Drug, Defense and Bank Issues Join Stock Rally
The Nasdaq composite index briefly topped 4,000 for the first time and the Dow Jones industrial average soared more than 200 points to a record Thursday as stocks from many sectors of the economy participated in the “Santa Claus” rally.
Drug, defense and financial issues joined the ongoing rally in many technology shares.
The tech-heavy Nasdaq rose 32.14 points, or 0.8%, to 3,969.44, its latest in a string of records--though it pulled back sharply late in the day from a 64-point gain.
The Dow surged 202.16 points, or 1.8%, to 11,405.76, surpassing its previous high of 11,326.04 set Aug. 25.
The Standard & Poor’s 500 index also reached a new high, rising 22.21 points, or 1.6%, to 1,458.34.
Stocks continued to ignore the morose bond market, where the yield on the 30-year Treasury bond ended at a fresh 27-month high of 6.48%, up from 6.45% Wednesday, in a shortened session.
Some analysts were heartened to see stocks’ rally broaden, as the number of rising issues topped losers by 19 to 12 on the New York Stock Exchange. But trading volume was modest compared with recent sessions.
On Nasdaq, winners topped losers by just 22 to 20.
“We are in an exuberant stage and people do not want to show cash at the end of the year,” said Charles Pradilla, chief investment strategist at SG Cowen Securities, explaining the pop in many stocks on Thursday.
“This is what happens in the pre-holiday atmosphere when you have a a lighter volume but the money keeps flowing in from mutual funds, pension funds and end-of-year bonuses,” said Larry Wachtel, market analyst at Prudential Securities.
For the holiday-shortened week, the Dow gained 1.3%, Nasdaq rocketed 6.9% and the S&P; 500 climbed 2.8%.
The stock market will be closed today in observance of Christmas.
Among Thursday’s highlights:
* Twenty-six of the 30 Dow stocks rose. Boeing paced a rally in many defense issues, rising $1.81 to $41.19. The jet maker was raised to “outperform” from “neutral” by Morgan Stanley Dean Witter. Also gaining was United Technologies, up $2.06 to $59.56.
* Merck climbed $2.56 to $69.75, as drug stocks, which have lagged the overall market much of the year, saw bargain-hunting. Bristol-Myers Squibb gained $3.50 to $66.69 and Warner-Lambert rose $2.19 to $85.13.
* Bank stocks also saw bargain-hunting. Wells Fargo gained $1.06 to $41.50 and Chase Manhattan jumped $2.63 to $77.50.
* In the tech sector, Hewlett-Packard helped drive the Dow, rising $5.69 to $112.63.
Other tech gainers included Dell Computer, up $2.38 to $52.69; Apple Computer, up $3.56 to $103.50; Compaq, up $1.38 to $28.75; and MCI WorldCom, up $4.50 to $81.
Novell surged $7.25 to $34.31 as strategist Alan Ackerman of Fahnestock & Co. named it one of his top stock picks.
* Nextel surged $8.44 to $105, as the company may benefit from a recent court ruling that could allow for the re-auctioning of wireless telecommunications licenses, a PaineWebber analyst said.
* The Internet sector was weak, even as other tech shares zoomed. Amazon.com fell $7.69 to $90, Yahoo fell $16.69 to $402.63, and EBay lost $7.19 to $142.31.
Nielsen/NetRatings reported that traffic on Internet retail sites fell 3.8% last week, signaling that the heaviest period of online holiday shopping is over.
RealNetworks lost $19.75 to $133.56 on speculation that a unit of Yahoo might stop using its software for playing audio and video on the Internet, which both companies denied.
And Juno Online Services plunged $15.06 to $46.19 after it said it will sell additional shares. Stock in the Internet services company had surged more than fourfold this week after it said it will offer free Internet service with advertising.
On the plus side, Commerce One vaulted $48 to $598 as the business-to-business software maker said it expects to break even in 2001.
And Xcelera.com jumped $28 to $160 after it named former EMC executive Cosmo Santullo to head its Mirror Image unit, which helps speed the transmission of data over the Internet.
* Countrywide Credit Industries fell $1.25 to $24.75 as the mortgage lender was downgraded to “outperform” from “strong buy” by Morgan Stanley.
* Sharper Image rose $1.06 to $16.06 as the retailer of gadgets and electronic toys expects “double-digit” holiday sales increases compared with last December’s 8% rise.
* Oil stocks, another depressed group, also rallied. Exxon Mobil rose $2.81 to $83.81; Texaco gained $2.13 to $54.88; and Chevron advanced $1.69 to $86.44.
Market Roundup, C8
* BEHIND THE RALLY
The market continues to defy doubters. A1
