Dow Up 111 as Techs Lead Broad Rally
Stocks on Thursday posted their biggest gains in two weeks as bargain hunters moved in, providing at least a temporary respite from the market’s recent slide.
Fueled in part by some strong economic data, the Dow Jones industrials leaped 111.99 points, or 1.3%, to 9,026.95, after slumping in six of the previous eight sessions.
More important, winners topped losers on both the New York Stock Exchange and on Nasdaq--halting two weeks of mostly negative “breadth,” meaning that more stocks had been falling than rising.
Advancing stocks led losers by nearly 2 to 1 on the NYSE and by a 22-to-18 margin on Nasdaq.
The Nasdaq composite index soared 38.09 points, or 2%, to 1,919.58, boosted by sharp gains in key technology stocks.
Analysts said the market was primed for a turnaround after the heavy selling that set in starting July 20--just after the Dow reached a record closing high of 9,337.97. The index still is off 311 points from that high.
“Market deterioration over the past couple of weeks reached an extremely oversold level,” said Scott Bleier, chief investment strategist at Prime Charter Ltd.
Concerns about slowing corporate earnings growth, which helped push stocks sharply lower in recent sessions, may have been partly allayed on Thursday after the government reported that American workers’ wages and benefits grew at a healthy pace in the second quarter.
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That suggests the U.S. economy remains on solid footing--which could lead to a rebound in corporate earnings once Asia’s economic crisis passes.
Stocks took their cue from the bond market, which rallied despite the wage and benefit data--suggesting that bond investors didn’t view the data as inflationary.
The yield on the bellwether 30-year Treasury bond dipped to 5.72% from 5.76% on Wednesday. A strong dollar also helped bonds: The dollar rose to 143.66 yen, up 1.31 yen.
“This is a relief rally that the [economic] data didn’t make anybody jump out of their seats,” said Jim Benning, a trader at BT Brokerage.
Meanwhile, some analysts warned that stocks’ near-term slide may not be over.
Smaller stocks--severely beaten up in recent months--did not rise nearly as much on Thursday as blue chips, a relative handful of which have helped hold up key indexes like the Dow since spring.
The Russell 2,000 index of smaller stocks rose 0.8% on Thursday, less than the Dow’s 1.3% rise.
The market’s strength will be tested today when the government gives its first report on the economy’s second-quarter performance, which is expected to slow markedly from the first quarter’s rapid 5.4% rate of growth.
Among Thursday’s highlights:
* Big-name technology shares led the latest about-face in a week of sudden market turns. Dell Computer rose $5.38 to close at $112.75, Intel jumped $3 to $87.63 and Microsoft rose $2.75 to $113.44.
Also, IBM soared $5.63 to a 52-week high of $133.38.
* In the ever-volatile Internet sector, Yahoo gained $9.13 to $182.69 and Lycos rose $8.31 to $60.
* Rambus surged $9.38 to $61.88 amid optimism that sales of its Direct Rambus memory-chip technology, which speeds up the memory chips used in personal computers, will boom.
* Drug stocks also rebounded. Merck rose $2.88 to $126.19 while Pfizer surged $3 to $112.13.
* Among major financial issues, Merrill Lynch soared $3.06 to $99.19 and NationsBank jumped $2 to $81.38.
* On the down side, Procter & Gamble, the top U.S. maker of consumer products, dropped $4.50 to $83.63 after warning that earnings in current quarter could be hurt by weakness in Asia as well as price competition.
Market Roundup, D6
