Stocks Broadly Higher, but Indexes Mixed
Stocks closed broadly higher Monday, though key indexes were mixed, despite the backlash against the United States after the Chinese Embassy bombing in Belgrade, and despite concerns about the near-term trend in interest rates.
The Dow Jones industrial average slipped 24.34 points to close at 11,007.25 after reaching a record high on Friday. But winners topped losers by 17 to 13 on the New York Stock Exchange and by 22 to 19 on Nasdaq. Trading was muted.
Smaller stocks showed particular strength--suggesting that the market rally continues to broaden.
Standard & Poor’s index of 600 smaller shares jumped 1.2%.
Rising interest rates, which hurt many highly valued growth stocks last week, weren’t a problem on Monday: Long-term government bond yields fell back slightly.
The yield on the bellwether 30-year Treasury bond dipped from Friday’s 11-month high of 5.81% to end at 5.79%.
“It’s a buying opportunity,” said Alan Day, who helps oversee about $4 billion at Stratevest Group in Burlington, Vt. “There’s an overreaction to the threat of inflation.”
Still, many bond traders are nervous ahead of the Treasury’s quarterly “refinancing.” The government will auction $15 billion of five-year notes today and $12 billion in 10-year notes Wednesday.
On Wall Street, optimism for a resolution to the conflict in the Balkans helped stocks in early trading. Western news agencies quoted the official Yugoslav news agency, Tanjug, as saying the Yugoslav government was withdrawing some troops from Kosovo.
Among Monday’s highlights:
* Tech stocks returned to favor, led by the Internet sector on speculation that USA Networks’ proposed takeover of Net search vehicle Lycos is collapsing. Many Lycos shareholders had argued that USA Networks wasn’t offering enough.
Lycos jumped $15.75 to $105.25. Other Net gainers included America Online, up $10.13 to $128.31, and Xoom.com, up $6.75 to $81.88.
* Other tech winners included Adobe Systems, up $4.50 to $72.44, and Dell, up $2.06 to $42.25.
Also, Motorola jumped $4.19 to $81.88. The firm disclosed that it got an unsolicited $1.6-billion offer for its semiconductor components group from TFG Acquisition, a firm composed of former and current executives. TFG asked that Motorola directors consider the bid along with any other offers for the unit.
* Profit-taking continued to hit many big consumer growth stocks. Johnson & Johnson dropped $2.75 to $93.38, Clorox lost $2.69 to $104.13 and MCI WorldCom fell $1.63 to $85.50.
* Some retailers picked up, including Wet Seal, up $1.06 to $46.38; Sport Chalet, up $1.25 to $6.38; and Tandy, up $3.94 to $83.13.
* Oil stocks were mixed despite rumors that Chevron may bid for Texaco. Chevron rose $1.38 to $96.25, but Texaco fell $1.38 to $65.88.
Crude oil futures rose Monday on the New York Mercantile Exchange, helped by a report showing that OPEC is, for the most part, living up to its promise of production cuts.
A report by the International Energy Agency examining OPEC’s April production showed 85% compliance with the planned 1.72 million barrels in cuts.
June oil futures rose as high as $18.55 a barrel. Prices eventually settled at $18.50, up 28 cents.
Market Roundup, C12
