Tech Stocks Extend Rally; Yields Edge Up
The blue-chip Dow index pulled back slightly Monday, but the broad market was higher despite another rise in bond yields.
Technology stocks led the charge, sending the Nasdaq composite index up 2.6% to 2,630.28--closing in on its record high of 2,652.05 reached April 26.
The Dow was odd man out, slipping 39.58 points to 10,815.98 as falling oil stocks hurt.
In the broad market, winners topped losers by 16 to 14 on the New York Stock Exchange and by 21 to 17 on Nasdaq.
“There is a broad-based recovery in the semiconductor and telecommunications sector,” said James Gribbell, a money manager with David L. Babson & Co. in Cambridge, Mass., which invests $22 billion.
In part, that reflects expectations that second-quarter corporate earnings will be very strong, he said.
In addition, Wall Street now senses that the Federal Reserve, which meets June 29 and 30, will order up just a small interest-rate increase to slow the economy, but nothing drastic.
Fears of rising interest rates had hammered many highly valued growth stocks in recent months, especially in the tech sector. With rate fears abating, buyers are returning, analysts said.
Indeed, Microsoft shares jumped $3.94 to $88.94 on Monday, the highest close since April 12. The stock’s 52-week high is $95.63.
Stocks advanced despite another backup in Treasury bond yields. Yields had tumbled early last week as Fed worries eased. But the 30-year T-bond edged back above 6% on Monday, to 6.02% versus 5.97% on Friday.
Supply issues are weighing on bonds: The Treasury will auction $15 billion of two-year notes Wednesday, while Ford Motor plans to issue at least $3 billion of debt this week.
“It’ll be tough for the market to rally before those sales,” said Anne Kennedy, who helps invest $2 billion at Columbia Partners Investment Management in Washington. “There’s going to be a lot of supply to digest.”
In other trading, oil prices continued to ease, pulling gasoline futures lower as well.
Overseas, Asian markets turned in powerful gains, as did Mexico’s market, where the main IPC index rose 1.9% to 5,823.71.
Among Monday’s highlights:
* Major tech stocks up sharply included Dell Computer, up $2.25 to $38.94; Cisco Systems, up $3.75 to a record $123.13; Intel, up $1.88 to $56.81; and IBM, up $4 to a record $124.75.
* Telecom winners included Newbridge Networks, up $2.63 to $31.25; General Instrument, up $2.38 to $43.69; and Lucent, up $2.44 to $65.38.
* Most Internet stocks continued to rebound. Yahoo jumped $14.44 to $158.88, America Online gained $3.38 to $115.38, EBay soared $5.88 to $152.06 and Amazon.com surged $12.19 to $123.50.
* Brokerage stocks were sharply higher, boosted in part by hefty earnings expectations in the current quarter. Ameritrade rocketed $16.81 to $89.75, Goldman Sachs gained $4.69 to $69.50, Lehman Bros. climbed $4.25 to $60.31 and Charles Schwab rose $8.25 to $98.25.
* Oil stocks sank, led by Exxon, down $2.13 to $78.25; Chevron, down $2.50 to $90.69; and Total, down $2.25 to $65.69.
* Drug stocks were weak, but they could get a lift today in the wake of the merger announced between Abbott Labs and Alza after trading ended Monday. Pfizer fell $2.06 to $97.50 and Lilly dropped $1.31 to $67.63.
* The Dow was clipped in part by Alcoa, which tumbled $4.19 to $63.38 after a recent rally. An executive at rival Alcan gave a downbeat assessment of prospects for aluminum prices in the next two years.
Among other metals stocks, Phelps Dodge tumbled $2.13 to $60.13.
Market Roundup, C15
