Big Names Lead U.S. Rally; Russian Shares Sink Again
Another rally in big-name stocks drove key U.S. indexes to record highs Wednesday, while the broader market rose more modestly in average trading.
Today, recently red-hot Internet-related stocks may be poised to rocket again, after a stronger-than-expected earnings report from Internet search vehicle Yahoo late Wednesday.
On Wall Street, the Nasdaq composite index rose 27.28 points, or 1.4%, to a record 1,935.39 on Wednesday, the first record close since April 22.
The Standard & Poor’s 500 index also hit a new high, gaining 11.72 points, or 1%, to 1,166.38.
The Dow industrials also were strong, rising 89.93 points, or 1%, to 9,174.97, closing in on the record high of 9,211.84 set May 13.
“There’s such momentum in the market right now,” said Jeffrey Davis, chief investment strategist at State Street Global Advisors, which oversees $458 billion.
Wall Street was able to shake off another decline in the Russian stock market, which fell 2.6% on Wednesday as interest rates soared.
The Russian Finance Ministry managed to raise only about $1.6 billion at Wednesday’s auction of government notes, against redemptions of $6.2 billion maturing this week. Demand was restrained even as yields jumped to 114%.
Russia is seeking financial assistance from the International Monetary Fund to overcome a cash crunch that some analysts worry could trigger a devaluation of the ruble--jarring global financial markets again.
Responding in part to those jitters, the dollar rallied against the Japanese yen Wednesday, rising 0.52 yen to 139.27 in New York. Analysts also cited disappointment with Japan’s lack of specifics regarding potential tax cuts.
In the U.S. stock market, buyers of blue-chip stocks seemed unperturbed by foreign concerns. Major tech issues shined, pushing the Nasdaq index to its new high.
Microsoft, for example, jumped $1.94 to $109.88, nearing its recent record of $110.13. And Intel surged $3.19 to $78.31 after Morgan Stanley, Dean Witter, Discover & Co. analyst Mark Edelstone reiterated his “strong buy” rating on the No. 1 computer chip maker and said its business will see a rebound in the second half of the year.
For the market overall, as second-quarter earnings-reporting season begins, “the consensus is that the worst of the bad news about the quarter is behind us, so it looks like clear sailing for the time being,” said Michael Metz, managing director at CIBC Oppenheimer.
While big-name stocks rose Wednesday, however, many smaller issues continued to languish. The Russell 2,000 index of smaller stocks edged up just 0.2% to 459.97.
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Moreover, several companies provided reminders that fears about weaker earnings growth--in part because of Asia’s economic crisis--are justified.
Troubled Motorola, which on Wednesday surprised analysts by reporting a small profit, still warned that Asia’s crisis will keep hurting the company’s business “for at least the remainder of the year.” Motorola slid $2.81 to $52.19.
And Hershey Foods slumped $3.75 to $66.75 after warning that second-quarter earnings won’t meet expectations, in part because of weaker Asian sales.
In other trading Wednesday, bond yields continued to seesaw, as the 30-year Treasury bond yield edged back up to 5.63% from 5.6% on Tuesday.
Among Wednesday’s highlights:
* Tech stocks advancing included Hewlett-Packard, up $2.56 to $60.94; IBM, up $1.13 to $115; Apple Computer, up $2.06 to $32.56; Sun Microsystems, up $2.56 to $45.50; and Vitesse Semiconductor, up $3 to $33.
* Some analysts speculated that money was flowing out of Internet-related issues and into the bigger tech names. Internet search vehicles hit by profit-taking included Lycos, down $7.50 to $77.50; Yahoo, down $4.81 to $186.19; and Excite, off $4.88 to $91.38.
But Yahoo’s surprising earnings report after the market closed sent many of those stocks sharply higher in after-hours trading, suggesting they could rally again today.
* GM soared $3.38 to $73.19 on optimism that strikes against it by the United Auto Workers may be settled soon. Chrysler also rose, gaining 38 cents to a record $58.63 as shares of Daimler-Benz, which plans to merge with Chrysler, gained in German trading.
* Financial issues were strong, led by Travelers, up $4.69 to $69.25, and Citicorp, up $11.38 to $171.88, after a Merrill Lynch analyst issued a bullish report on those two companies’ planned merger.
Among other financial issues, NationsBank jumped $2.75 to $87, BancOne leaped $2.13 to $59.13, J.P. Morgan added $2.56 to $125.25 and Golden West Financial rose $2.94 to $110.13.
* Among Southland issues, Walt Disney got a Tina Brown bounce, up $1.75 to $108.31. Disney’s Miramax Films unit said it’s forming a new venture with Brown, who will depart as editor of the New Yorker, to publish a new monthly magazine and produce films and television programs.
* Allergan rose $1.56 to $49 after the Irvine-based optical supplies company said it had better-than-expected worldwide revenue in the second quarter on strong sales of pharmaceutical products. The company also said it has signed agreements with Santen Pharmaceutical, giving the Japanese company exclusive distribution rights for its brimonidine in Japan.
* Pasadena-based Gemstar fell $2.38 to $41.25 after saying it would review an unwelcome takeover bid.
* Fremont, Calif.-based Cardima rocketed $6.41 to $8.97 as the medical instruments company received clearance from the Food and Drug Administration to market its Vueport guiding catheter, used in heart X-rays.
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Market Roundup, D6
