Tech Stocks Brighten the Dow’s Week
The Dow Jones industrial average closed higher as another strong day in the battered technology sector helped overshadow worrisome signs on inflation and interest rates, bringing a painful week to a hopeful close.
The blue-chip Dow ended 48.72 points higher at 6,526.07. For the week, however, it dropped 214.52 points, the fourth-largest after the Oct. 13, 1989, decline of 216.26.
In the broader market, advancing issues led decliners 1,410 to 1,046 on active volume of 537 million shares on the New York Stock Exchange.
Analysts said sudden strength among bellwether technology shares, which boosted the beleaguered Nasdaq market to a sizable gain for the second straight session, helped instill some confidence in jittery investors.
“It’s a real emotional market. What we saw late today was some good old-fashioned bargain hunting, first in technology, and then the rest of the market followed,” said Bob Dickey, managing director of technical analysis at Dain Bosworth in Minneapolis. He noted that investors may also have been relieved that there are no major economic reports due for a week.
Early in the session, the Dow crumbled more than 70 points on the employment report, which analysts said did nothing to dispel the belief that the Federal Reserve Board will raise interest rates again.
The 5.2% unemployment rate reported by the Labor Department was the lowest in five months and another sign of the economy’s brisk, and possibly inflationary, growth.
Average hourly wages rose by 5 cents to $12.15 in March, after edging up a revised 5 cents in February, instead of the previously reported 3 cents, the Labor Department said. Over the last 12 months, wages rose 4%, matching their highest growth rate since the 12 months ended June 1990.
Concerns that a tight labor market might bring more rate hikes sparked a sell-off in the bond market.
As bond prices fell, the yield on the 30-year Treasury bond--a key determinant of consumer and company borrowing costs--rose from 7.06% to 7.12%, the highest since September.
The dollar ended sharply higher against the Japanese yen and the German mark Friday, cheered by reassuring comments from Treasury Secretary Robert Rubin and the U.S. employment report.
Rubin, in Japan on his way to a meeting of Asia-Pacific finance ministers in the Philippines, rejected suggestions that a stronger Japanese currency--and thus a weaker U.S. dollar--was the best way to avoid a renewed rise in Japan’s trade surplus with the United States.
The dollar ended the day at 124.31 yen, substantially up from 122.65 on Thursday. Against the mark, it climbed to 1.6858, compared with Thursday’s 1.6695.
On Wall Street, investors appeared ready for some bargain hunting, particularly in technology stocks.
The Nasdaq composite index rose 22.97 points to 1,236.73.
The Standard & Poor’s composite index of 500 stocks rose 7.58 points to 757.90. The American Stock Exchange index was off 1.09 points at 556.73.
The NYSE composite index rose 3.62 points to 398.02. The average share was up 37 cents.
Among Friday’s highlights:
* Semiconductor stocks led, with Intel up 4 3/8 to 145 and Applied Materials up 3 3/4 to 52 1/4.
But computer giant IBM gave up 1 7/8 to 129 1/4. Merrill Lynch cut its near-term rating on the stock.
* Staples rose 5/8 to 21 7/8 and Office Depot sank 5 5/8 to 13 3/8 after the Federal Trade Commission voted to reject their proposed merger.
* Checkpoint Systems lost 2 5/8 to 10 1/8 and Ultrak fell 4 5/8 to 11 7/8 after the two makers of security systems canceled a $397-million merger agreement and projected lower-than-expected first-quarter earnings.
* Alex. Brown shares soared 8 1/2 to 53 1/8 as investors bet for a second straight day that the Baltimore brokerage firm will be taken over by Bankers Trust New York.
* Centocur rose 4 5/8 to 36 1/8 after the biotechnology company reported a breakthrough in late-stage trials of its drug for Crohn’s disease.
In the commodities markets, corn and soybeans plunged after a U.S. agriculture official said Taiwan, a major customer, will cut feed-grain purchases for its disease-ravaged hog herd.
Crude oil prices tumbled on expectations that rising global production and U.S. imports will more than offset a seasonal increase in domestic refinery demand.
May crude fell 35 cents to $19.12 a barrel on the New York Mercantile Exchange, the lowest since Feb. 23, 1996.
Overseas, Tokyo’s Nikkei stock average fell 1.5%, Frankfurt’s DAX index rose 0.9% and London’s FTSE-100 rose 0.5%.
Recent stock declines failed to unsettle most mutual fund investors. D2
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Finally, a Bounce
Technology stocks have rallied from Wednesday’s lows, helping to stabilize the market overall. Some of the tech stocks that have led the two-day rebound:
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52-week Wednesday Friday Stock high low close Cisco Systems $75.75 $47.00 $50.88 Dell Computer 76.00 67.63 74.25 Intel 165.00 136.50 145.00 Lucent Technologies 60.63 49.88 54.38 Remedy 55.75 36.63 47.63 Seagate Technology 56.25 45.88 50.63 Texas Instruments 87.25 74.63 83.00 Western Digital 77.25 58.38 64.63
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Source: Times Research
Market Roundup, D7
* JOBLESS RATE DROPS
Unemployment fell to 5.2%, upsetting inflation-skittish financial markets. A1
* CALM AFTER STORM
