Broad Market Gains; Yields Climb Sharply
Technology and drug stocks rose sharply Monday, leading several market measures to new highs, but blue-chip shares pulled back as investors locked in some of last week’s record-setting gains.
Bond prices closed sharply lower.
The Dow Jones industrial average ended with a loss of 25.66 points after dipping 76 points, to close at 9,141.84. The index gained 90 points Friday, closing at a record 9,167.50.
Broad-market measures also reversed course late in Monday’s trading, with the Standard & Poor’s 500 index edging into record territory just before the close.
Nasdaq jumped to its second straight record high as bellwether technology shares rallied in advance of IBM’s first-quarter profit report. The computer maker’s latest results, released after Monday’s close, squeaked past analyst forecasts.
A rally in small Internet-related stocks and computer companies sent the Nasdaq composite index up 20.54 points to 1,887.14.
Drug stocks also posted big gains amid reports of an enthusiastic response to a new impotence pill introduced earlier this month by Pfizer, which surged $8.19 to $113.38.
Bonds prices pared some losses near the end of Monday’s session but still closed sharply lower as the specter of heavy corporate supply weighed on investors. Thin volume helped to exaggerate weakness, traders and analysts said.
Ford Motor Credit and General Motors are among those lined up to sell a total of about $11 billion in debt securities in coming days.
The yield on the benchmark 30-year Treasury bond, which moves in the opposite direction from price, rose to 5.93% from 5.87% on Friday.
Declining issues outnumbered advancers by an 8-7 margin on the New York Stock Exchange in fairly heavy trading.
The S&P; 500 rose 0.93 point to 1,123.65, but the NYSE composite index slipped 0.10 point to 584.01. Both measures closed at record highs Friday.
The Russell 2,000 index of smaller companies rose 1.80 points to a record 488.81.
Among Monday’s highlights:
* The Dow was weighed down by American Express, which fell $2.75 to $103.75, and J.P. Morgan, down $2.38 at $142.38.
* Computer-related issues are poised to rise today after IBM reported first-quarter earnings a penny above analysts’ estimates. IBM rose $3.56 to $111.19 in electronic trading after the report.
Microsoft gained $2.50 to a record $94.63, boosted by optimism that it will beat analysts’ earnings forecasts. Cisco Systems rose $1.81 to a record $72.25 after it agreed to work with Ciena, which was up $2.88 to $48.50, to develop new optical networks.
Nasdaq also got a boost from the sudden fervor for all things Internet. K-Tel International, which recently announced plans to sell its music products on the Web, surged $12.94 to $41.63. Netscape Communications rose $2.50 to $25.56 and Infoseek added $2.50 to $39.19.
* In addition to Pfizer, other drug stocks advancing included Eli Lilly, up $3.81 to $72.19 after a better-than-expected earnings report and evidence that its Evista drug may prevent breast cancer.
* Some bank stocks declined as bond prices sagged. Norwest fell 75 cents to $42.
In currency trading, the dollar fell against the German mark, pressured as the British pound tumbled against the mark and investors braced for the possibility of weak British economic data this week.
The dollar ended at 1.8010 marks, down from 1.8090 on Friday. It closed at 132.15 Japanese yen, up from 131.79 on Friday. The pound ended at $1.6757, off from $1.6845.
Overseas, Tokyo’s Nikkei stock average edged lower, Frankfurt’s DAX index surged 3.3% and London’s FTSE-100 rose 0.5%.
