Nasdaq Rally Continues; Dow Rebounds
The U.S. stock market shook off a bout of profit taking to close higher Thursday, as smaller stocks continued to lead the way in heavy trading.
Elsewhere, wheat and corn prices shot up to new highs in Chicago on fresh reports of winter-wheat crop damage. Weather forecasters were predicting the worst possible scenario for wheat and spring planting.
On Wall Street, the Dow industrial average rebounded from a 45-point midday decline to close up 13.01 points at 5,566.91.
But the market’s star was again the Nasdaq composite index of mostly smaller stocks, which gained 7.34 points to a record 1,184.17.
It was the sixth straight record for the Nasdaq index. Other small-stock indexes also set new highs, including the Russell 2,000 index, which rose 1.60 points to 346.24.
Investors have been flocking to smaller stocks in recent weeks on optimism about the U.S. economy’s revival this spring. At the same time, the stronger dollar has soured some investors on blue-chip multinational stocks, because a healthy dollar can depress multinationals’ overseas earnings.
The dollar advanced again Thursday, climbing to a 14-month high of 1.534 German marks in New York from 1.520 on Wednesday. The dollar also traded at 106.70 Japanese yen, up from 106.53.
But blue-chip stocks rallied anyway as bond yields fell back. The yield on the Treasury’s main 30-year bond fell to 6.79% from 6.82% on Wednesday, despite a surprisingly strong report on March existing-home sales.
In the broad market, winners topped losers by 22 to 16 on Nasdaq and by 13 to 10 on the New York Stock Exchange. Nasdaq trading was the second-heaviest ever, trailing only Wednesday’s record volume.
The big surprise this month, analysts say, has simply been the strength of first-quarter corporate earnings. That has given many investors the confidence needed to bet on stronger earnings for the rest of the year, especially at smaller companies that may have the most to gain from a resilient U.S. economy.
Among Thursday’s highlights:
* Technology stocks continued to lead Nasdaq higher. Adobe Systems jumped 3 to 43, FileNet soared 3 1/8 to 56 1/2, Wyle Electronics soared 4 5/8 to 42, Cirrus Logic gained 2 3/8 to 21 1/2 and DSC Communications leaped 2 1/2 to 31 1/4.
Many biotechnology stocks were also up sharply.
* Blue chips got a lift from some healthy earnings reports. Among companies reporting, Xerox zoomed 4 1/8 to 145, Procter & Gamble gained 1 to 85 1/2 and Allied-Signal rose 5/8 to 58 1/4. But Dow Chemical was off 5/8 to 87 1/4 and DuPont sank 3 to 80 3/4.
* Johnson & Johnson added 3/8 to 90 1/8. It boosted its dividend 15% and said it will split its stock 2 for 1.
In Mexico City, stocks fell for the third time in four sessions, hurt by unexpectedly weak earnings from Grupo Televisa. The Bolsa index fell 13.86 points to 3,239.01.
In commodities trading, grain markets were roiled again, 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, where much of the crop is all but dead.
In response, May wheat futures on the Chicago Board of Trade closed up the daily allowable limit of 20 cents at $6.96 1/2 a bushel. May corn jumped 12 cents to $4.99 a bushel--double the year-ago price.
Despite growing crop fears, Agriculture Department Secretary Dan Glickman said he doesn’t expect wheat shortages to develop this summer, “but obviously it’s something we’re going to watch for.”
