Stocks Rise, Yields Fall as Report Eases Rate Fears
Long-term bond yields fell Friday, helping to power another rally on Wall Street, after a government report further dampened inflation worries.
The Nasdaq composite index surged 46.34 points, or 1.5%, to a record 3,102.29, lifting the tech-dominated index’s gain for the week to 4.6%.
The Dow Jones industrial average added 64.84 points, or 0.6%, to 10,704.48, though the blue-chip index surrendered most of what had been a 200-point gain early in the day.
Stocks responded to another sharp decline in bond yields after the October employment report suggested that wage inflation is subdued.
The bellwether 30-year Treasury bond yield ended at 6.04%, down from 6.09% Thursday and the lowest since Sept. 27.
“The bond market likes what it sees: growth and low inflation,” said Alan Day of Stratevest Group in Burlington, Vt.
But traders noted that shorter-term yields were flat or up slightly Friday.
Still, more investors are growing confident that the Federal Reserve will refrain from raising short-term interest rates at its Nov. 16 meeting.
Of the 30 main Treasury bond dealers on Wall Street, 17 now expect no rate increase for the rest of the year, according to a survey taken after the employment report. Earlier this week a majority of dealers expected a November rate increase.
In the stock market falling bond yields--and strong corporate earnings--have helped revive bullishness over the last two weeks.
But some traders worry that the market is losing steam. Although there still is frenzied buying of many technology stocks, the Dow actually lost ground this week, falling 0.2%. The Standard & Poor’s 500 added just 0.5%.
But market bulls say the rally is simply broadening. Winners topped losers by 18 to 13 on the New York Stock Exchange on Friday, and by 22 to 18 on Nasdaq.
The Russell 2,000 small-stock index surged 3.2% for the week.
Among Friday’s highlights:
* Tech stocks up sharply again included Qualcomm, up $30.44 to $294.38; Motorola, up $7.81 to $114.31 (after issuing a bullish forecast on semiconductor sales); Apple, up $4.69 to $88.31; and Cisco Systems, up $3.44 to $73.44
Some analysts expressed concern about tech stocks, given the Microsoft court ruling after markets closed. But many said the effect on other tech stocks is likely to be limited, if any.
* New stock issues continued to sizzle. Cobalt Networks (ticker symbol: COBT), a maker of computer servers for small businesses, rocketed $106.13 to $128.13 in its debut on Nasdaq.
Telecom firm Wireless Facilities (WFII) soared $47 to $62 in its debut, and online grocer Webvan Group (WBVN) rose $9.88 to $24.88.
But a weak spot was Santa Ana’s Collectors Universe (CLCT), which closed unchanged at $6 in its debut.
* Many financial stocks gained, including Goldman Sachs, up $3.56 to $73.69, and Bank of America, up $1.56 to $65.06.
* Walt Disney sank $2.19 to $24.31 in the wake of its warning that next year’s earnings will miss forecasts.
Market Roundup, C4
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Brisk Bond Rally
Since climbing to a two-year high of 6.3% last week, the benchmark 30-year Treasury yield has tumbled to 6.04% as bonds have rallied. Daily closes since Oct. 1:
Friday: 6.04%
Source: Bridge Information Systems
