Chip Stocks Lead Rally; Dow Sets Another High
Computer chip stocks rocketed Friday, leading the broad market to yet another record high.
The Dow Jones industrial average shot up 53.29 points, or 0.8%, to a record 6,471.76, bringing the gain for the week to nearly 2% and the year-to-date gain to 26.5%.
The Nasdaq composite index, heavily weighted with technology stocks, soared 16.28 points, or 1.3%, on Friday to a record 1,274.36, eclipsing the previous high of 1,270.36 set Nov. 14.
Indeed, the best news for the bulls on Friday was that stocks’ advance broadened meaningfully, after having been dominated by a surge in the 30-stock, blue-chip Dow index in recent weeks.
Rising stocks outnumbered losers by about 3 to 2 on the New York Stock Exchange and by almost 4 to 3 on the Nasdaq. And the Russell 2,000 index of smaller stocks, which has been badly lagging the Dow, nearly equaled the Dow’s rise, gaining 0.8% to 349.92.
Trading volume was heavy on both the NYSE and Nasdaq.
The rally was sparked by optimism that the long-depressed semiconductor business may be poised to rebound in 1997.
Although the No. 1 chip stock--Intel--has been a hot issue all year, many chip producers have suffered from a worldwide glut, especially among commodity-type memory chips.
But late Thursday Applied Materials, a major producer of chip-manufacturing equipment, told analysts that orders are improving. Even as it reported sharply lower earnings for its recent quarter, Applied said it expects sales of $800 million and earnings per share of about 45 cents for its fiscal first quarter, with better results in future quarters.
“This is confirmation that the duration of the downturn [in the chip industry] is shorter than previous cycles,” said analyst Elliot Rogers of brokerage Deutsche Morgan Grenfell.
Applied’s stock was upgraded by at least seven Wall Street analysts Friday, helping to send it rocketing 6 5/8 to 38 5/8.
Tech stocks advanced across the board. “The high-techs were the lead sled dogs, and there isn’t a group that the market likes to see act well more than high techs,” said Alfred E. Goldman, analyst at A.G. Edwards & Sons in St. Louis.
Meanwhile, the bond market was relatively quiet, so it didn’t distract Wall Street. The yield on the bellwether 30-year Treasury bond continued to hover near eight-month lows, inching up to 6.44% from 6.41% Thursday.
Among Friday’s highlights:
* Other chip-equipment stocks soaring included KLA Instruments, up 5 1/4 to 38 1/2; Novellus Systems, up 9 49/64 to 59 3/4; Tencor Instruments, up 5 3/4 to 27; and Lam Research, up 4 9/16 to 34 1/16.
* Among other tech issues, Intel jumped 3 5/8 to 122 1/2, Micron Technology gained 1 3/4 to 32 1/2, IBM rose 4 3/8 to 158 1/2, Texas Instruments added 2 7/8 to 56 7/8 and 3Com surged 3 to 75 5/8. Hewlett-Packard rose 1 1/8 to 54 after announcing it would buy back up to $1 billion of its stock.
* Besides IBM, the Dow index was led by Caterpillar, up 2 1/2 to 80; Boeing, up 1 1/8 to 98 5/8; American Express, up 1 3/8 to 51 7/8; and 3M, up 1 3/8 to 84 3/4.
* Energy stocks also were broadly higher. Exxon rose 2 to 92 7/8, Atlantic Richfield added 2 1/8 to 135 7/8 and Noble Affiliates zoomed 1 7/8 to 48 1/4.
* Financial stocks streaked upward again. NationsBank jumped 2 5/8 to 102 1/8, First Union gained 1 3/4 to 75 3/4, BankAmerica added 1 to 97 3/4, Aames Financial shot up 4 1/4 to 42 3/4 and Morgan Stanley rose 2 3/4 to 59 5/8.
* The most active NYSE issue was Venezuelan phone company Compania Anonima Nacional Telefonos de Venezuela, or Cantv, which late Thursday sold 20.52 million American depositary receipts at 23 each in an initial public offering. The stock closed at 25 7/8.
Another new issue, Nu Skin Asia Pacific, a cosmetics distributor, surged from 23 at its offering price to 28 3/4.
And Woodland Hills-based Brilliant Digital Entertainment, a digital entertainment firm, went public at 5 a share and closed unchanged on the Amex.
Market Roundup, D4
