Smaller Stocks Chase Dow; Treasury Auction Begins
Smaller stocks lagged the Dow industrials’ big gain Tuesday but still turned in a respectable performance as they play catch-up with surging blue chips.
The Russell 2,000 index of smaller shares rose 3.91 points, or 0.9%, to 451.19, trailing the Dow industrials’ 115.09-point, 1.4% jump to a record 8,295.61.
Still, the Russell index’s rise beat the 0.8% advance of the broader blue-chip Standard & Poor’s 500 index, which closed at a record 1,019.01.
Overall, Monday’s market advance was formidable, with winners topping losers by 18 to 10 on the New York Stock Exchange and by 24 to 18 on Nasdaq.
In the bond market, meanwhile, yields were stable or slightly lower as expectations for a balanced federal budget this year--and thus lower government borrowing--helped spur demand at the Treasury’s sale of $13 billion in three-year notes.
“With the deficit coming down, it means we’ll see pretty small net borrowing,” said Donald Ross, director of fixed income at National City Corp. in Cleveland. “That’s pretty bullish for bonds.”
The Treasury sold new three-year notes at an average yield of 5.41%, meeting expectations. Demand topped the average at the last 10 three-year note sales, based on the number of bids received for the notes.
The Treasury will round out its quarterly debt auctions with a sale of $12 billion in 10-year notes today and of $10 billion in 30-year bonds Thursday.
The yield on the existing 30-year T-bond eased to 5.92% on Tuesday from 5.94% on Monday.
Among Tuesday’s stock highlights:
* Tech issues were strong, with IBM up $2.88 to $100.88, Dell up $2.75 to $110.88, Hewlett-Packard up $2.06 to $63.38 and Computer Sciences up $3.69 to $92.19.
* Culligan Water Technologies soared $15.13 to $54 after it agreed to be acquired by U.S. Filter for about $60 a share. U.S. Filter fell $3 to $31.56.
* Biotech stocks helped boost Nasdaq. Amgen jumped $2.13 to $55.06, Biogen gained $2.06 to $43.50 and Immunex surged $4.63 to $65.50.
* Drugstore chain Duane Reade rocketed $5.06 to $21.56 on its first day of trading.
Market Roundup, D12
* MAIN STORY: A1
