Tech Stocks, Broad Market Bounce Back
Technology stocks rallied Thursday, embarking on another recovery bid, while the broad market reversed a recent trend by opening weak and finishing strong.
Bonds closed lower, and the dollar slipped against the mark as the impact of a British interest rate hike added strength to the German currency.
The Dow Jones industrial average erased an early 54-point loss and rose 66.76 points to 8,870.56, with most of the gain coming over the final two hours of trading.
Most broad-market indexes also bounced back from a morning stumble. The Nasdaq composite bucked the trend from the outset, as investors rummaged among popular technology names that have been slammed this week.
Intel, dogged by last Friday’s warning of delay in one of its new semiconductors, rose $2.25 at $68.19, and Dell Computer rose $4.25 to $84.50 to lead the Nasdaq advance.
Similarly, IBM rose $2.19 to $116.06 as the second-strongest Dow component after Merck, which jumped $3.13 to $115.69.
Before the late burst of buying, trading had been rather hesitant with a key economic report--the nation’s unemployment rate for May--due today and no resolution to the mounting uncertainty about how much and how long the Asian financial crisis will hurt American companies.
Friday morning’s reading on payroll and wage levels--two major forces behind inflation--may offer some key insight on whether the Federal Reserve might need to slow the economy with higher interest rates.
“I would think the market’s not out of the woods yet. There’s some unfinished business--mainly longer term--on the profit side,” said Charles Pradilla, chief investment strategist at Cowen & Co. With the market retreating steadily since the Dow’s record close at 9,211.84 points May 13, “it isn’t surprising to see a small rebound,” he said.
Despite Wall Street’s rally, bonds tumbled.
The key 30-year Treasury bond fell, with its yield rising to 5.81% from Wednesday’s close of 5.78%.
Advancing issues outnumbered decliners by nearly a 4-to-3 margin on the New York Stock Exchange, where composite volume totaled a modest 676.21 million shares, down from 691.45 million on Wednesday.
The Standard & Poor’s 500 rose 12.10 points to 1,094.83, and the Nasdaq composite index rose 27.64 points to 1,769.95.
The NYSE composite index rose 4.92 points to 566.35, and the American Stock Exchange composite index rose 4.98 points to 709.46.
The Russell 2,000 index of smaller companies rose 2.58 points to 451.74.
In the commodities market, crude oil prices rose after Saudi Arabia, Venezuela and Mexico announced further production cuts in an attempt to boost prices.
Oil futures rose as much as 5.1% as traders anticipated the announcement, then fell back when the 450,000-barrel-a-day cuts announced in Amsterdam were less than expected.
“It’s the minimum that they need to do the job,” said Ken Haley, manager of energy forecasting at Chevron Corp., the third-largest U.S.-based oil company. “The key question is will others go along with them. It certainly improves the prospect for balancing the market.”
Crude oil for July delivery rose 31 cents, or 2.1%, to $15.12 a barrel on the New York Mercantile Exchange, after reaching a one-month high of $15.57 earlier.
Meanwhile, in the currency market, the dollar slipped against the mark, pressured lower as traders sold the British pound for the German currency in a bet that a British interest rate hike would be the last for a while.
In late New York trading, the dollar was lower at 1.7675 marks from 1.7695 at the close on Wednesday. It was also down at 138.27 Japanese yen from 138.75.
The Bank of England raised its key lending rate by a quarter percentage point to 7.50% in a move that took markets by surprise.
In addition, the mark was bolstered by a report that the German economy grew 3.8% year-over-year in the first quarter, the highest annual rate of growth since the unification of East Germany and West Germany in 1990.
Market Roundup, D6
