Tech Stocks Rally; Dow Reverses for Slight Gain
Technology stocks rallied to lead a blue-chip rebound Tuesday, with the profit-taking behind Monday’s sell-off reversing just as the Dow slipped below 9,000.
The Dow Jones industrial average initially extended Monday’s 216-point plunge by 128 points, but reversed course by midday and finished 16.99 points higher at 9,133.54. The rebound lifted most popular indexes into positive territory, but declining issues still outnumbered advancers by a small margin at the closing bell.
The Nasdaq composite index surged 54.21 points, or 2.8%, to 2,003.75, taking back most of Monday’s nearly 67-point loss.
While a spurt of merger activity helped fuel last week’s buying, a mood change was apparent Monday as investors sold amid news of a $10.1-billion takeover of Bankers Trust by Deutsche Bank, and again early Tuesday amid news of a $75.3-billion purchase of Mobil by Exxon.
The decision to take some profits, analysts said, wasn’t surprising for a market that had been rallying almost nonstop since early October. The Dow’s slide Monday was the first of more than 100 points in one session since Oct. 1.
“With the huge move we had off bottom, the market was ripe for a small correction,” said Charles White, portfolio manager at Avatar Associates, cautioning that the market still faces “the question of whether it will be able to hold its gains while concerns about company earnings and world economies persist.”
In Tuesday’s trading, declining issues outnumbered advancers by a slim margin on the New York Stock Exchange, while Nasdaq decliners led by a 5-4 ratio. NYSE volume was heavy.
The S&P; 500 rose 11.65 points to 1,175.28, and the NYSE composite index rose 1.83 points to 573.33. The Russell 2,000 index of smaller companies rose 0.99 point to 398.74, and the American Stock Exchange composite index fell 0.58 point to 663.
U.S. bond prices rose for a fifth straight session, driving 30-year yields to near six-week lows amid optimism that falling oil prices will curb inflation.
The benchmark 30-year bond yield fell to 5.04%, the lowest since Oct. 19, from 5.06% on Monday. Yields on two-year notes, among the most actively traded Treasuries, fell 0.07 percentage point to 4.44%.
The dollar fell for a second day against the German mark as traders scaled back expectations for lower interest rates in Europe. The dollar fell to 1.68 marks from 1.69 on Monday in New York. It dropped for the first time in eight days against the Japanese yen, to 122.17 from 123.26.
Among Tuesday’s highlights:
* Several leading technology names rallied back from Monday’s selling. IBM rose $4.75 to $169.88 as the Dow’s biggest gainer. In Nasdaq trading, Dell Computer climbed $4 to $64.81, Microsoft jumped $7.50 to $129.50, and Intel advanced $7.38 to $115.
* Exxon fell $3.38 to $71.63, and Mobil sank $2.25 to $83.75 as the companies finalized their merger talks, with Exxon agreeing to buy Mobil for stock valued at $94.56 a share.
* WavePhore vaulted $7.50 to $15.25, Platinum Entertainment surged $2.47 to $8.88, and Bluefly jumped $6.13 to $20.94, as the search for undiscovered Internet stocks continued. WavePhore, a data broadcasting company, announced the launch of an electronic commerce channel; Platinum reported that traffic to its music Web site rose from 13,500 visitors in October to 1.5 million in November; Bluefly launched a co-branded version of its online store with Yahoo.
* Western Digital shares soared $4.81, or 37%, to $17.88 after the company’s chairman told investors at a conference that the outlook for its products was improving. Other disk drive makers also rose, with No. 1 Seagate Technology climbing $2.25 to $31.75, and Quantum gaining $1.75 to $23.88.
Overseas, Japan’s Nikkei stock average fell 0.3%, Germany’s DAX index dropped 4.8% and Britain’s FTSE-100 lost 3.6%.
Market Roundup, C9
