Nasdaq at New High; Oil Falls on Iraq Deal
Big-name technology shares drove the Nasdaq market to its first new high in four months Monday, but with most stock measures already trading at record levels, the broad market posted a mixed performance.
Meanwhile, oil prices plunged to their lowest levels since March 1994, after U.N. Secretary-General Kofi Annan reached an agreement with Iraq on weapons inspections that could avoid another war in the oil-rich Persian Gulf.
On Wall Street the Nasdaq composite index, dominated by a technology group that suffered the heaviest damage in late October’s sell-off, jumped 23.63 points, or 1.4%, to a record 1,751.76. That topped the old record of 1,745.85 set Oct. 9.
But the blue-chip Dow Jones industrial average slipped 3.74 points to 8,410.20, weighed down by declines in energy stocks.
Most broader stock measures rose modestly, but enough for the Standard & Poor’s 500 index to set a record high for the 10th time in 15 sessions. It gained 3.93 points to 1,038.14.
The day belonged to Nasdaq, however, as buyers continued to pour back into major tech names.
“The bears were wrong; the bears had jumped to the conclusion that somehow Asia was going to bring the technology sector to its knees,” said Joseph McAlinden, chief investment officer at Dean Witter InterCapital Inc.
Instead, he noted, many tech companies will be helped because they can buy components more cheaply in Asia, he said.
Meanwhile, U.S. bond yields continued to edge higher as investors fretted that Federal Reserve Board Chairman Alan Greenspan, who testifies to Congress today, may suggest that Asia’s slowdown won’t have a big impact on the U.S. economy.
“I wouldn’t take any big bets on Treasuries before” Greenspan’s remarks, said Jack Ablin, who oversees $7 billion in bonds at Barnett Capital Advisors in Jacksonville, Fla. The Fed chairman may indicate “the Asian situation is not going to pare our economy as much as he originally thought,” Ablin said.
The yield on the benchmark 30-year Treasury bond rose to 5.90% on Monday, the highest in almost two weeks. It was at 5.87% on Friday.
Analysts said they weren’t surprised that markets weren’t bolstered more by news that U.N. Secretary-General Annan may have averted a U.S.-led military strike on Iraq by securing an agreement from Saddam Hussein to give weapons inspectors unlimited access to his palaces.
“When dealing with Saddam Hussein, there’s always a degree of uncertainty and very few Wall Streeters understand the complete nature of the tentative agreement,” said Alan Ackerman, market analyst at Fahnestock & Co.
In the stock market overall winners topped losers by 15 to 14 on the NYSE and by 23 to 20 on Nasdaq.
Smaller stocks looked better than blue chips: The Russell 2,000 index of smaller companies rose 2.30 points, or 0.5%, to 456.29.
Despite the small decline in the Dow and the marginal buying outside the technology group, analysts remained encouraged by the market’s resilience.
“It’s as simple as the market digesting the phenomenal gains it’s had from January to present. The market’s doing a great job, they can barely sell it off,” said Ralph Bloch, chief market analyst at Raymond James & Associates of St. Petersburg, Fla., calling the Nasdaq record a key development.
Meanwhile, in commodities trading, near-term crude oil futures on the New York Mercantile Exchange sank 87 cents to $15.37 a barrel, the lowest since March 1994, on news of the U.N.-brokered deal with Iraq.
The agreement follows a unanimous vote Friday by the U.N. Security Council approving a resolution allowing Iraq to export $5.2 billion worth of oil over a six-month period, more than double the previous $2 billion limit.
That’s expected to boost Iraqi oil exports by about 800,000 barrels a day, raising the already glutted world supply by about 1%.
Among Monday’s highlights:
* Nasdaq was buoyed by its bellwethers. Microsoft surged $4.06 to $81.63 on its first day of trading after a 2-for-1 stock split, while Dell Computer rose $4.63 to $130.94, Intel gained $2.38 to $94.19 and Autodesk shot up $1.56 to $43.81.
Also, Qualcomm rose $4.75 to $51.38 after the maker of wireless-phone equipment said it will be supplying $240 million in wireless phones to AirTouch Cellular.
* The potential impact of Iraq selling its oil in an oversaturated market hit big oil producers. Chevron fell $2.19 to $77 and Exxon fell $1.81 to $62.50 as two of the Dow’s weakest components.
Likewise, oil-field service stocks plummeted. Schlumberger dropped $2.44 to $72.06. Smith International fell $2.38 to $48.88.
* On the plus side, transportation stocks rose on expectations that jet-fuel prices will follow crude oil lower. UAL, parent of United Airlines, jumped $3.75 to $89, Alaska Air Group gained $3.63 to $55.88 and Southwest rose $1.19 to $28.94.
* Home Depot rose $1.56 to $68.56 as the home-improvement retailer was expected to report better-than-expected fourth-quarter results today.
* Major drug stocks surged, led by Merck, which rose $5.94 to $130.63 on a key drug approval. But the group could be hit today by news late Monday that merger talks between SmithKline and Glaxo collapsed.
In currency trading the dollar fell sharply against European currencies on the news out of Iraq.
The dollar fell to 1.80 German marks from 1.82 marks late Friday.
In foreign stock trading the South Korean market continued to rebound, with the benchmark index up 4% to 543.06.
Taiwan’s market also was higher, adding 1.2%.
But in Tokyo the Nikkei-225 share index fell 0.9% to a one-month low after the Japanese government said it wouldn’t respond immediately to pressure from the Group of Seven industrialized nations to bolster its economy.
Early today the Nikkei continued to sink, losing 1.6% to 16,344.
Market Roundup, D14
