Stocks Gain Despite Oil; Dow Adds 25
The 1998 market rally pushed on Wednesday, sending most major stock indexes to new highs even as oil prices rebounded sharply from nine-year lows.
The Dow industrials closed up 25.41 points at a record 8,775.40, after an early slide to 8,706.
In the broad market, the Standard & Poor’s 500 gained 5.07 points to a record 1,085.52, and the Nasdaq composite edged up 8.98 points to a record 1,788.28.
Winners outnumbered losers by 1,569 to 1,388 on the New York Stock Exchange and by 2,131 to 2,023 on Nasdaq.
“We remain in a very powerful bull market, but the intensity of the advance is tiring,” said Alfred Goldman, analyst at brokerage A.G. Edwards & Sons.
Stocks opened the session lower amid news that another leading technology company, computer networker Bay Networks, expects to post disappointing earnings in the current quarter.
The announcement late Tuesday by Bay came a day after chip maker Micron Technology reported a wider-than-expected loss for its latest quarter, and less than two weeks after a spate of profit warnings by Intel, Motorola and Compaq.
But Bay shares rallied despite the report, gaining $2.50 to $26.50 in heavy trading. Overall, the tech sector finished mixed.
“What the market is telling us is that we’re nearing the end of the [earnings] pre-announcement season and the fundamental backdrop hasn’t changed,” said Tony Dwyer, chief strategist at Ladenburg Thalmann. “Investors are aware that the first quarter is going to be tough, especially in technology, so it’s already discounted in the market.”
As for rebounding oil prices, analysts noted that even if oil recovers somewhat, prices remain well below the $26-a-barrel level of late 1996.
Meanwhile, the dollar hit a two-month high against Japan’s yen Wednesday, adding 0.47 yen to 130.11, amid new concerns that Japan will fail to move aggressively to keep its economy out of recession.
In Japan’s seesawing stock market the Nikkei-225 index sank 2.2% to 16,619.
In U.S. bond trading, Treasury yields showed little response to the Federal Reserve Board’s report of a surprisingly healthy domestic economy. The yield on the 30-year Treasury bond edged up to 5.90% from 5.89% on Tuesday.
Among Wednesday’s highlights:
* Brokerage stocks were strong thanks to bullish forecasts for first-quarter earnings (given the ongoing bull market) and on rumors of more takeovers.
Merrill Lynch shot up $7.25 to $87 on rumors that Chase Manhattan might bid for it. (Investor Spotlight, D9)
Other brokerage winners included PaineWebber, up 94 cents to $41.56; Jefferies Group, up 81 cents to $52.13; and Bear Stearns, up 75 cents to $52.
* In the tech sector, Compaq gained 19 cents to $23.81 and Intel added 38 cents to $77, while networker Cisco Systems lost $1 to $63.56 and Ascend Communications dropped $1.03 to $32.
* Energy-related shares helped boost the Dow and the S&P; indexes, as oil surged. Exxon leaped $1.69 to $64.63, Texaco jumped $3.13 to $59.25 and Western Atlas was up $3.50 to $75.
Meanwhile, airline stocks--which had rocketed as oil plunged in recent sessions--gave back some gains. Delta Air Lines lost $2.75 to $120.13.
* The Dow drew strength from some classic growth stocks. Coca-Cola rose $2.38 to a record $74.81 on expectations of strong first-quarter sales growth. Procter & Gamble gained $1.19 to $84.69.
* Paper companies fell after several analysts lowered earnings estimates for International Paper, citing lower sales in Asia and lower prices from competing Asian producers. IP fell $1.75 to $50.
Market Roundup, D8
