Blue Chips Lead Dow Back Up; Nasdaq Slides
A late rally pushed blue-chip stocks sharply higher Wednesday, but smaller stocks ended mostly lower.
Meanwhile, in foreign trading, the Mexican peso tumbled on worries about the country’s banking scandal. In Asia early today, stocks rallied on news that Indonesian President Suharto had resigned.
On Wall Street, the Dow industrial average shot up 116.83 points, or 1.3%, to 9,171.48, lifted by a diverse group of blue chips. The gain left the Dow within easy striking distance of its record high of 9,211.84 set last week.
But the broad market was eerily weak, continuing the trend of the last month or so. Modest selling in the tech sector pushed the Nasdaq composite index down 14.12 points, or 0.8%, to 1,831.75. Also, the Russell 2,000 index of smaller stocks fell 0.5% to 468.54.
The Russell index is up just 7.2% year-to-date. It was up as much as 12.6% at its peak on April 22.
Overall, losers topped winners by 2,369 to 1,729 on Nasdaq on Wednesday. And on the New York Stock Exchange, winners had only a tiny edge over losers.
“Investors are nervous about the technology sector,” said John Maack, a money manager at Crabbe Huson Group in Portland, Ore. “If you’re a holder of tech stocks, you know you have exposure to potentially negative developments, but you’re just not sure what they are at any moment or from what direction they’ll come.”
Dell Computer shares fell $2.84 to $91.75, even though it topped Wall Street’s consensus earnings estimate for the quarter ended May 3. Dell’s results were reported after the close on Tuesday and, while they were robust, they raised questions about the health of Dell’s competitors in the increasingly cutthroat personal computer business.
Dell rival Gateway fell $3.13 to $47 and Compaq lost 56 cents to $29.56.
In Asia, stock markets were mixed Wednesday amid continuing concern over Indonesia’s future. Early today, however, most Asian markets rallied modestly as Suharto resigned. Tokyo stocks were up 1.5% early today after gaining 0.7% on Wednesday. South Korea’s market rose 1.2% early today after jumping 1.8% on Wednesday. But Hong Kong remained weak, off 0.2% early today after a 1.1% gain Wednesday.
In commodity trading, oil prices continued to slide. The July crude futures contract in New York fell 83 cents to $14.18 a barrel. The June contract expired Tuesday at $12.98, near a 10-year low.
Oil added to Mexico’s problems. The peso slumped 4.7 centavos to 8.62 to the dollar, as some foreign investors sold pesos on concern that the U.S. indictment of a score of Mexican bankers on money-laundering charges could create a crisis of confidence.
The Mexican stock market fell for a third day, off 0.4%.
Among Wednesday’s highlights:
* Analysts said the blue-chip rally in part reflected investors’ growing nervousness about the market overall. Big-name stocks often are viewed as “safe havens.”
In the Dow, American Express gained $3.63 to $106.13, AT&T; rose $2.44 to $58.88, GE jumped $2.81 to $85.69 and Walt Disney gained $3.69 to $114.63.
Also, McDonald’s soared $3.06 to a record $65.88. The company said it expects to meet analysts’ earnings estimates this quarter.
* Among other consumer growth stocks, PepsiCo jumped $2.56 to $40.50. One analyst told clients that worries about a potato shortage’s effect on PepsiCo’s Frito Lay snack food unit were overblown.
* Brokerage stocks soared, led by Bear Stearns, up $3.13 to $56, on rumors that Dutch bank ABN Amro wants to acquire it. ABN Amro denied the rumors. But given the ongoing consolidation trend in the brokerage business, Merrill Lynch soared $5.06 to $92.81 and PaineWebber rose $2.31 to $44.50.
Market Roundup, D8
