Dow Hits 5th Record in 5 Days; Oil Rises Again
Investors continued to unload brand-name growth stocks and technology issues in favor of industrial shares and smaller stocks on Friday, leaving the market overall split.
In commodity trading crude oil rose almost 3% as OPEC members rushed to make output cuts aimed at boosting prices.
On Wall Street the Dow Jones industrial average rose 31.17 points to a record 10,493.89, capping a week in which it surged 3.2% and set closing records every day.
The Nasdaq composite, meanwhile, slumped 37.73 points, or 1.5%, to 2,484.04 on Friday and dropped 4.2% for the week, weighed down by tech stocks.
“It seems like tech is poison, and everything economically sensitive is golden,” said Arthur Hogan, chief analyst at Jefferies & Co.
Indeed, while IBM slid $7.38 to $170.38 and Microsoft dropped $2.25 to $86.63 on Friday, machinery giant Caterpillar surged $2 to $63.81 despite reporting earnings well below year-ago levels.
Appliance maker Whirlpool, long in the shadow of the more glamorous tech sector, rocketed $5.19 to $59.81 after the company soundly beat analysts’ first-quarter earnings estimates.
The market’s sudden interest in heavy-industry stocks reflects a growing belief that the global economy is more likely to accelerate than decelerate in the months ahead, many analysts say.
That should give more companies an opportunity to generate stronger earnings. Hence, “Money is rotating from a narrow, select group of high-tech growth stocks to manufacturing, mid- and small-cap stocks,” said Gil Knight, a money manager at Allied Investment Advisors in Baltimore.
Analysts said they were most impressed by the market’s breadth: For the week, winners topped losers by 23 to 12 on the New York Stock Exchange and by 27 to 22 on Nasdaq.
The Russell 2,000 index of smaller stocks jumped 0.9% on Friday and gained 3.9% for the week, better even than the Dow’s 3.2% rise. However, small stocks remain depressed: The Russell index is down 0.1% year-to-date and is down 14% from its record high reached one year ago next week.
In commodity markets, near-term oil futures rose 46 cents to $17.33 a barrel on the New York Merc, highest since January 1998, after Iran and Saudi Arabia told customers they’re reducing deliveries as part of an agreement last month to cut world oil output 2.7%.
Oil’s gain, as well as continued optimism about economic growth, helped send Mexico’s stock market up 1.2% on Friday to a record 5,556.44. Other Latin American markets also rallied, as did key Asian markets.
But the outlook for global growth also may be weighing on U.S. Treasury bonds: The 30-year Treasury bond yield rose to 5.57% Friday from 5.52% on Thursday.
Among Friday’s highlights:
* Industrial winners included FMC, up $5 to $61.88; Stanley Works, up $2.81 to $32.94; and Ameron, up $1 to $38.75.
* The Dow was helped higher by Kodak, up $6.44 to $73, after it reported earnings above estimates.
* Energy stocks zoomed with oil prices. Chevron surged $3.13 to $98.88, Baker Hughes leaped $2.38 to $27.38 and Nuevo Energy jumped $2 to $14.
* On the downside, brand-name growth issues sliding included American Express, down $3.81 to $129.88; Wal-Mart, off $2.75 to $95; and Wrigley, down $1.44 to $92.
* Tech shares were led down by Sun Microsystems, off $5.50 to $54.94. The computer workstation maker beat quarterly earnings estimates but issued a warning about future growth.
* Real estate investment trusts rose for a seventh day, as purchases by billionaire Warren Buffett in two REITs and management buyout bids for others spurred optimism that a 15-month slump is ending. The Morgan Stanley REIT index rose 3.6%. For the week the index jumped 8%.
* Mutual fund manager Franklin Resources surged $4.13 to $35. Investors may be betting that more money will begin to flow into the company’s emerging-market funds, as those markets rebound.
Market Roundup, C4
