IBM, Philip Morris Drive Dow Up 76; Bonds, Dollar Slip
Stocks rose sharply Monday, boosted by big gains in IBM and Philip Morris that helped snap a broad-market slump and boost blue-chip measures back toward record levels.
But U.S. bonds and the dollar fell.
The Dow Jones industrial average shrugged off an early 26-point deficit, jumping back above the 7,000 mark to end at 7,008.20, up 76.58 points.
“The nod keeps going to the big-cap, blue-chip stocks,” said Alan Ackerman, market strategist at Fahnestock & Co.
IBM and Philip Morris accounted for nearly half of the rise in the 30-share Dow, the world’s most widely watched stock index.
Broader measures also turned higher as several computer industry bellwethers started to rebound from last week’s sell-off, helping the technology-heavy Nasdaq market end a five-session losing streak.
The blue-chip index has been locked in a relatively narrow range since chalking up a record close of 7,067.46 on Feb. 18, falling in two straight sessions and managing a small gain on Friday. But as has happened with stubborn regularity lately, the brief pullback quickly attracted buyers.
“We had some sellers at the 7,000 level, but they couldn’t bring the market down too much,” said Peter Canelo, chief investment strategist at Dean Witter. “I don’t think this rally’s over. We have a very happy confluence of events.”
That confluence includes an upbeat economy, a strong dollar and low inflation that recently has dipped to barely noticeable levels.
Bond prices fell for the fourth time in five days, as a slumping dollar prompted concern that overseas investors may shy away from Treasury securities.
Traders also speculated that bonds probably won’t move much before Federal Reserve Board Chairman Alan Greenspan testifies today to Congress and the Treasury sells $75 billion of new debt this week.
As the benchmark 30-year Treasury bond dipped, its yield rose to 6.65% from 6.64% Friday.
On the New York Stock Exchange, advancing issues outnumbered decliners by a 7-5 margin in heavy trading.
The Standard & Poor’s 500-stock list rose 8.51 points to 810.28, and the NYSE composite index rose 3.47 points to 424.48.
The Nasdaq composite index rose 10.76 points to 1,345.08. The Russell 2000 Index rose 0.08 point to 366.45.
Among Monday’s highlights:
* Bellwether tech issues, beaten down over the last week as earnings worries prompted investors to lock in profits on January’s stellar run, led Monday’s turnaround.
IBM surged 6 1/4 to 143 7/8 as one of the Dow’s big gainers. The two most active Nasdaq issues were Cisco, up 5/8 to 59, and Intel, 2 7/8 to 149 1/4.
Microsoft leaped 5 1/8 to 100 1/8 after rebounding from an early 1-point drop.
* The Dow’s other two big gainers were Philip Morris, up 6 to 135 1/8; and Merck, up 3 1/4 to 98 3/8.
* Paper and forest products companies were higher. Mead rose 2 5/8 to 60, Champion International gained 2 1/4 to 44 1/4, and Consolidated Papers climbed 2 to 50 3/4.
* Oil shares declined as crude prices fell to seven-month lows. Exxon fell 1 1/8 to 102 5/8, Mobil lost 1 3/8 to 128 1/8, and Amoco fell 7/8 to 86 1/4.
* Security-Connecticut jumped 7 7/8 to 45 3/8 after ReliaStar Financial said it will buy the company for $488 million in stock and debt, forming the 11th-largest publicly held U.S. life insurer. ReliaStar fell 5/8 to 58 5/8.
* Staples rose 7/8 to 21 3/4 after Ralph Nader’s consumer watchdog group said the company’s proposed $4.4-billion purchase of Office Depot should be rejected because it will reduce competition and raise prices. Office Depot fell 7/8 to 18 7/8.
In currency trading in New York, the dollar cost 122.18 yen, down from 123.28 yen on Friday.
Overseas, Tokyo’s Nikkei stock average fell 0.7%, Frankfurt’s DAX index rose slightly, and London’s FTSE-100 fell 0.1%.
