Stocks Gain as Bond Yields Approach Lows

Key blue-chip stock indexes rose closer to their record highs on Wednesday as long-term government bond yields edged down toward the 6% mark.

Meanwhile, technology stocks--beaten up on Tuesday over near-term earnings concerns--had a mixed session.

In other markets, the dollar suffered its biggest decline in a month against the German mark, and depressed gold and copper prices continued to fall.

On Wall Street, the Dow Jones industrials gained 13.18 points to 8,032.01, boosted by a late rally.

Broader market indexes also were modestly higher, with the Nasdaq composite adding 8.76 points to 1,615.13.

But the Nasdaq market overall remained weak, with losers outnumbering winners by 23 to 20.

Indeed, since the Oct. 27 market plunge--when the Dow lost 554 points--Wall Street’s recovery has been largely a blue-chip affair.

The blue-chip Standard & Poor’s 500 index has gained 11.4% since Oct. 27, and at 976.77 points at Wednesday’s close is just a 0.7% rise from topping its all-time high of 983.12 set on Oct. 7.

By contrast, the Russell 2,000 index of smaller stocks has risen just 3.2% since Oct. 27 and remains 6.8% below its all-time high set on Oct. 13.

Stocks were helped Wednesday by another rally in bonds, which sent the yield on the bellwether 30-year Treasury bond down to 6.01% from 6.03% Tuesday.

The T-bond yield now is the lowest in nearly two years.

Investors apparently were happy with Federal Reserve Board Chairman Alan Greenspan’s speech on Tuesday evening.

The Fed chief focused mostly on Asia’s economic turmoil, and didn’t say much new, traders said. Still, there was relief that he did not give any of his frequently adamant warnings about the Fed’s need to be vigilant about inflation--which can be a veiled warning about a potential credit-tightening move.

“It’s not anything what Greenspan said--it’s what he didn’t say,” said Patrick Dimick, bond analyst at UBS Securities. “There was some relief that his speech was so nonthreatening to the Treasury market.”

The 30-year T-bond yield “can go to 5.75%,” said Joseph Bench, who manages $1.5 billion of bonds at Capstone Asset Management in White Plains, N.Y.

On Wall Street, technology stocks opened lower after Tuesday’s heavy losses, then rebounded later in the session.

The sector was pounded on Tuesday after several companies, including Altera, Western Digital and Cabletron Systems warned of weaker near-term earnings growth, in part because of slower demand for their products.

Tech stocks have been one of the market’s weakest sectors in recent weeks. The Morgan Stanley high-tech share index has fallen 4% since Nov. 5.

Still, whatever negative sentiment is infecting tech stocks hasn’t spread to major blue chips, which many investors continue to view as “safe haven” issues given the uncertainties over the market in the near term.

Among Wednesday’s highlights:

* Financial stocks led the Dow higher, with American Express up $2.06 to $85 and Travelers up $1.63 to a record $56.50.

* Oil-related stocks continued to rebound as crude oil prices stabilized. Exxon rose $1.25 to $62.44, Halliburton gained $2.13 to $54.50 and Western Atlas jumped $4.13 to $71.50.

* Telephone stocks were boosted in part by news reports that AT&T; might want to restart merger talks with Baby Bell SBC Communications. AT&T; gained 81 cents to $57.13 and SBC surged $2.50 to $74.94.

Other winners included GTE, up $1.56 to $50.81, and Ameritech, up $3 to $80.06.

* Merck surged $3.38 to $98 after the drug giant gave a bullish profit outlook for the next five years.

* In the tech sector, Microsoft gained $2.44 to $144.69, Dell rose $3.38 to $91.69 and Texas Instruments inched up 25 cents to $46.75.

But Altera fell further, losing $2.19 to $38.56. Cabletron slipped 75 cents to $14.94 and Western Digital lost 19 cents to $19.19.

The dollar’s decline from 1.777 German marks to 1.772 came after a Bundesbank council member, Ernst Welteke, suggested the central bank may sell dollars to boost the German currency. Also, Germany reported that its industrial output rose 1.8% in October, ending two months of declines.

But the dollar inched up versus the Japanese yen.

In commodities trading, gold slipped to a new 12-year low of $292.60 after Argentina announced that it sold 124 tons of the metal.

Copper sank to a four-year low as Asian demand continued to sag.

Market Roundup, D9