Broad Rally Lifts Dow 125; Techs Resurge

The stock market’s reputation for increasingly manic behavior appeared well-deserved Friday, as share prices rocketed after plunging on Thursday.

But the mood could swing again Monday, because Compaq Computer said after trading closed that it won’t make money this quarter--adding to the chorus of tech companies warning about weak near-term results.

The Dow Jones industrial average soared 125.06 points, or 1.5%, to 8,569.39, as bargain hunters swooped in after Thursday’s 95-point drop. Buyers were emboldened by a strong February employment report that failed to rile the bond market. Tumbling oil prices also helped.

The tech-heavy Nasdaq composite index, which plunged 47.78 points, or 2.7%, on Thursday after computer chip giant Intel warned of a shortfall in first-quarter sales, rebounded 41.57 points, or 2.4%, to 1,753.49.

The market was strong across the board, with winners topping losers 22 to 8 on the New York Stock Exchange and 29 to 13 on Nasdaq. NYSE volume ballooned to 666 million shares.

The blue-chip Standard & Poor’s 500 index hit a record high, rising 20.64 points, or 2%, to 1,055.69.

Some analysts said Friday’s snap-back demonstrated that investors continue to believe that sharp market pullbacks are great buying opportunities.

“People who remember the sell-off we had only four months ago are saying, ‘I don’t want to miss the next big move,’ ” said Richard Wallman, a technology fund manager at Dreyfus Corp., which oversees $100 billion.

But some traders noted that Friday’s rally was led by so-called defensive issues, or companies whose earnings growth tends to be more consistent over time and less affected by economic cycles--such as telephone, drug and consumer-products stocks.

The backdrop for Friday’s rebound was a strong February employment report showing that the economy created 310,000 jobs last month and that average hourly wages also jumped. (Story, A1)

The bond market initially sold off on the news, but by afternoon yields pulled back, and closed lower on the day. The 30-year Treasury bond yield eased to 6.02% from 6.07% on Thursday, though it was up from 5.93% a week ago.

Despite the healthy economy, there are few signs of price inflation and thus no indication yet that the Federal Reserve Board might tighten credit to slow growth. That encouraged investors to buy bonds Friday even though the economic data might ordinarily spook the bond market, traders said.

It also helped bonds that oil prices tumbled anew. Crude futures in New York slid 42 cents to $14.91 a barrel, a four-year low, amid high inventories of crude oil, heating oil and winter-grade gasoline. Lower oil prices will further restrain inflation, experts noted.

On Wall Street, stocks’ rebound began at the opening bell and gathered steam all day. Analysts noted that a stronger economy should help support corporate earnings growth.

Profits may need all the help they can get: After the market closed Friday, Compaq became the latest in a long line of major companies warning that earnings will be depressed this quarter. Compaq cited a glut of computers for its troubles.

For the week, the Dow gained 23.67 points. But the Nasdaq composite lost 17.02 points, or 1%.

Among Friday’s highlights:

* Intel, down $10.88 on Thursday, rebounded $2.56 to $78.13. Also resurging were Dell, up $6.63 to $138.50; Microsoft, up $2.69 to $82.75; Oracle, up $1.56 to $26.88; Vitesse, up $1.56 to $46.56; and Cisco Systems, up $2.56 to $64.38.

But Motorola sank $2.88 to $53 after it warned late Thursday of depressed results this quarter because of Asia’s economic woes.

Compaq was up 50 cents to $27.63 before its announcement.

* Stable-growth stocks leading the market higher included Gillette, up $3.06 to a record $110; Warner Lambert, up $5.25 to $156; Merck, up $3.69 to $127.38; and Hershey Foods, up $2 to $70.75.

* Retailers also were strong, with Nordstrom up $3.13 to $64.88 and J.C. Penney up $2.88 to $73.75.

In foreign trading, European markets surged, while Asia was mixed. Brazil’s market gained 1.9% after the central bank slashed interest rates.

Market Roundup, D4

* HIGH-TECH TROUBLES

Compaq is the latest computer firm to warn of lower quarterly profit. D2