Nasdaq Hits Still Another High, but Microsoft Restrains the Dow
Stocks ended mixed on Monday, as trading in software giant Microsoft dominated the day’s action.
The Nasdaq composite surged to a new high as many of Microsoft’s rivals gained in the wake of a federal judge’s finding Friday that the company exercises monopoly power in key markets.
The index zoomed 41.68 points, or 1.3%, to 3,143.97, its seventh consecutive record high.
But the Dow Jones industrials--which now include Microsoft as a member--added just 14.37 points to 10,718.85, weighed down modestly by Microsoft’s net decline of $1.63 to $89.94.
In the broad market, winners topped losers by 21 to 19 on Nasdaq, while losers had a 17-14 edge on the New York Stock Exchange.
NYSE volume was subdued, while Nasdaq volume was inflated by the 121 million Microsoft shares that changed hands at prices as low as $84.38 and as high as $90.75 during the session.
The judge’s decision in the Microsoft antitrust case “leads to the opening of markets and possibilities that there’ll be more competition,” said Gary Campbell, chief investment officer at Commerce Bank Investment Management Group in St. Louis.
At the same time, he said, Microsoft’s “earnings over the short run are not going to be hurt.”
A slight uptick in bond yields also weighed on stocks. The 30-year Treasury bond yield ended at 6.06%, up from 6.04% on Friday.
The bond market’s latest rally stalled after four days of gains. Investors held back from buying bonds--with yields near six-week lows--before this week’s $25 billion in Treasury debt sales.
The government will auction five-year notes today and 10-year notes on Wednesday.
Yields had tumbled Friday as signs of slower wage growth in October gave more investors confidence that the Federal Reserve won’t raise interest rates for a third time this year when its policymakers meet Nov. 16.
The October employment report added to evidence on manufacturing, housing and the economy as a whole that points to tame inflation, with some signs of slowing growth.
If that’s the case, “The fundamental backdrop is very favorable for stocks,” said Don Selkin, chief investment strategist at Joseph Gunnar in New York.
Economic reports due this week include the October wholesale inflation report, to be issued Wednesday.
Among Monday’s highlights:
* Microsoft rivals gaining after Friday’s court ruling included Apple Computer, up $8.06 to a record $96.38; IBM, up $3.81 to $93.94; Sun Microsystems, up $2.19 to $111.88; and America Online, up $4.88 to $150.38.
But Oracle added just 75 cents to $59.44.
* Internet stocks in general were hot again, including EBay, up $3.75 to $137; Yahoo, up $13.75 to $197.19; Homestore.com, up $11.25 to $59; Commerce One, up $53.81 to $342.94; and Infospace.com, up $3.94 to $65.94.
* Telecom issues, by contrast, took a break. Qualcomm fell $5 to $289.38, Equant lost $3.50 to $91.63 and JDS Uniphase slid $5.88 to $191.13.
* Energy stocks bounced back after recent profit-taking. Exxon gained $3.69 to $74.31, Chevron surged $3.88 to $89.38 and Unocal added $1.56 to $33.63.
December crude oil futures edged up 27 cents to $23.27 a barrel in New York.
* Drug stocks slid after soaring last week on news of the merger deal between American Home Products and Warner-Lambert, then on news of Pfizer’s hostile bid for Warner-Lambert.
Warner shares fell $2.06 to $87.88, while Eli Lilly slid $1.75 to $75.25. Pfizer was unchanged at $34.75.
* Walt Disney shares continued to slide after last week’s warning by the company that growth is not likely to resume in 2000. The stock fell 81 cents to $23.50. Its 52-week low is $23.38.
Market Roundup, C14
