Techs Power Nasdaq to 8th Record Close
Big-name computer stocks on Monday drove the Nasdaq market to a record close for the eighth straight session, but the broad market ended nearly unchanged after an early foray toward new highs.
Thirty-year Treasury bonds drifted lower, while the dollar surged to a new six-year high against the German mark.
The Dow Jones industrial average rose 1.16 points to close at 7,922.98 after it erased a 61-point deficit over the last half-hour of trading.
The technology-rich Nasdaq composite index rose 21.26 points to finish at 1,523.88, giving it an eight-session gain of 85 points, or nearly 6%. Tech stocks face a critical series of earnings-related tests this week, with reports due from industry bellwether companies Intel and Microsoft.
Intel warned in late May that its second-quarter earnings would fall short of earlier forecasts because of product transition issues. Investors have apparently decided the worst is already passed, analysts said.
“Right now, the market is certainly telling us it expects good news,” said Guy Truicko, portfolio manager at Unity Management.
Intel, which reports quarterly results today, gained $183 to close at $78.75. Microsoft, which reports on its second-quarter profit Thursday, jumped $5.88 to finish at $135.63. Dell Computer rose $4.75 to close at $142.75 on top of Friday’s 9-point surge to lead Monday’s Nasdaq advance.
On the New York Stock Exchange, meanwhile, Hewlett-Packard rose $4.06 to close at $65.06 as the Dow’s biggest gainer, and Compaq Computer rose $4.38 to end at $128.25.
Bill Meehan, market analyst at Prudential Securities, said Compaq’s robust earnings report last week bolstered confidence that technology profits can continue to grow.
“If you listen to what Compaq had to say, they had a great quarter. But more importantly, they’re reinventing their business,” Meehan said. “We believe that they can cut prices pretty dramatically, pick up market share and improve margins.”
At the same time tech stocks have shot higher, the Dow has stalled a bit, remaining stuck just below the 8,000-point mark since closing at 7,895.81 on July 3.
Although analysts are not expecting a stiff blue-chip correction, they say the milestone may remain elusive for a while longer, as investors flock to the once-again favored technology group.
Broad-market measures finished mixed after surrendering early gains and then rebounding into the close, extending a recent pattern.
However, outside the technology sector there were few themes for investors to play on with no major economic data or earnings reports released.
There was mild trepidation that today’s reading on July retail sales will reveal an inflationary spurt in economic activity. The markets have rallied since mid-April amid signs that the economy slowed enough in the second quarter to ease pricing pressures without a boost in interest rates by the Federal Reserve Board.
Advancing issues outnumbered decliners by a small margin on the NYSE in moderate trading.
The Standard & Poor’s 500-stock list rose 1.70 points to close at 918.38, and the NYSE composite index slipped 0.01 point to close at 478.11. Both measures retreated from morning gains that would have set new highs.
The Russell 2,000 index of small stocks rose 1.59 points to close at 403.85, its third record in a row and fourth in five sessions.
The price of the benchmark 30-year Treasury bond fell slightly, pushing its yield to 6.55% from 6.52% Friday.
The dollar rocketed to about 1.80 marks, before ending the day at 1.7965 marks, up from 1.7773 late Friday. But it edged lower to 113.96 Japanese yen from 114.02.
Financial stocks were among the Dow’s weakest issues, retreating as interest rates edged higher in the bond market from Friday’s seven-month low. J.P. Morgan fell $1.13 to $107.63, American Express fell $1.13 to $78.75 and Travelers Group fell $1 to $65.19.
Overseas, Tokyo’s Nikkei stock average rose 1.8%, Frankfurt’s DAX index rose 2.1% and London’s FTSE-100 rose 1.2% to a new high.
