Blue Chips Rally With Net Issues
Blue-chip stocks rose to record highs Monday, though Internet-related stocks again stole the show.
Meanwhile, long-term Treasury bond yields fell to their lowest levels since June 15, matching the historic low set that day.
On Wall Street, the Dow Jones industrials gained 66.51 points, or 0.7%, to 9,091.77, the highest close since May 22. That left the Dow just 120 points from its record close of 9,211.84 set May 13.
Meanwhile, the Standard & Poor’s 500 index continued its winning ways, gaining nearly 1% to 1,157.33, its fifth record close in eight sessions.
Winners topped losers by 17 to 13 on the New York Stock Exchange, while losers had a modest edge on Nasdaq. The S&P; small-cap index gained just 0.3%.
The bond market set a good tone for stocks, as the the 30-year Treasury bond yield fell to 5.57% from 5.6% on Friday. At 5.57%, long-term government bond yields haven’t been this low in more than 20 years.
The bond market was bolstered as Japanese stocks fell about 1% on Monday, reflecting disappointment as Japan’s government appeared to back away from the idea of tax cuts to stimulate domestic demand.
The dollar, however, was mixed.
In the stock market, blue-chip growth issues continued to attract institutional investors, as worries about near-term earnings reports fade, analysts said.
“What we are seeing today is some buildup in anticipation of some good earnings coming forward,” said Robert Froehlich, investment strategist at Scudder Kemper.
But the Internet was the favored hunting ground of many smaller investors Monday, as many Net-related issues rocketed to new highs--reminiscent of the late-April surge in other Net stocks.
That April surge, however, coincided with the peak of the market for smaller stocks in general, some analysts noted. The Russell 2,000 index of smaller stocks peaked April 21 and is still struggling to regain that high.
Among Monday’s highlights:
* Among more established Net-related stocks, America Online rose $2.94 to $113.25 and Excite jumped $8.06 to $107, while Yahoo soared $26.38 to $199.25.
* In the blue-chip growth sector, McDonald’s rose $2.50 to $73.50, Merck surged $2.13 to $134.88, Gillette gained $1.81 to $60.63 and Lucent soared $3.88 to $86.38.
* On the downside, oil-related shares fell as crude oil prices headed lower again. Baker Hughes fell $1.31 to $33.44. Chevron lost 50 cents to $84.63.
* Airline stocks rallied as oil fell. AMR, parent of American, zoomed $3 to $87.38. Delta jumped $3.31 to $134.69.
* Proffitt’s tumbled $4 to $36.69 after it agreed to buy luxury retailer Saks Holdings for more than $2 billion in stock. Proffitt’s, the fourth-largest U.S. department store chain, would exchange shares worth $33.36 for each Saks share. Saks rose 44 cents to $29.44.
Other retailing stocks were generally higher, including Sears, up $1.38 to $63.44, and Dayton Hudson, up $1.88 to $52.25.
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Market Roundup, D14
