauge of big U.S. companies also gained support from the bond market, where a late jump in prices brought interest rates lower.
The Nasdaq composite rose 7.34 points to 1,184.17, the sixth straight record close for the index. The Nasdaq, which rebounded steadily through the afternoon, has surged amid expectations that its many technology issues and other smaller-company stocks will be the biggest beneficiaries of an improving economy.
The Russell 2,000 index of smaller companies set its sixth straight record; it has risen 5% in just two weeks.
Other, broad-market measures ended the day higher after spending much of the session in negative territory.
Advancing issues outnumbered decliners by about 6 to 5 on the New York Stock Exchange, where volume totaled 462.12 million shares, down from Wednesday’s pace.
Technology stocks--bolstered by a spate of recent strong earnings reports that assuaged fears of a computer industry slowdown--rebounded from some early profit taking.
The yield on the Treasury’s main 30-year bond fell to 6.79% from 6.82% late Wednesday. Bond prices often rise on signs of a sluggish economy, which makes fixed-income investments more valuable. But the effect of data released Thursday morning showing an increase in unemployment filings was offset by that of another report, also released Thursday, showing that sales of existing homes jumped in March.
Among market highlights:
* Investors continued to favor cyclical issues, which if recent indications that the economy is growing are correct, will benefit. Caterpillar rose 1 7/8 to 66 5/8 , and International Paper rose 1 1/8 to 40 1/4.
* By contrast, defensive plays such as stocks in drug companies, whose earnings should be steady regardless of economic conditions, slid again. Merck lost 1/4 to 60 1/8.
* Johnson & Johnson added 3/8 to 90 1/8 after it boosted its dividend 15% and said it will split its stock 2 for 1.
* Mesa closed unchanged at 3 7/8 after billionaire investor Marvin Davis, who last year launched a campaign to challenge Boone Pickens for control of Mesa, has disclosed that he has cut his stake in the natural gas company by 25% and disbanded a shareholder group formed to assume management posts.
In Mexico City, stocks fell for the third time in four sessions, hurt by unexpectedly weak earnings from Telefonos de Mexico and Grupo Televisa. The Bolsa index fell 13.86 points, or 0.43%, to 3239.01.
Grain markets were roiled after the National Weather Service released its latest six-to-10 day outlook for Tuesday through May 4, predicting below-normal rainfall in U.S. winter wheat regions but above normal moisture in the U.S. spring wheat areas. In response, May wheat closed at $7.34 on Kansas City Board of Trade, up the 25-cents-per-bushel daily limit and more than double the year-ago price.
