Dow Up 88; Broader Indexes Hit Records
Oil prices pulled back Tuesday--and stocks were off to the races again.
The Dow Jones industrials rebounded 88.19 points, or 1%, to 8,904.44, recouping nearly all of Monday’s 90-point drop.
Many broader-market indexes rose enough to reach record highs, as this year’s surprising rally showed no sign of slowing.
Two new stock issues got warm welcomes: ISS Group, an Atlanta-based computer network security company, rocketed to close at $40.38 on Nasdaq from its initial price of $22. And EarthShell, a Santa Barbara-based packaging company, saw its shares rise to $23.56 on Nasdaq from an initial price of $21.
Meanwhile, many European stock markets--most of which have risen even faster than the U.S. market this year--also hit new highs Tuesday. The German, French, Swedish and Italian markets all closed at record levels.
On Wall Street, share prices rocketed at the opening bell, as oil prices pulled back after leaping 13% on Monday as three major exporters pledged to cut output.
Weaker oil prices gave stock buyers a green light, traders said. With the end of the first quarter less than a week away, many portfolio managers who are under-weighted in stocks now may be scrambling to boost their positions, so clients see winning shares on quarter-end statements.
A placid bond market is also helping stocks. Long-term yields have barely budged since March 12. The Treasury met ample demand Tuesday for its sale of $14 billion of two-year notes. Their average yield: 5.5%.
Tuesday’s stock rally was broad-based, with winners topping losers by 18 to 12 on the Big Board and by 24 to 19 on Nasdaq.
The Standard & Poor’s 500 index rose 10.10 points, or 0.9%, to a record 1,105.65, and the Nasdaq composite gained 19.93 points, or 1.1%, to a record 1,812.44.
Other indexes hitting new highs included the Russell 2,000 index of smaller stocks, up 0.5% to 476.26, and the Standard & Poor’s utilities index, up 0.2% to 248.32.
Some analysts said the market’s next big test will be first-quarter earnings reports, which will begin flowing out in about two weeks.
“We’ve still got to get through first-quarter earnings,” said Ted Theodore, director of research at Avatar Associates in New York. “That looks like it’s going to be a little bit rocky.”
Microsoft on Tuesday said its first-quarter results will be better than expected, although the company warned of slowing growth ahead. Toy giant Hasbro said its first-quarter results will disappoint.
And a Coopers & Lybrand survey of some of the nation’s fastest-growing companies showed that 21% expect slower sales growth or reduced profit margins over the next year because of Asia’s economic turmoil.
Among Tuesday’s highlights:
* Blue chips hitting new highs included GE, up $2.19 to $82.63; AT&T;, up $1.56 to $67.50; and Merck, up 81 cents to $131.88 after trading as high as $132.81.
* Retail shares were strong, with Dayton Hudson up $2.06 to $86.13, Nordstrom up $1.38 to $60.88 and Pacific Sunwear up $1.94 to $40.75.
* On the downside, energy stocks fell after surging Monday. Baker Hughes lost $2.44 to $40.19; Chevron fell $1.44 to $85.44.
* Brokerage stocks rallied after Goldman Sachs issued a bullish profit report, raising expectations for its rivals. Merrill Lynch soared $4.13 to $87 and Jefferies Group jumped $2.38 to $54.13.
* In the tech sector, IBM surged $2.13 to $103.50 and Dell gained $3.50 to $65.75. Tekelec jumped $4.69 to $42.75 after an analyst at SoundView Financial said the Calabasas-based telecommunications equipment maker’s first-quarter results are “ahead of schedule.”
Cisco Systems gained $3.06 to $67.81. Chief Executive John Chambers said Internet service and voice and data business could account for half the company’s sales within four years.
Market Roundup, D10
