Techs Continue Surge in Mixed Close; Dow Off
Stocks closed mixed Monday as bond yields rose ahead of today’s report on November consumer inflation.
But there remain few signs that investors’ hunger for technology and telecom shares is waning: The Nasdaq composite index gained 1.1% to a new high of 3,658.17
In the broader market, losers topped winners by 3 to 2 on the New York Stock Exchange, and most key indexes ended lower.
The Dow Jones industrials fell 32.11 points to 11,192.59. The Standard & Poor’s index of 600 smaller stocks slipped 0.2%.
On Nasdaq, however, winners had a 21 to 20 edge, as Internet and telecom names were in demand once again.
“The technology stocks continue to pull in money, and they’re pulling it away from the rest of the market,” said Eugene G. Mintz, analyst at Brown Bros. Harriman in New York. “There doesn’t seem to be any other sector that’s grabbing attention.”
Qualcomm, one of the bellwether telecom issues, soared $26.06 to a record $417.56 after Lehman Bros. analyst Tim Luke said the company will be a “clear beneficiary” of upgrades by wireless-service providers to handle more Internet traffic on networks that use its technology.
He said his earnings estimates of 96 cents a share for the company’s fiscal first quarter and $4.16 for fiscal 2000 “remain conservative.”
Qualcomm stock began the year at $26.
While money poured into Qualcomm on Monday, it exited many financial stocks, as bond yields rose.
The yield on the 30-year Treasury bond ended at 6.20%, up from 6.16% on Friday.
Yields had been sliding in recent sessions, but there is nervousness ahead of today’s consumer inflation report--even though the November wholesale inflation report, released last Friday, was benign.
Wall Street remains wary of any inflation news that could prompt the Federal Reserve to raise short-term interest rates again in coming months.
Financial stocks are typically the first to respond to changes in the interest rate backdrop, because higher rates can squeeze the companies’ profits.
Losers Monday included Golden West Financial, down 81 cents to $31.25; Morgan Stanley Dean Witter, down $2.81 to $131.69; and Fannie Mae, down 63 cents to $65.25.
Other poor-performing groups Monday included autos, energy, tobacco and drugs.
Many analysts continue to worry that the weakness in many stocks, even as tech shares rise to the sky, is a bad omen.
“Without a pickup in breadth and an improvement in the underlying structure of the market, markets would be increasingly vulnerable to a more serious decline,” argues A.C. Moore, chief investment strategist at Dunvegan Associates Inc. in Santa Barbara.
In currency trading, the yen had its worst day against the dollar in four weeks and fell against the euro after a report showed confidence among Japanese manufacturers isn’t rising as much as expected.
The Bank of Japan’s quarterly tankan survey gave a mixed view of the economy, leaving some analysts with the impression that, while Japan’s growth isn’t tailing off, it isn’t accelerating.
The dollar rose to 103.24 yen, up 0.90 yen. Tokyo’s Nikkei-225 stock index eased 0.4%.
Among Monday’s highlights:
* Internet stocks up sharply included Inktomi, up $10.50 to $178.25; Lycos, up $4.13 to $85.38; America Online, up $2.50 to $94; and CMGI, up $17.81 to $211.88.
Foundry Networks soared $26.25 to a record $304. The maker of high-speed computer-networking gear said its board approved a plan to split the company’s stock 2 for 1.
On the downside, recent Net new issue Fogdog slid $3.44 to $11.19.
* Telecom shares rallying with Qualcomm included Pegasus Communications, up $5.94 to $88; Global Crossing, up $4.50 to $51.38; Osicom Technologies, up $6.19 to $38.38; and US West, up $3.50 to $70.25.
Next Level Communications surged $9.09 to $63.66. The broadband communications system developer said it signed deals to supply nine phone companies.
* Even Wal-Mart benefited from the technology frenzy, surging $4.75 to a record $68 on speculation that it will soon announce an alliance with America Online.
* While major drug stocks were lower, several biotech issues rallied strongly. Amgen rose $1.88 to $46.63, Genetech gained $4.31 to $104.50, Imclone Systems jumped $3.19 to $37.63 and Immunex leaped $5.75 to $70.94.
Market Roundup, C13
