Dow Rises Out of Rut; Tech Stocks End Mixed
Blue-chip stocks rallied to snap a five-session losing streak Monday as bargain hunters stepped in and technology issues recovered some ground.
The Dow Jones industrial average ended the day with a gain of 84.29 points at 7,922.59.
Broad-market indexes were mixed, but well above early-morning levels. Bargain-hunting of technology stocks helped lift the Nasdaq composite index from a nearly a 21-point decline to finish almost unchanged, down 0.02 point at 1,536.56.
For weeks, uncertainty about the economic climate in Asia has plagued U.S. financial markets. Investors worry that stalled Asian growth may hurt profits of U.S. corporations that sell products or services in Asia or compete with products made there.
The Dow dropped nearly 311 points last week on Asian concerns.
But there were some encouraging developments to help soothe investors’ nerves Monday.
“It’s not as though we are completely over what is going in Asia. There still is a dark cloud over this market,” said Hugh Johnson, chief investment officer at First Albany Corp. “But for a moment, we started getting over the worry.”
Advancing issues outnumbered decliners 7 to 6 on the New York Stock Exchange in heavy trading.
The Standard & Poor’s 500-stock list was up 10 points at 963.39 and the NYSE composite index was up 4.12 points at 504.12.
Behind much of Monday’s gains was news that South Korea pledged to restructure its financial sector and open it to foreign investment.
The South Korean government indicated that it will sell at least one debt-ridden commercial bank to foreigners and planned to raise badly needed foreign currency by issuing state bonds overseas.
Also boosting stocks were hopes that Japan would soon announce a plan to aid its ailing financial system.
Although the Dow snapped a five-session losing streak, technology stocks tumbled at the outset after some Wall Street investment firms slashed earnings estimates and expected growth rates for personal computer companies and other makers of high-tech gear due to the economic problems in Asia, a key source of demand and supply for high-tech equipment.
“Anything that was technology was being sold with no regard to company fundamentals,” said Charles White, managing director of Avatar Associates.
But by the time dust settled, investors had made more careful choices, opting for semiconductor stocks and the largest technology stocks but mercilessly dumping personal computer stocks.
One reason behind the sell-off was a cut in PC growth rates by an analyst from SoundView, a boutique investment firm that specializes in technology stocks.
In the bond market, the price of the 30-year Treasury fell, raising its yield to 5.97% from 5.92% Friday.
Among Monday’s highlights:
* Bank and financial services companies with interests in Asia benefited from the fading worries. Citicorp rose $5.31 to $132.13, Chase Manhattan rose $1.19 at $112.25 and J.P. Morgan rose $2.69 at $119.75.
* Concerns, however, lingered in certain industries that depend greatly on Asian growth, especially tech stocks. PC maker Compaq Computer lost $1.81 to $54.50 and Dell Computer fell $4.81 to $83.44.
Meanwhile computer chip makers ended with gains, including Intel, up $1.63 to $72.13; Texas Instruments, up $1.63 to $42.50; IBM, up 50 cents to $100.88; and Applied Materials, up $1.94 to $28.06.
In currency trading, the dollar rose to a fresh 5 1/2-year high against the Japanese yen after a report from Japan’s central bank underscored deterioration in the business climate.
The dollar closed at 130.68 yen in New York, up from 130.45 late Friday. It also rose to 1.7765 German marks from 1.7745.
In commodities markets, gold for February delivery rose $1.70 to $284.50 an ounce at New York’s Commodity Exchange. January crude oil fell 4 cents to $18.17 at the New York Mercantile Exchange.
Overseas, Tokyo’s Nikkei stock average rose slightly, Frankfurt’s DAX index fell 0.6% and London’s FTSE-100 was up 1.5%.
