Dow Gain Again Tops 100 Points; Other Indexes Back Near Records

The never-say-die bull market roared ahead again Wednesday, with the Dow Jones industrial average posting its third straight gain of better than 100 points--recouping all of what was lost in last Friday’s steep dive.

The Dow gained 103.13 points, or 1.3%, to 8,021.23, after surging 108.70 points on Monday and 114.74 points on Tuesday.

More important, the market’s rally was broad-based and pushed key indexes of smaller stocks to just under their record highs, while the Dow remains 3% below its record of 8,259.31.

Technology stocks were red-hot after a favorable earnings report from personal computer giant Dell Computer.

“It’s unbelievable,” said Bob Streed, a money manager at Northern Trust Co., which oversees about $130 billion. “Last Friday it looked pretty ugly. But at the first sign the world wasn’t coming to an end, the cash just poured in.”

The Dow tumbled 247.37 points, or 3.1%, on Friday--the biggest percentage decline since 1991--in a sell-off led by some of the blue-chip stocks that have powered the bull market’s advance since 1994.

On Wednesday, as in the previous session, tech stocks continued to shine, as investors hunted for companies expected to show strong earnings growth amid the U.S. economy’s healthy advance.

Tech stocks’ gains helped push the Nasdaq composite index, which includes many major tech issues, up 27.99 points, or 1.8%, to 1,628.70--leaving it just a hair’s breadth below its recent record 1,630.44.

Rising stocks outnumbered losers by more than 2 to 1 on the New York Stock Exchange and by 3 to 2 on Nasdaq in moderate trading.

Also, the Russell 2,000 index of smaller stocks rose 5.28 points, or 1.3%, to 419.07, just below its recent record of 420.73. Smaller stocks have been rising faster than many blue-chip stocks in recent months, as investors’ interest in lesser-known issues has broadened.

Still, the blue-chip Dow’s fast recovery demonstrates that “everybody’s [still] under the assumption that when the market falls, it’s a tremendous buying opportunity,” said Francis Curzio, president of FXC Investors Corp., which manages $46 million in New York. “You’ve got a lot of money coming into the market and you’ve got a lot of confidence.”

Indeed, a weekly consumer sentiment poll by Money magazine and ABC News shows that confidence among Americans is hovering near record-high levels. Of 1,033 people surveyed this week, a record 61% rated the economy positively, and 62% gave high marks to their personal finances.

Wednesday’s stock gains came despite a weak session in the bond market, where yields inched up. The bellwether 30-year Treasury bond yield ended at 6.54%, up from 6.51% on Tuesday.

But “the economic data is not particularly threatening” in the near term, thanks to the relative paucity of government indicators due over the next 10 days, said Henry Herrmann, investment chief at Waddell & Reed in Overland Park, Kan. “So there’s no reason for the bond market to have any kind of sell-off, and it seems safe [to buy stocks] for now.”

The Federal Reserve Board met on Tuesday and left short-term interest rates alone, as anticipated. The Fed is expected to wait for more economic data over the next month before deciding whether the economy’s pace is strong enough to merit tighter credit.

The dollar continued to strengthen Wednesday against European currencies after a recent sell-off. A stronger dollar bolsters the appeal of U.S. assets for foreigners. The dollar rose to 1.85 German marks in New York from 1.84 on Tuesday.

Among Wednesday’s highlights:

* Dell Computer’s shares jumped $3.19 to a record $87.88 after the company reported quarterly earnings 9% above expectations. The news boosted computer hardware makers in general. (Investor Spotlight, D10.)

“Investors like to extrapolate, and they assume what’s good for Dell is good for other computer companies,” said Bill O’Hearn, a money manager with McKinley Capital Management Inc. in Anchorage, which oversees $1.2 billion. “I agree. There’s huge demand for technology, and these companies deliver easy earnings.”

Other tech gainers included Intel, up $2.59 to $100.50; Compaq, up $4.25 to $65; Adobe Systems, up $2.25 to $43.44; Cisco Systems, up $2.63 to $78.38; and Western Digital, up $2.31 to $54.

* Many of the blue-chip consumer stock issues that had been beaten down in recent weeks on earnings growth worries continued to snap back.

Gillette, which helped trigger the Dow’s plunge Friday after warning about slightly lower-than-expected earnings gains in the second half of this year, rose $1.81 to $87.56.

Also, drug stocks rallied after a Morgan Stanley Dean Witter analyst raised his rating of Eli Lilly. Lilly jumped $6.25 to $112.50, boosting other drug issues, including Pfizer, up $2.69 to $55.88, and Bristol Myers, up $2.63 to $79.94.

The same analyst, Paul Brooke, warned earlier this month that the “honeymoon” between investors and drug stocks was over for the moment and that drug companies were likely to earn less than expected in the second half of the year.

* Many bank shares also were higher, including BancOne, up $1.69 to $56.69; BankBoston, up $1.75 to $85.44; and BankAmerica, up $2.81 to $70.44.

* On the downside, JB Oxford shares sank 50 cents to 84 cents in the wake of the FBI’s raid on the company’s Los Angeles office on Tuesday.