Techs Lead Nasdaq Up 37 Points to Record High
Some old-favorite tech stocks led Wall Street mostly higher on Monday and pushed the Nasdaq composite index to a record close.
Heavy buying of names such as Microsoft, Intel and Ascend Communications drove the Nasdaq index up 37.48 points, or 1.9%, to a record 2,040.64--eclipsing the previous peak of 2,016.44 set Nov. 27.
Blue chips also advanced, with the Dow Jones industrials gaining 54.33 points, or 0.6%, to 9,070.47. But the Dow index remains off 3.2% from its peak of 9,374.27 reached on Nov. 23.
In the broad market winners topped losers by 17 to 13 on the New York Stock Exchange, while losers had a small edge on Nasdaq.
The Russell 2,000 index of smaller stocks rose 0.7%.
While the Internet stock craze has dominated Nasdaq action in recent weeks, buyers turned hungry on Monday for more established tech companies.
“You’re seeing a return to leadership among large technology firms,” said Eric Wiegand, a money manager in Philadelphia who helps manage $50 billion for First Union. “There is good consumer demand out there [for computers], and there isn’t a lot of inventory.”
Indeed, Compaq Computer jumped $3 to a record $41.69, topping the old peak of $39.75 set in 1997, as 30 million shares changed hands on the NYSE.
Analysts expect Compaq’s earnings to almost quadruple in 1999, according to First Call. A glut of personal computers pushed prices down earlier this year and depressed Compaq’s earnings--making it easier for the company to post big percentage gains in profit next year.
Credit Suisse First Boston analyst Michael Kwatinetz said personal computer sales were strong during Thanksgiving week, and next year looks bright also. On Monday he raised his 1999 earnings forecast for Compaq to $1.75 a share from $1.70.
Stocks in general may have been helped Monday by new signs of economic strength, as the Federal Reserve reported sharp growth in consumer credit in October.
That data put upward pressure on short-term Treasury security yields, but longer-term yields were largely flat.
Strong gains in many Asian markets set a good tone for Wall Street. The Hong Kong market jumped 4.7% to 10,428 points in the wake of interest rate cuts by major Hong Kong banks. Also, China’s central bank on Sunday trimmed key rates by an average of a half-point.
Brazil’s battered market also rebounded, gaining 4.2%.
Among Monday’s highlights:
* The tech rally extended to all areas of the computer business. Microsoft surged $6.19 to a record $133.56 after South Carolina dropped out of the antitrust case against the company.
Chip giant Intel rose $2.63 to a record $118.94. IBM gained $2.94 to $167.19.
* Computer networkers and telecom-equipment suppliers also were hot. Ascend soared $6.88 to $63.94, its highest close in almost two years. Other winners included Cisco Systems, up $1.94 to $80.19; Tellabs, up $5.44 to $65.56; and Lucent, up $4.25 to $100.
Lucent on Friday said demand for its products is strong and that all of its major plants are running at capacity.
* Oxford Health Plans leaped $3.19 to $14.88 as analysts said the health maintenance organization’s new management has been able to hold on to more members than expected while raising premiums.
Other HMOs rising included United Healthcare, up $1.19 to $47.94; Wellpoint, up $1.94 to $86.44; and Humana, up $1.31 to $20.94.
* Mylan Laboratories, the world’s second-largest maker of generic drugs, slumped $2.44 to $31.94. Antitrust enforcers are preparing to sue Mylan for raising its prices after attempting to corner the market on raw materials used to make the drugs, said people familiar with the case.
* Maxxam, a lumber and metals company, rocketed $7.38 to $56.75. The stock may be undervalued given its unprecedented agreement with the federal government to stop logging in some areas, and one money manager believes it’s worth at least $122 a share, Barron’s magazine reported.
Market Roundup, C13
