Blue Chips, Techs Lead Stock Rally
Stocks rebounded from last week’s heavy losses and ended higher Monday, but investors hoping for a break from Friday’s wild ride were hit with another day of volatility.
The Dow Jones industrial average rose 63.02 points to close at 7,819.31.
Stocks opened higher across the board Monday, with blue chips and technology shares leading the way. AT&T; led the gainers among the 30 stocks that compose the Dow Jones industrial average, gaining $2.63 to close at $63.94.
Analysts said investors were trying to rebuild from Friday, when the Dow fell 269 points before recovering two-thirds of its losses and closing down 90 points.
Also, said Tony Dwyer, chief equity strategist at Ladenburg Thalmann & Co., prolonged weakness in the technology-heavy Nasdaq Stock Market left investors ready to buy.
“Nasdaq is so oversold,” Dwyer said. “There’s so much negative sentiment that a rally was in order.”
The Nasdaq composite index, which posted the only gains Friday, closed 7.32 points higher at 1,532.06 after fading at midday. Overall, shares had given up most of their gains by midday as investors appeared to rethink their early exuberance and reacted instead to another rocky showing in Asia. Tokyo’s Nikkei stock average fell 3.4%, dropping below the 15,000-point mark for the first time since mid-1995.
Ultimately, most indexes rallied again to finish slightly higher. Analysts said U.S. investors are still weighing the impact of Asia’s financial crisis but may be ready to stop selling as heavily as they have in the last few weeks.
“I think most of the people who would have sold off their Asian holdings have already done so,” said Bob Dickey, managing director of technical analysis at Dain Bosworth in Minneapolis.
The retreat from Asian stocks has fueled a rally that continued Monday in the U.S. bond market, where yields on 30-year Treasury fell to 5.87%, the lowest level in more than four years. Treasuries are attractive in times of financial unrest because of their liquidity and security.
Among the casualties of the Asian turmoil are stocks of multinational companies based in the United States, whose future profits would be hurt by economic slowdowns in what had been a fast-growing market for U.S. goods and services. But analysts said investors now may be viewing those multinationals as newfound bargains.
“Technology is having a very nice bounce,” said Dickey. “I’m not sure if that’s the start of anything meaningful, but it looks very good right now.”
Intel, which rose $1.44 to close at $71.44, and Dell Computer, which gained $3.31 to $81.63, led the rally.
Advancing issues outnumbered decliners by a 5-4 margin on the New York Stock Exchange, where volume was at 534.56 million shares, below the 782.06 million shares that changed hands in the previous session. Friday was the second-busiest day in NYSE history.
Among Monday’s highlights:
* Retail stocks struggled amid continued reports of a weak-to-moderate Christmas season. Federated Department Stores lost $1 to close at $40.94, J.C. Penney fell $1.63 to $58.88 and May Department Stores lost $1.63 to close at $50.50.
* Merck rose $3.31 to $105.94 as the Food and Drug Administration cleared it to sell Propecia, the first prescription pill to treat male baldness.
In Europe, Frankfurt’s DAX index fell 1.0% and London’s FTSE-100 ended the day virtually unchanged, down 2 points.
The Bridge Commodity Research Bureau futures price index fell to its lowest level in almost 2 1/2 years, dragged down by sagging prices for everything from crude oil to copper to gold.
Demand for many raw materials slumped in recent months as the economies of key importers such as Japan, South Korea, Malaysia and other Asian nations slowed. A slide in consumption came as refineries, mines and farmers boosted output, flooding the market with fresh supplies, analysts said.
