Technology Issues Lift Market to New Highs
Investors waiting for the soaring technology sector to pull back were disappointed again Thursday, as many tech shares led the market to fresh highs.
But some buyers suddenly chased after hardware and software issues that have been lagging the technology leaders. That could mean either that the rally’s speculative tone is reaching a fevered pitch, or that investors are growing wary of the most expensive stocks, traders said.
The Nasdaq composite index jumped 77.72 points, or 2.4%, to a record 3,347.11, lifting the index’s year-to-date gain to nearly 53%.
The blue-chip Standard & Poor’s 500 also hit a record, while the Dow Jones industrial average soared 152.61 points, or 1.4%, to 11,035.70, leaving it just 2.6% below its record of 11,326.04 set Aug. 25.
Even the Dow was a tech story Thursday: It was led by Hewlett-Packard’s surge of $13.31 to $94.31, after a better-than-expected quarterly earnings report, while the company’s measurement-device spinoff, Agilent Technologies, zoomed on its first day of trading.
Agilent gained $14 to $44 on the New York Stock Exchange.
In other markets, bond yields continued to edge higher, while oil prices fell. The euro, meanwhile, hovered at a four-month low against the dollar.
On Wall Street, the hunger for tech and telecom stocks remains unsated. Some analysts figure that portfolio managers who refused to join the tech rally a month ago may now be piling on, unwilling to take the chance that the sector may continue to surge without them.
Some buyers on Thursday also were looking for tech issues that have either plunged in recent months because of company-specific problems or have simply been ignored. Troubled Xerox, for example, surged $2.88 to $27.75. Computer networker 3Com, which has traded in a narrow range for the last eight months, jumped $4.81 to $43.31.
The pickup in those stocks could be viewed as a sign that investors are moving down the quality scale from the tech leaders, which could suggest the rally is topping.
But it also could be a reaction to the super-high price-to-earnings ratios now commanded by such stocks as database software giant Oracle, which leaped another $3.19 to a record $74.19 on Wednesday.
Meanwhile, smaller investors apparently remain very active in the Nasdaq market overall, helping to drive volume there to 1.59 billion shares Thursday, second only to Wednesday’s 1.65 billion shares.
Rising stocks outnumbered losers by 23 to 17 on Nasdaq overall, and 219 issues hit new 52-week highs while 77 hit new lows.
By contrast, winners and losers were nearly even on the New York Stock Exchange, while the number of new 52-week lows totaled 149, well above the 90 stocks that hit new highs.
NYSE investors may be more worried about the bond market, where the 30-year Treasury bond yield rose to 6.17% on Thursday, up from 6.13% on Wednesday. Bond investors seem to be unwilling to buy into the idea that the economy is really slowing.
That also is weighing on utility stocks: The Dow utility share index fell 0.7%.
In currency trading, the euro slid to $1.029, down from $1.041 on Wednesday and the lowest since mid-July. That may indicate the European money is chasing U.S. stocks.
In the oil markets, near-term crude futures pulled back, losing 80 cents to $25.80 a barrel in New York.
Among Thursday’s highlights:
* Major tech shares powering ahead included Intel, up $3.75 to $78.50; Cisco Systems, up $3.19 to $87.94; and Motorola, up $4.81 to $123.81.
* In the telecom sector, Nokia soared $9.81 to $137, and Ericsson leaped $4.38 to $51.38 after upbeat words from Merrill Lynch.
Also, Qualcomm rebounded $12.94 to $355.81.
* Aerospace issues were strong. Lockheed Martin rose $1.38 to $20.63 and Rockwell jumped $3.44 to $50.63.
* Dept. of No Surprise: China-related issues pulled back after posting gigantic gains earlier this week on optimism about the new U.S.-China trade pact.
Dransfield China Paper slid $4.13 to $7, China Prosperity fell $12.81 to $19.25 and China.com slumped $11.63 to $93.38.
* U.S.-traded Mexican shares gained as the Mexico City market hit a record high. Grupo Televisa rose $1.06 to $48.88, Grupo Simec gained 56 cents to $3.63 and Empresas ICA rose 31 cents to $3.69.
* Starbucks rose $1.25 to $30.13 after reporting quarterly earnings up 27%.
Market Roundup, C8
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Tech Rally: A New Wave
Thursday’s market rally was powered in part by tech stocks that have lagged the sector’s leaders in recent months, as investors hunted for new ideas:
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Thurs. Thurs. Stock close change Compaq $25.50 +$1.75 IBM 98.00 +4.25 Macromedia 67.25 +9.38 Newbridge Net. 24.00 +5.06 Parametric Tech. 28.06 +6.06 PeopleSoft 22.81 +4.31 3Com 43.31 +4.81 Unisys 30.13 +5.44 Xerox 27.75 +2.88
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Source: Times research
