Tech Rally Lifts Dow and Nasdaq to New Highs

Broad-market indexes caught up to the streaking Dow industrials Wednesday, as technology stocks paced a strong rally amid relief over first-quarter earnings.

The Dow gained 52.07 points, or 0.6%, to a record 9,162.27, and the Nasdaq composite surged 20.23 points, or 1.1%, to a record 1,863.26.

The Nasdaq index’s new high was its first since April 3, when it hit 1,855.40.

Also hitting a new high for the first time in two weeks was the Russell 2,000 index of smaller stocks. It rose 0.5% to 487.12.

Winners topped losers by 16 to 14 on the New York Stock Exchange and by 24 to 19 on Nasdaq.

The advance cheered analysts, who noted that the market’s pattern this year has remained one of constant rotation among stock sectors--a sign that investors are reluctant to leave the party overall.

On Wednesday tech shares zoomed back to a leadership position, after Intel, Compaq Computer and Seagate Technologies--three industry bellwethers--reported depressed earnings, as expected, but also hinted that better growth lies ahead as excess computer inventories wind down.

Meanwhile, yields eased in the bond market. In economic news, the government said inventories of goods on shelves and back lots posted the biggest rise in five months in February, up 0.6% to a seasonally adjusted $1.05 trillion.

Some economists said the buildup was a sign that, in most industries, companies expect strong consumer demand to continue. A growing tide of cheap imports from Asia also was cited.

For Wall Street, the path of least resistance still is up, many analysts argue--despite the Dow’s 16% rise already this year.

Among Wednesday’s highlights:

* Tech shares rising included Compaq, up 69 cents to $26.75; IBM, up $3.50 to $109.75; Hewlett-Packard, up $2.81 to $63.75; Microsoft, up $2.94 to $91.38; Xylan, up $1.94 to $28.56; Cisco Systems, up $3 to $70.69; and Unisys, up $2.38 to $21.75 on a robust earnings report.

But Seagate fell $1.06 to $27.94 after soaring $4.19 on Tuesday. And Intel lost $1.13 to $74.88 after Merrill Lynch analyst Tom Kurlak reportedly warned that the stock could fall to $60 because of near-term earnings pressure.

* Retailers, market leaders this year, were strong again. Mercantile Stores jumped $3.19 to $71.25, Sears surged $2.81 to $58.63, Limited gained $2 to $31.38 and Dayton Hudson rose $1.94 to $86.88.

* Airline stocks rocketed after AMR, parent of American Airlines, reported strong earnings. AMR leaped $6.63 to $153.88, Delta gained $3.44 to $121.94 and US Airways rose $2.31 to $79.75.

* Industrial issues were mixed after surging on Tuesday. Weyerhaueser fell $1.81 to $60, but USX-U.S. Steel gained $2.06 to $42.75, Deere rose $1.13 to $62.13 and Alcoa jumped $2.50 to $78.50.

Meanwhile, many consumer growth stocks continued to suffer from profit-taking. Coca-Cola lost $1.13 to $76.19 on its earnings report. Drug stocks also were broadly lower, with Merck losing $1.50 to $123.50.

* Financial stocks were mixed after soaring early in the week on expectations of continuing merger activity. J.P. Morgan rose $1.38 to $138.69 and SunTrust Banks gained $1.19 to $80.38. But Chase Manhattan lost $2.69 to $140.06, Lehman Bros. dropped $1.81 to $81.63 and Charles Schwab slumped $3.44 to $36.50, the latter on a disappointing first-quarter earnings report.

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Market Roundup, D8