Computer, Internet Stocks Vault Nasdaq to New High
On the biggest shopping day of the year, surging enthusiasm for Internet retailers helped propel the Nasdaq composite index Friday to a record close.
The Nasdaq finished above 2,000 for the first time since July 20, gaining 30.94 points to 2,016 on rallies in computer and Net shares. The technology-heavy index is up 28% on the year.
U.S. stocks rose broadly in the abbreviated session, with oil shares pacing blue chips amid speculation that Exxon’s talks to buy Mobil will spark other mergers in the industry.
The Dow Jones industrial average rose 18.80 points to 9,333.08. The broader Standard & Poor’s 500 index gained 5.42 points to 1,192.29. The Russell 2,000 index of smaller companies rose 2.77 points to 402.09.
Five stocks gained for every four that fell on the New York Stock Exchange.
“Merger mania makes everybody feel good,” said Alfred E. Goldman, director of market analysis at A.G. Edwards & Sons of St. Louis. “It’s a sign that acquiring companies have more richly valued currency to use in bartering.”
U.S. bond yields fell for the sixth time in seven days amid optimism that a strengthening dollar and falling commodity prices will keep inflation low. The benchmark 30-year Treasury bond yield fell to 5.16%, the lowest since Oct. 30, from 5.18% on Wednesday.
In currency trading, the dollar rose to a two-month high against the mark after European Central Bank President Wim Duisenberg hinted the ECB may cut interest rates next year. In afternoon trading it was at 1.7133 marks, compared with 1.7006 on Thursday.
The dollar rose to 123.07 Japanese yen from 121.73 late Thursday, gaining for the sixth straight day after reports on industrial production, retail sales and unemployment showed the outlook for Japan’s economy remains bleak.
The Dow industrials, now up 18% for the year, could be headed for a fourth year of 20%-plus gains despite a July-October slump that knocked them down 1,798 points. Investors began pushing up U.S. stocks again after the Federal Reserve cut benchmark interest rates three times to calm financial markets roiled by Russia’s debt default.
“The U.S. economy continues to expand and create jobs, and corporate profits continue to rise in most industries, despite sluggish conditions abroad,” Abby Joseph Cohen, Goldman, Sachs & Co.’s investment strategist, wrote in a note to clients Friday. Cohen, one of the most optimistic and closely followed market strategists, repeated her year-end targets of 1,150 for the S&P; 500 and 9,300 for the Dow. She said she expects operating earnings for companies in the S&P; 500 to rise 5% to 7% in coming quarters.
For the week, the Dow gained 1.9%, the S&P; climbed 2.5% and the Nasdaq rose 4.6%.
“The tone of the market is bullish,” said Ed Laux, co-head of equity trading at ABN Amro Inc., a Dutch bank. “The problems over the summer seem less troublesome. The perception is that the worst is over.”
Among Friday’s highlights:
* Exxon rose $1.69 to $74.38, after the biggest U.S. oil company confirmed it is in talks to combine with Mobil. Mobil soared $7.63 to $86, Chevron rose $5.25 to $85.63 and Texaco rose $3.44 to $60.81.
* Shares of companies selling goods over the Internet rose as investors continued to bet that more consumers will do their holiday shopping online.
CDNow rose $9.88 to $26.88, Egghead.com gained $10.19 to $31.63, Onsale soared $37.63 to $97.63, EBay climbed $13.50 to $218, Open Market zoomed $8.31 to $20.75 and Connect surged $4.74 to $6.13.
Books-a-Million, which introduced an enhanced Web site Wednesday, soared $26 to $38.94 as the most active U.S. stock. Leading online bookseller Amazon.com rose $6.31 to $216.63.
* Tel-Com Wireless Cable TV shares surged 29% as it neared the debut of its new Internet shopping site hosted by Ivana Trump. The Miami-based company’s shares rose $3.75 to $16.75.
* USA Networks rose to a record high as the company winds down a promotion of its stock offering of Ticketmaster Online-CitySearch. Shares of the media and electronic-commerce company rose $4.25 to $34.75.
* Other leading computer and software gainers included America Online, up $2.63 to $94.88; Microsoft, up $3.81 to a record $128.06; Cisco Systems, up $2.94 to $80; and Sun Microsystems, up $4.63 to $80.38.
U.S. markets were closed Thursday for the Thanksgiving holiday, and trading closed three hours early Friday.
Overseas, Japan’s Nikkei stock average fell 0.9%, Germany’s DAX index rose 1.4%, Britain’s FTSE-100 rose 0.3% and France’s CAC-40 rose 0.9%.
Market Roundup, C4
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Back Above 2,000
Powered by rallies in the computer and Internet sectors, the Nasdaq composite index closed at a record level Friday and eclipsed 2,000 for the first time since July 20. The index is up 28% year-to-date. Daily closes since July 1:
July 1: 1,914.46
July 20: 2,014.25
Oct. 8: 1,419.12
Friday: 2,016.44
Source: Bloomberg News
