Dow Climbs Above 8,000 as Tech Shares Lead the Rebound
The Dow industrials hopped back above 8,000 on Monday, just days after threatening to sink below its summer low of 7,400, as big-name technology shares continued to lead a sharp blue-chip rebound.
The dollar, meanwhile, edged higher in quiet trading. The bond market was closed for the Columbus Day holiday.
The Dow Jones industrial average rose 101.95 points, or 1.2%, to 8,001.47 after jumping 168 points Friday. The technology-heavy Nasdaq composite index jumped 53.59 points, or 3.6%, to 1,546.08.
Broader indicators also extended the rebound that began Thursday as the Dow and other measures sank toward lows reached in the sell-off of Aug. 31 and Sept. 1. The market has now reversed course several times at those levels, which have proved appealing to bargain hunters.
“The market was significantly oversold late last week. Sentiment on common stocks was so low that you couldn’t get much more bearish,” said John Shaughnessy, chief investment strategist for Advest Inc. of Hartford, Conn.
“Stock prices already reflect these deflated expectations,” said Shaughnessy, who also attributed the rebound to “a growing realization that the Federal Reserve [Board] is going to be fairly aggressive in lowering interest rates” to offset the drag of economic crises abroad.
It was the Dow’s first close above 8,000 in two weeks, pushing the blue-chip index back into positive terrain for the year, but still 14% below its July 17 record of 9,337.97.
The early trickle of third-quarter financial results remained fairly encouraging Monday, with a strong showing from Chrysler, which rose $2.50 to close at $44.25.
Stocks rallied from the opening after Asian and European markets posted big gains. Investors welcomed Japan’s upper house voting into law cross-party measures to liquidate or nationalize failed banks, which have been restraining the Japanese economy and hence a broader recovery in Asia.
Only 17 stocks made new 52-week highs while 133 reached new lows. Many traders were away from their desks because of the holiday, with the bond market shut.
The Standard & Poor’s 500-stock index rose 13.32 points to 997.71, after gaining 25 points Friday. The New York Stock Exchange composite index rose 6.25 points to 492.95, and the Russell 2,000 small-stock index rose 7.22 points to 325.62.
Elsewhere, the dollar edged higher against the Japanese yen after last week’s steep decline.
The dollar rose to 117.63 yen late in New York, from 116.95 on Friday.
The yen’s impressive strengthening last week against the dollar helped boost China’s currency, the yuan, which had a record closing high against the greenback Monday. The yuan finished at 8.2774 to the dollar Monday on the Shanghai Foreign Exchange Trade System, eclipsing the former peak close of 8.2777 on Friday.
China said late Friday that foreign exchange reserves had reached $141.1 billion at the end of September, up $1.2 billion from the end of last year.
“The data showed foreign exchange reserves were still high,” one dealer said.
Among Monday’s highlights:
* Software and computer shares rebounded from last week’s 7.6% drop in the Nasdaq. Microsoft gained $2.88 to $99.75, Dell Computer climbed $3.25 to $56.06, and Cisco Systems rose $2.31 to $52.38. IBM gained $3.56 to $130.88.
Intel gained $1.63 to $85.44 on predictions it will report higher-than-expected earnings today.
* Drug shares rallied, led by Bristol-Myers Squibb, which rose $1.81 to $96.94; Abbott Laboratories, up $1 to $42.94; and Warner Lambert, up $1.25 to $68.75. Merck added $1.06 to $131.13, Eli Lilly climbed 38 cents to $73.75, Schering-Plough rose $1 to $95.69, and Pharmacia & Upjohn gained $1.31 to $50.06.
* Boeing rose $1.13 to $33.13, after it said it won a 10-year, $1.2-billion contract to upgrade systems in a U.S. Air Force fleet of 87 transport planes.
* Investment bank Hambrecht & Quist Group fell $1 to $14.88 after it said its fiscal 1998 earnings will “be close” to its earnings last year.
Overseas, Tokyo’s Nikkei-225 stock average rose 5%, and stocks in London rose 4.4%.
Market Roundup, C14
