Techs Gain Again, Lead Stock Rally
Stocks rallied Tuesday as technology shares continued their recovery and some investors grew optimistic about the economic outlook for Asia.
Bond prices rose as the dollar strengthened against the Japanese yen.
The Dow Jones industrial average rose 117.33 points to 8,828.46, the fourth swing of 100 points or more in seven sessions.
The Nasdaq composite index posted its third-biggest point gain ever, rising 38.75 points to 1,844.57, the best close in a month for the technology-dominated measure.
Microsoft soared $4.94 to $100.75 after winning a skirmish in its antitrust battle as a federal court threw out a preliminary injunction that had barred the software maker from packaging its Internet browser with Windows.
“Investors are becoming more comfortable with the negatives that have presented themselves,” said Tony Dwyer, chief equity strategist at Ladenburg Thalmann & Co., referring to the nagging worries about profit pressures from the economic crisis in Asia.
The blue-chip rally masked a strong showing in the battered smaller-company sector. The Russell 2,000 index, which over the past two months has given back most of what was once a robust 12% gain for 1998, rose 5.77 points to 447.42.
“That’s where the attractive valuations are now,” said Dwyer, noting that the Dow remains within 5% of May 13’s all-time high of 9,211.84. With no relief in sight for big companies with a heavy exposure to Asia, he said, “I remain skeptical in the larger-cap arena that you can drive valuations much higher.”
The benchmark 30-year Treasury bond gained, pushing down its yield, which moves in the opposite direction, to 5.64% from 5.66% at Monday’s close.
Advancing issues outnumbered decliners by a 3-to-2 margin on the New York Stock Exchange, where composite volume totaled 781.31 million, up sharply from Monday’s modest tally of 638.05 million.
The Standard & Poor’s 500 rose 16.25 points to 1,119.49, the NYSE composite index rose 6.75 points to 571.63, and the American Stock Exchange composite index rose 4.61 points to 698.60.
On Tuesday, Japan’s government said it’s considering establishing a state-run “bridge bank” to buy up private banks’ bad loans, sell off any collateral and extend loans to the corporate customers of banks that fail. It has pledged to announce its plan in two weeks.
Among Tuesday’s highlights:
* IBM rose $3.63 to $111.75 as the Dow’s strongest component for a second straight day. Hewlett-Packard, the Dow’s other technology issue, rose $2 to $59.25.
Among other leading technology names, Intel rose $1.38 to $75.25 and Dell Computer rose $5.25 to $93.13 as the two most active Nasdaq issues after Microsoft.
* Energy stocks also jumped for a second day, along with the price of crude oil futures. The 11-member Organization of Petroleum Exporting Countries meets today, and traders expect it to cut production further to boost sagging prices.
“There’s a growing sense that OPEC’s resolve in this meeting coming up is very high and that you could see a material cut in production,” said Jon Olesky, head of block trading at Morgan Stanley Dean Witter & Co.
Chevron rose $2.31 to $84.06, and Texaco gained $1.81 to $62.63. August crude futures rose 87 cents a barrel to $14.52.
Meanwhile, in late New York trading, the dollar stood at 139.15 Japanese yen, up from Monday’s 138.16 close. Against the mark, the dollar stood at 1.8017, up from Monday’s 1.7935 close.
Overseas, Tokyo’s Nikkei stock average fell 1.7%, Frankfurt’s DAX index rose 1.1%, and London’s FTSE-100 rose 1.0%.