Major Stock Indexes Rally; Broader Market Weakens
Major stock indexes rebounded Wednesday from Tuesday’s losses, but the deterioration of the broader market continued.
The Dow Jones industrials surged 120.58 points, or 1.1%, to 10,998.39, helped by big gains in two of the index’s highest-priced stocks: General Electric and Procter & Gamble.
The Nasdaq composite, which slumped 2.5% on Tuesday amid a tech-stock sell-off, regained 0.5% to 3,353.71 on Wednesday.
But losers topped winners by 17 to 14 on the New York Stock Exchange and by 21 to 20 on Nasdaq, though trading volume eased on both markets.
Some traders were disappointed that the bond market couldn’t muster a rally despite reports suggesting the economy might be slowing, at least a bit.
The 30-year Treasury bond yield ended unchanged at 6.29%, though it was down from a morning peak of 6.34%.
Though technology stock investors seem to turn everything into good news today, many bond investors are doing just the opposite: looking for any reason to sell, even with yields at two-year highs.
Some traders said bond sentiment was depressed by comments late Tuesday by Federal Reserve Gov. Laurence Meyer. With the November employment report looming this Friday, Meyer sounded like a central banker ready to vote for yet another increase in short-term interest rates.
In a speech, Meyer said the Fed must raise rates and slow the economy, once the labor market tightens to a point where it creates inflation pressures.
“In my judgment, we are already in a range in which such a normal response to further declines in the unemployment rate is warranted,” he said.
At least the currency market stayed out of bonds’ way Wednesday: The dollar arrested its recent slide against the yen, closing up 0.81 yen to 102.69, on speculation the Bank of Japan may get more aggressive in trying to stop the yen’s ascent.
On Wall Street, buyers jumped into GE after Salomon Smith Barney raised its price target for the stock to $150 from $135. The shares surged $4.38 to $134.50. Salomon cited, in part, GE’s e-commerce initiatives.
Another Dow stock, P&G;, gained $4.25 to $112.25 on no apparent news.
Because the Dow is a price-weighted index, the moves in its highest-priced stocks have more impact on the index overall.
In the tech sector, meanwhile, buyers were picking and choosing, making for a volatile Nasdaq session overall.
Among Wednesday’s highlights:
* Selling continued in many Internet stocks, perhaps stemming in part from cautionary words by a Merrill Lynch Net analyst.
EBay slid $5.06 to $160, Inktomi lost $10.06 to $119, Priceline.com fell $1.38 to $60.63 and EToys slid $4.06 to $58.56.
But Yahoo jumped $16.13 to $228.88. Late Tuesday, Standard & Poor’s said it would add the stock to the blue-chip S&P; 500 index--an addition that might have seemed outlandish even two years ago.
* Bigger tech names under pressure included Sun Microsystems, down $2.06 to $130.19; Adobe Systems, down $2.13 to $66.56; and Gateway, down $1.63 to $74.75.
But buyers piled into Apple, pushing it up $5.19 to a record $103.06, as analysts continue to wax bullish about holiday computer sales.
Also gaining were Texas Instruments, up $3.19 to $99.25; Oracle, up $2.88 to $70.69; and Cisco Systems, up $2.25 to $91.44.
* MCI WorldCom slumped $4.56 to $78.13. Traders cited market rumors that the long-distance giant will soon caution analysts to lower revenue growth estimates.
* Traditional (as opposed to online) retailers attracted more interest. Home Depot jumped $2.13 to $81.31, Sears added 75 cents to $34.94, Circuit City gained $2.13 to $50.63 and Gap surged $3.44 to $44.
* Energy stocks moved higher as oil prices stabilized. In the oil services sector, Halliburton jumped $2.50 to $41.13, and Helmerich & Payne shot up $2.13 to $24.75.
* Drug stocks suffered another day of profit-taking. Schering-Plough fell $2.50 to $48.63, and Merck was off $1.98 to $76.39.
Market Roundup, C15
