Nasdaq Zooms to 8th Record; Dow is Flat
Big-name computer stocks on Monday drove the Nasdaq market to a record close for the eighth straight session, while blue chips closed mostly unchanged.
Elsewhere, Treasury bond yields were up modestly, while the dollar surged to a six-year high against the German mark.
On Wall Street, the technology-rich Nasdaq composite index leaped 21.26 points, or 1.2%, to finish at 1,523.88, giving it an eight-session gain of nearly 6%.
Smaller stocks in general were strong, taking the market leadership position from blue chips once again.
The Russell 2,000 index of smaller shares rose 1.59 points, or 0.4%, to a record 403.85.
Meanwhile, the Dow Jones industrial average inched up just 1.16 points to close at 7,922.98, after it erased a 61-point deficit over the last half-hour of trading.
Investors who expect personal computer price cuts to fuel sales in the second half of the year are pushing up shares in the largest computer-related companies, portfolio managers said.
Earnings “are going to be better than expected; that’s what the prices are telling you,” said Christy Wood, who manages the $600-million Westcore Midco Fund.
Monday’s tech rally was led by Compaq, up $4.38 to a record $128.25, and Microsoft, up $6.19 to a record $135.94.
Computer chip giant Intel, which reports quarterly results today, gained $1.88 to close at $78.75.
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.
On the New York Stock Exchange, meanwhile, Hewlett-Packard rose $4.06 to $65.06 as the Dow’s biggest gainer.
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.”
Outside the technology sector, there were few themes for investors to play on Monday, 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.
But bond yields were up only marginally Monday. The 30-year Treasury bond yield finished at 6.55%, up from 6.52% on Friday.
The dollar, meanwhile, rocketed to about German 1.80 marks before ending the day at 1.794, up from 1.777 on Friday.
The dollar is gaining on concerns about European monetary union. (Investor Spotlight, D20.)
Among Monday’s highlights:
* Financial stocks were among the Dow’s weakest issues. 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.
* DuPont fell 94 cents to $62.31 after the company agreed to buy bulk-chemicals businesses from Imperial Chemical Industries of Britain for about $3 billion. Merrill Lynch & Co. lowered its 1998 earnings estimates on DuPont.
* MCI Communications rose $2.56 to $37.56, recouping some of the 17% drop Friday, when the company warned profit will be hurt by the expense of trying to break into local telephone markets.
* HCIA plummeted $16.38 to $15.63. It said it expects a second-quarter loss of 15 to 18 cents a share. Analysts had expected the health-care information systems company to turn a profit.
In foreign trading, profit-takers hit Latin American markets, while German shares soared as the mark weakened.
Market Roundup, D16
