Earnings, Merger Boost Nasdaq to Record
Equity indexes climbed Thursday and the Nasdaq composite set a new high, as strong earnings, stock splits and a high-profile Internet merger pulled technology shares out of the previous day’s funk.
“This market is merger-driven,” said Ted Theodore, director of research at Avatar Associates, “and you have this added feature of a very good earnings picture.”
The Dow Jones industrial average climbed 81.10 points to 9,281.33. The Nasdaq composite index surged 70.20 points to 2,477.34, beating the previous record of 2,433.41 set Tuesday. The Standard & Poor’s 500 composite added 22.20 points to 1,265.37.
Meanwhile, bond yields dipped, with the benchmark 30-year Treasury declining to 5.10% from 5.13% on Wednesday.
In currency trading, the dollar advanced to 116.40 Japanese yen, from 115.82 on Wednesday.
While the Dow’s gain left it 362 points below the record 9,643.32 set Jan. 8, Wall Street’s best-known indicator failed to make back Wednesday’s 124-point loss. Market analysts also noted that advancers barely led decliners on the New York Stock Exchange and that Big Board volume, though heavy at 1.03 billion shares, was below Wednesday’s level.
Internet stocks led the charge, as search service Yahoo announced it is buying GeoCities for $3.9 billion in stock. Yahoo shares soared $31.88 to $367.75, and GeoCities shares shot up $42.25 to $117.25, both in Nasdaq trading.
“It doesn’t happen often that the acquirer and the ‘acquiree’ go up,” said Robert Streed, a money manager with Northern Trust Co. “But it happens in the Internet world.”
America Online, another Net mainstay, rose $8.94 to $174.44 in leading volume on the Big Board. The Internet service provider beat earnings estimates and announced a 2-for-1 split Wednesday.
In other merger news, Ford Motor said it will buy the automotive operations of Sweden’s Volvo for $6.45 billion. Ford’s shares rose $2.19 to $62.50, while Volvo’s American depositary receipts declined 81 cents to $26.56.
The market was also supported by a recovery in banking stocks. Hit hard Wednesday by trouble in Brazil, they recovered Thursday as the Brazilian currency and stock market stabilized. Citigroup rose $1.50 to $55.50 and J.P. Morgan added $4.31 to $104.38. Both are Dow components.
In other action on Wall Street, the NYSE composite index rose 7.32 points to 595.40, and the American Stock Exchange composite index rose 6.74 points to 713.93. The Russell 2,000 index of smaller companies rose 2.85 points to 423.97.
Among Thursday’s highlights:
* Intel rose $4.44 to $137.19 in leading Nasdaq volume, after the software company announced its own 2-for-1 split Thursday.
* Drug stocks also boosted the market. Eli Lilly shares rose $1.50 to $92.25 after it announced strong earnings and authorized a $1-billion stock-repurchase program. Competitor Pfizer, capitalizing on the current craze for stock splits, advanced $5.63 to $127.56 after the company said its board will vote on a 3-for-1 split in April.
* Brokerages, both online and traditional, rallied.
E-Trade Group gained $15.94 to close at $99.50 and AmeriTrade Holding rose $5.75 to $66.75. Daily online trading volume in the fourth quarter rose 34% from the previous three months, according to a Credit Suisse First Boston Corp. report. One in seven U.S. stock trades were done online.
Donaldson Lufkin & Jenrette jumped $2.06 to $48.50, Merrill Lynch rose $1.75 to $74 and Morgan Stanley Dean Witter gained $2.44 to $84.19.
Overseas, Tokyo’s Nikkei index dropped 0.8%, Frankfurt’s Dax rose 1.5% and London’s FTSE-100 dipped 0.2%.
Market Roundup, C6
