Tech Rebound Drives Nasdaq to Record High
If you blinked, you missed the pullback in tech stocks.
A two-day decline in the tech sector early this week set the stage for another surge of buying on Thursday that pushed the Nasdaq composite index to a record high.
The index leaped 99.07 points, or nearly 3%, to 3,452.78, surpassing the previous high of 3,447.81 set last Friday and lifting the year-to-date gain to 57.5%.
As has been typical in recent weeks, the broader market wasn’t as strong: The New York Stock Exchange composite index edged up just 0.4%, and the Dow Jones industrials gained 40.67 points, or 0.4%, to 11,039.06.
But the hunger for tech issues pushed such shares as Yahoo, Apple Computer and Lucent Technologies up to record or near-record closes.
Internet directory Yahoo, which Standard & Poor’s this week decided to add to its blue-chip S&P; 500 index--making it only the second pure-play Internet issue in the index, after America Online--jumped $16.94 to a record $245.81, topping the old high of $244 set in early April.
“Despite the quickie reversal earlier this week, the techs didn’t really go away,” Joseph V. Battipaglia, chief investment strategist at Gruntal & Co., noted. “Portfolio managers are still going to want to score off these companies as we head toward the end of the year.”
The Nasdaq index fell 3.2% between Friday and Tuesday.
The technology sector overall has largely ignored a rise in bond yields in recent weeks to nearly two-year highs, amid fears that the Federal Reserve Board will raise short-term interest rates early in 2000 to slow the economy.
Sellers hit bonds again on Thursday, sending the 30-year Treasury bond yield to 6.31%, up from 6.29% on Wednesday and nearer to the two-year high of 6.37% set Oct. 26.
Many non-tech stocks have declined sharply over the last month as yields have risen. Bank of America, for example, has fallen from $65 on Nov. 5 to $56.38 now, a 13% decline. The Dow utility stock index has slumped 7% in that same period.
The bond market faces a big test today, when the government issues the November employment report. Federal Reserve Gov. Laurence Meyer earlier this week warned that a continuing drop in unemployment would probably drive the Fed to tighten credit again, to slow economic growth before it fans inflation.
Meanwhile, on Wall Street and in stock markets worldwide, many analysts are wondering what happened to worries about the year 2000 computer bug. Fear over Y2K problems was expected to trigger a “flight to safety” this quarter, driving some investors to sell stocks and park funds in cash for the time being.
Instead, the main Brazilian stock market index roared to a record high on Thursday, up 2.4% to 14,213. The main Mexican stock index also hit a record, rising 2.7% to 6,370.50.
In Hong Kong the Hang Seng index jumped 1.2% to 15,603.04, the highest since August 1997, when the East Asian economic crisis began to spiral.
Analysts say optimism about global economic growth in 2000 remains the key driver of world stock markets.
Among Thursday’s highlights:
* Sharply rising tech stocks included Apple, up $7.13 to $110.19; Lucent, up $3.25 to $80.50; Sun Microsystems, up $5.81 to $136; Oracle, up $5.25 to $75.94; Cisco Systems, up $2.06 to $93.50; Advanced Micro Devices, up $3 to $30.50; and Network Solutions, up $11 to $165.
* Some retail stocks fell on disappointment over November sales. Best Buy lost $4.50 to $62, Ann Taylor fell $2 to $42 and J.C. Penney lost $1.50 to $20.94. Many of the stocks, however, had run up in recent days.
* Atlantic Richfield slumped $4.25 to $87.81 on growing concern over government opposition to its merger deal with BP Amoco. BP lost $2.13 to $59.38.
* Many drug stocks continued to weaken. Johnson & Johnson fell $2.56 to $99.94 and Merck eased 63 cents to $75.63.
Market Roundup, C8
