Chip Stocks Lead Rally; Dow Sets Another High
Chip stocks led a broad rally Friday as the Dow Jones industrial average set its 11th high in 13 sessions, pulling within striking distance of 6,500 just six weeks after its first close above 6,000.
The Dow rose 53.29 points to 6,471.76, a gain of 123.73 points, or nearly 2%, for the week. For the year, the famed blue-chip barometer has advanced 26.5%.
U.S. bond prices dipped slightly amid a perception that the market’s four-week rally would falter without new signs of slower growth and tame inflation.
Applied Materials, a maker of computer chip equipment, sparked Friday’s stocks climb after it reported better-than-expected earnings and company executives said orders are expected to stay ahead of shipments in the coming year.
The Santa Clara-based firm surged 6 5/8 to 3 5/8. Applied Materials’ rally spurred a revival among other chip equipment suppliers, notable for being some of the most depressed computer-related stocks.
A rebound for chip equipment makers translated into gains for other computer-related stocks. IBM paced the rally and continued its weeklong leadership among Dow industrials, soaring 4 3/8 to 158 1/2 to set another nine-year high. Starting Nov. 15, IBM has gained 21 5/8 points, or the equivalent of nearly 65 Dow points.
Leading stock indexes closed at new highs again as November’s powerful rally resumed after a one-day pause. The technology-rich Nasdaq market rose more than 1%.
“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, vice president at A.G. Edwards & Sons Inc. in St. Louis.
The benchmark 30-year Treasury bond declined about 1/4, nudging its yield up to 6.44%. Two-year notes yielded 5.67%, up 1 basis point from Thursday.
For the week, bonds’ yields fell enough to extend the market’s rally into a fourth week for the first time since September 1995.
Traders also pointed out that Treasuries also sank after corporations sold more than $7 billion in new securities this week.
On the New York Stock Exchange, advancing issues outnumbered decliners by 11 to 7.
The Standard & Poor’s 500-stock index rose 5.98 points to 748.73, and the NYSE’s composite index rose 2.41 points to 394.66. It was the third record-high this week for both measures.
The Nasdaq composite index jumped 16.28 to 1,274.36, breaking the record set Nov. 14, when it finished at 1,270.36.
Among Friday’s highlights:
* Following Applied Materials’ lead, chip equipment makers soared. KLA Instruments rose 5 1/4 to 38 1/2 and Novellus Systems gained 9 19/64 to 59 3/4. Tencor Instruments, a supplier of chip equipment to Intel, gained 5 3/4 to 27, Lam Research hopped 4 9/16 to 34 1/16 and Silicon Valley Group climbed 2 3/8 to 21 7/8.
Among other computer-related shares, Microsoft rose 1/8 to 150 1/2 and Intel jumped 3 1/2 to 122 3/8. Computer-product distributor Avnet leaped 1 1/2 to an all-time high of 58 1/8. Memory chip maker Micron Technology gained 1 3/4 to 32 1/2.
Cisco Systems, the No. 1 maker of networks for computers, rose 1 5/8 to an all-time high of 67 5/8.
America Online, the biggest network communications service, surged 4 to 31 1/8 after its main rival, CompuServe, which gained 5/16 at 11, canceled a service aimed at family users.
Hewlett-Packard rose 1 1/8 to 54 after announcing it would buy back up to $1 billion of its stock.
* 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 opened Friday at 26 and closed at 25 7/8.
* Oil shares occupied the other top gaining positions, with Schlumberger jumping 2 to 104 5/8 and Halliburton rising 1 3/4 to 61 3/4. Exxon rose 2 at 92 7/8 and Texaco was up 1 1/2 to 100 3/8.
Overseas, Tokyo’s Nikkei stock average rose 0.3%, Frankfurt’s DAX index fell 0.3%, and London’s FTSE-100 rose 1.6%.
Market Roundup, D4
