Nasdaq Leads Broad Market Rally
The Nasdaq composite got a good start toward 4,000 on Thursday, leading the broad market higher as investors’ appetite for technology and telecom stocks remains unsated.
Meanwhile, bond traders’ recent mood swing to the bullish side also continued, as they pushed interest rates lower ahead of the government’s report today on October employment trends.
On Wall Street, the Nasdaq composite gained 27.44 points, or 0.9%, to a record 3,055.95, one day after closing above the 3,000 mark for the first time.
The Dow Jones industrials edged up 30.58 points, or 0.3%, to 10,639.64, once again fading in late trading after an early surge--a pattern that troubles some analysts.
Still, the market’s breadth continues to be positive, with rising stocks narrowly outnumbering losers on the New York Stock Exchange and Nasdaq. Trading activity remains at very high levels.
Stocks should have been happier with the bond market’s action, some traders said.
The yield on the 30-year Treasury bond fell from 6.13% on Wednesday to 6.09%, lowest since Oct. 4, as buyers stepped up despite the risk that the October employment data could point to a stronger-than-expected economy.
But with other recent data suggesting the economy is in fact slowing, more bond investors are feeling that the Federal Reserve either won’t raise short-term interest rates when it meets Nov. 16, or will do so but signal that it is probably done tightening credit for the near term.
The European Central Bank, meeting on Thursday, raised its key rate--but said that’s probably it for now. European stock markets rallied on the move.
“If the Fed decides to raise rates, that increase is already discounted” in the financial markets, Goldman Sachs market guru Abby Joseph Cohen told brokerage industry executives meeting in Florida.
Among Thursday’s market highlights:
* Drug stocks were standouts among blue chips, after Pfizer shocked the market with its bid for Warner-Lambert. Warner surged $6.19 to $90, Eli Lilly jumped $4.25 to $76.13, Schering-Plough leaped $4.06 to $55 and Pharmacia & Upjohn surged $3.38 to $59.
But Pfizer lost $1.31 to $37.25, and Merck gained just 56 cents to $79.69.
* Computer chip-related stocks helped drive Nasdaq. Intel rose $1.81 to $81.56, Emulex leaped $9.44 to $169.44 and Motorola shot up $3.25 to $106.50.
Among other tech issues, Apple jumped $2.13 to a record $83.63. But IBM lost $2.81 to $91.56.
* Internet shares rebounded, led by Inktomi, up $8.56 to $107.31; America Online, up $5.25 to $144.25; and PSINet, up $2.31 to $43.50.
AOL now is at its highest level since April. You could have bought it for $82 in late September.
* In the telecom sector, Qualcomm--which surged $35.69 to $260.50 on Wednesday after a strong earnings report--continued to fly, rising $3.44 to $263.94.
Other winners: Equant, up $5.13 to $92.50, and Ortel, up $6.81 to $41.75.
* Financial stocks resumed their rally as bond yields fell. First Union gained $1.31 to $42.56, Citigroup rose $1.75 to $54.75, Morgan Stanley Dean Witter gained $4.31 to $113.19 and Lehman Bros. surged $4.19 to $74.
* The entertainment sector also attracted buyers--at least before Walt Disney’s earnings report, issued after the close.
Viacom Class B rose $1.19 to $44.63, Time Warner gained $2.13 to $67.13, Sony rose $1.19 to $160.25 and Fox Entertainment inched up 56 cents to $22.25.
Market Roundup, C7
