Blue-Chip, Internet Stocks Leave Rate Worries Behind
Blue-chip shares and Internet issues rocketed Wednesday, as some investors brushed aside worries about the possibility of another Federal Reserve interest rate hike.
But the stock market overall wasn’t as strong as bond yields hovered at one-month highs.
The Dow industrials zoomed 187.75 points, or 1.8%, to 10,588.34, closing at their high for the session.
The Nasdaq composite jumped 2.1% to 2,857.21, nearing its record high of 2,887.06 reached Sept. 10.
Stocks sank on Tuesday after the Fed met and left short-term interest rates unchanged but adopted a “bias” toward higher rates. However, the Fed said it wasn’t implying an imminent rate hike.
Wednesday’s rally reflected that “the market spent six weeks wringing its hands about interest rates, and though it didn’t get exactly what it wanted, it’s now behind us,” said Alfred Goldman, analyst at A.G. Edwards & Sons in St. Louis.
Still, the rally was fairly narrow. Winners topped losers by 18 to 13 on the New York Stock Exchange.
On Nasdaq, winners enjoyed only a 21-19 edge.
The market’s bulls believe more buyers will appear in coming weeks as Wall Street digests what should be strong third-quarter corporate earnings reports overall.
The bond market was fairly calm Wednesday, but yields failed to pull back much after jumping on Tuesday after the Fed meeting. The bellwether 30-year Treasury bond was unchanged at 6.17%.
Stocks’ rally helped the dollar rise to 107.51 yen from 106.41 on Tuesday. The euro held up well after a stronger-than-expected German factory orders report fueled expectations that the European Central Bank may raise interest rates today.
In commodity markets, gold inched up just 10 cents to $324.50 an ounce in near-term futures trading, pausing after Tuesday’s jump.
Among Wednesday’s highlights:
* Among the first firms to release quarterly earnings, PepsiCo jumped $1.75 to $33.19 after reporting it beat analysts’ estimates. But Alcoa fell $2.13 to $62 after saying it met estimates.
* Internet stocks zoomed ahead of Yahoo’s earnings report--which came after the market closed and was far above estimates. EBay jumped $10.50 to $151.69, America Online leaped $6.50 to $120, Priceline.com gained $8.50 to $72.75 and PSINet surged $5.69 to $39.56.
* Among tech-related new stock issues that began trading Wednesday, Breakaway Solutions (ticker symbol: BWAY) soared $28.25 to $42.25, Silicon Image (SIMG) zoomed $14.75 to $26.75 and SmartDisk (SMDK) leaped $12.81 to $25.81.
* Investors rushed back into some brand-name giants that have been battered recently. Coca-Cola surged $4 to $51.94, perhaps helped by PepsiCo’s earnings report. Gillette gained $1.06 to $38.56 and Merck rose $2 to $72.13.
Also among blue chips, GE hit a record high, up $2.75 to $123.69.
* Biotech stocks rallied anew, led by Amgen, up $3.19 to $88.19; Genentech, up $12.56 to $167.63; and Immunex, up $6.50 to $48.50.
* On the downside, motor home maker Winnebago plunged $3.75 to $19.88 despite reporting record earnings for its fiscal year.
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Market Roundup, C8
