Techs Mixed as Blue Chips Recoup Losses; Yields Climb

After a big step backward Wednesday, the Nasdaq market took only a small step forward Thursday, as many technology stocks remained under pressure.

In the broad market, blue chips recouped their Wednesday losses, almost down to the exact point. The Dow Jones industrial average rose 103.16 points, or 1.1%, to 9,298.63, springing back from Wednesday’s drop of 101.56 points.

In other trading, bond yields rose again amid more signs of economic strength. The dollar continued to rise against the yen.

On Wall Street, the Dow opened stronger, dipped briefly into negative territory then resumed climbing in late morning.

But the tech-heavy Nasdaq composite index, which slumped nearly 65 points, or 2.8%, on Wednesday, inched up just 11.64 points, or 0.5%, to 2,260.55 on Thursday. It retreated from its intraday high of 2,273.

Tech stocks have been sliding in recent weeks after leading the market rally since October. The stocks were slammed Wednesday in the wake of Dell Computer’s report late Tuesday of slower-than-expected fourth-quarter sales growth.

On Thursday, buyers just nibbled at most major tech shares. Dell, which sank $7.19 on Wednesday, rose $1.44 to $83 on Thursday. The stock is off 25% from its recent record high.

Among other techs, Intel surged $3.50 to $128.13, but Microsoft lost $4.25 to $145.75. IBM rose $3.75, while Sun Microsystems eased 6 cents to $94.

On Nasdaq, losers slightly edged winners, while winners had a 17-12 margin on the New York Stock Exchange. Volume remained below recent peaks.

The tone of the market again failed to impress traders and technicians, who have been complaining for some time that even on days the Dow finishes higher, the trend isn’t confirmed across the entire market.

“The breadth tells me the whole story,” said Larry Rice, chief investment officer at Josephthal & Co. “The rallies are very narrow, and the sell-offs kill you. There’s really been very little leadership.”

The day’s economic news put more pressure on the bond market, sending the yield on the 30-year Treasury bond up to 5.37% from 5.31% on Wednesday. The yield is still below the six-month high of 5.42% reached last Friday.

Debt sales by Ford Motor Credit, J.P. Morgan and a handful of other companies also provided investors higher-yielding alternatives to government bonds.

Anything offering fatter yields than Treasury debt “is being snatched up,” said Greg Jones, a taxable fixed-income trader at First Capital Group.

Likewise, the robust economic data are encouraging some investors to buy stocks of some heavy-industry companies. GM soared $3 to $85.56, Alcoa gained $2.81 to $81.94 and International Paper rose $1.19 to $41.69.

Some retail issues also gained, helped by reports that consumer spending remains healthy. Ann Taylor jumped $3.63 to $36.75, Ross Stores rose $1.44 to $44.38 and Dayton Hudson added 69 cents to $61.63.

“Investors are really going after these consumer cyclicals like retail and autos,” said Ned Riley, chief investment officer at BankBoston, “but I don’t think it’s a sustainable leadership simply because we’re in the eighth year of a recovery, and one would think the pent-up demand for things like autos has long been exhausted.”

In currency trading, the dollar benefited as Japanese Vice Finance Minister Koji Tanami joined a chorus of finance officials this week in voicing support for a weaker yen, saying its recent decline is “not undesirable” for Japan’s sinking economy.

The dollar rose to 119.81 yen, up 0.79 yen, the highest since early December.

Among Thursday’s highlights:

* Insurance stocks soared after Dutch insurer Aegon agreed to buy U.S. life insurance company Transamerica for $9.7 billion in cash and stock. Transamerica soared $15.25 to $72.88 and Aegon gained $5.13 to $99.88.

Among other insurers, Conseco jumped $2 to $29 and Lincoln National surged $4 to $88.38.

* In the Internet sector, shares were mixed, with Amazon.com falling $4 to $89.50, its lowest closing price since Dec. 15.

Yahoo eased 75 cents to $128.88, Lycos lost $3.19 to $84.25 and Inktomi slid $3.50 to $53. But Broadcast.com surged $9.94 to $68.13.

* McDonald’s rose $2.44 to an all-time high of $82.94 after Merrill Lynch analyst Peter Oakes said the stock could reach $100.

Market Roundup, C5