Major Tech Stocks Rally; Dow Ends Down Slightly

Big-name technology shares rallied Monday as portfolio managers began sprucing up for mid-year shareholder reports, but other blue chips struggled after a summit on the Asian financial crisis proved disappointing.

The Dow Jones industrial average slipped 1.74 points to 8,711.13 after retreating from a 50-point midday gain.

But the technology-heavy Nasdaq composite index jumped 24.53 points, or 1.4%, to 1,805.82. Most other broad-market indexes also closed higher, though they weren’t as strong as the Nasdaq.

Shares of Intel, plagued by investor worries about the computer industry’s heavy exposure in Asia, surged $3.88 to $73.88 to lead the Nasdaq advance, even though there were no positive developments for the sector or the chip maker.

Likewise, IBM rose $2 to $108.13, the Dow’s biggest gainer. Among other leading Nasdaq technology names, Dell Computer jumped $3.13 to $87.88 and Microsoft rose $1.13 to $95.81.

“It’s very typical toward the end of every quarter. You get a flight to safety in big names, a flight to liquidity in big names,” said Larry Rice, chief investment officer at Josephthal & Co.

Given the strong performance of blue chips relative to smaller stocks in recent weeks, some fund managers now are adding those names because they expect that shareholders will want to see such stocks in the portfolios in midyear reports.

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Still, the search for quality didn’t necessarily extend to other blue chips, as the Dow showed. Winners edged losers by just 15 to 14 on the New York Stock Exchange, while losers had a small edge on Nasdaq. Trading volume plunged from last week’s levels.

On the plus side, Wall Street was largely able to shrug off a setback for the Japanese yen, which last week began recovering from an eight-year low thanks to a U.S.-led effort to stabilize the battered Japanese currency.

The yen fell Monday after a weekend meeting of officials from around the world, including Deputy U.S. Treasury Secretary Lawrence Summers, produced no concrete plan from Japan to pull itself out of recession.

“The finance minister said they won’t even begin to have a plan until after the elections in mid-July,” said Art Cashin, PaineWebber Inc.’s director of floor operations at the NYSE. “That’s going to have an effect on the currency markets, so I don’t think we’re out of the woods yet.”

The dollar rose as high as 138.79 yen Monday, from 137.02 yen late Friday in New York, and was at 138.16 in late trading.

The dollar also rose to 1.792 German marks from 1.789 on Friday on speculation Russia may devalue the ruble. A weaker ruble would make it more difficult for Russia to repay debts to Germany, its largest creditor.

Some analysts had hoped Japan would use the meeting in Tokyo to build on last week’s momentum with initiatives to clean up a bad debt problem and stimulate new business.

Market sentiment on Japan’s recovery prospects--and prospects for the rest of Asia--improved last week after a rare U.S. move into the currency market to buy yen with dollars.

But on Monday Asian stock market indexes were broadly lower again, led by Hong Kong, which sank 4.5% before the government announced new measures to boost the economy.

Singapore also was hit, falling 2.2%. But Tokyo edged up 0.3%.

Some traders worry that the U.S. stock market’s recovery will be short-lived if Asia’s economic problems worsen, darkening the outlook for U.S. corporate profits.

The Nasdaq index gained 2.1% last week, while the Dow fell 1.4%.

In the U.S. bond market Monday, yields closed mostly unchanged, as a midday rally faded after oil prices jumped on speculation about possible new production cuts by the Organization of Petroleum Exporting Countries.

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Among Monday’s market highlights:

* The rally in key tech stocks drove the Morgan Stanley high-tech index up 2.3%.

Besides gains in some of the major players, Internet-related stocks soared anew, as investors focused on major investments made in Internet directory companies last week by General Electric and Walt Disney.

Gainers included Yahoo, up $10.31 to a record $139.56; Earthlink, up $6 to $72; and America Online, up $4.75 to $101.13.

* General Re fell back $15.50 to $259.50 after soaring Friday on news that Berkshire Hathaway will pay $21.4 billion, or $271.25 a share, in stock for the firm, the largest U.S. reinsurance company.

But other insurance stocks got a boost, including Unitrin, up $1.56 to $68.06; Chubb, up $1.44 to $76.19; and SCOR, up $3 to $62.63.

* Oil-related stocks rose with crude prices. Halliburton jumped $1.38 to $43.88, Texaco rose $1.31 to $60.69, British Petroleum rose $2.88 to $86.13 and R&B; Falcon soared $1.69 to $23.69.

* Home builders’ shares were strong as bond yields remained tame, suggesting lower mortgage rates ahead. Kaufman & Broad gained 81 cents to $27.19, Centex surged $1.31 to $37.13 and Lennar was up $1.50 to $28.63.

* Weak blue chips included American Express, down $1 to $105.50; Procter & Gamble, down $1.69 to $86.69; and many drug stocks, including Merck, off $1.06 to $125.81, and Bristol-Myers Squibb, down $1.69 to $111.88.

Also, Boeing--slammed by Asia’s woes--fell 19 cents to $42.75 and traded at a new 52-week low of $42.13.

* In the takeover arena, Broderbund Software surged $2.25 to $18.75 after it agreed to be acquired by Learning Co. for $420 million, or $20 a share.

Market Roundup, D14