Industrials, Oil Nudge Dow to Record; Nasdaq Retreats
Industrial and energy stocks roared again Wednesday, but their gains were offset by renewed profit-taking in many consumer growth stocks and technology issues.
Internet stocks also were sharply lower despite upbeat earnings reports from some key companies.
In commodity trading, oil prices hit a 16-month high.
On Wall Street, the Dow Jones industrials eked out a record close, adding 13.74 points to 10,845.45.
But the index had been up as high as 103 points in late afternoon, before computer-driven selling accelerated in such consumer stocks as Merck and American Express.
The Nasdaq composite tumbled 2% to 2,550.37, continuing its pullback from Monday’s record high as investors shaved positions in leading tech stocks.
Other broad market indexes also lost ground. Yet losers had only a 21-19 edge over winners on Nasdaq. And winners were well in the lead on the New York Stock Exchange: Rising stocks outnumbered losers by a 17-13 margin in heavy trading.
Institutional investors flocked back to industrial shares whose prospects should improve if the world economy is indeed poised for stronger growth--a view that is gaining many followers on Wall Street.
“I see a strong economy in this country and the potential for a bottoming in Asia,” said Michael Berry, money manager at Heartland Advisors, which oversees $2 billion.
That could mean two or three years of gains for the stocks that do best in a growing economy, he said.
The government said Wednesday that factory orders for big-ticket goods rose in March for the fourth time in the last five months, reflecting increased demand for cars, computers and electronics.
“What we’re seeing is a market lifted by energy and other commodities in line with the strong durable-goods orders,” said Charles Crane, chief investment strategist at Key Asset Management.
Big winners Wednesday included aluminum giant Alcoa, up $6.63 to $62; 3M, up $3.69 to $84.50; lumber and paper firm Georgia-Pacific, up $4.06 to $94.13; and Dow Chemical, up $8.50 to $126.50.
Another sign of global recovery: Japanese industrial production rose 2.2% in March from February, beating the 0.5% increase projected by economists surveyed by Bloomberg News.
Also, crude oil futures in New York jumped 64 cents to $18.45 a barrel, the highest since Dec. 18, 1997.
That gave energy stocks a powerful lift. Exxon soared $3.25 to $81.50, Chevron leaped $3.94 to $102.88 and Unocal rocketed $4.69 to $44.25.
To raise funds to buy those stocks, institutional investors dumped some widely held consumer and tech stocks.
Drug stocks slumped, for example. Merck slid $2.81 to $70.75 and Pfizer dropped $3.13 to $118.
In the tech arena, IBM dropped $7 to $205. As expected, on Tuesday the company announced a new $3.5-billion stock buyback and raised its dividend 9%. The stock hit a record $212 on Tuesday.
Among other tech shares, Intel eased $1.06 to $61.19 and Sun Microsystems lost $2.19 to $61.44.
The heaviest selling on Nasdaq was in Internet names. America Online slumped $10 to $143, despite reporting stronger-than-expected earnings Tuesday.
MindSpring Enterprises, which also beat earnings estimates, dropped $13.63 to $102.69. Other Net-related losers included EBay, down $16.69 to $192.56, and IVillage, down $10.13 to $85.
Still, given the surge in those stocks in recent sessions, few traders were surprised by the profit-taking.
In the bond market, the Treasury sold $15 billion of two-year notes at a yield of 5.02%, which was in line with expectations. Yields in general were modestly higher.
Among Wednesday’s highlights:
* Stocks up sharply on earnings reports included Aetna, up $10.38 to $92; disability insurer Unum, up $6.19 to $53.75; and newsprint maker Bowater, up $5.88 to $52.
* Among new issues, Razorfish--which designs Web sites for online businesses--continued to surge after going public Tuesday at $16 a share. The stock jumped $12.88 to $46.38 on Wednesday. Its ticker symbol is RAZF.
* Fleetwood Enterprises jumped $1.69 to $25.44. Shares of Fleetwood, a maker of manufactured housing and motor homes, had dropped Tuesday to their lowest level since 1996 on the heels of the company’s recent warning about last quarter’s earnings.
But Fleetwood on Wednesday issued a preliminary sales report, saying its fiscal fourth-quarter sales overall were up 12% from a year earlier.
Market Roundup, C8
