Tech Advance Pushes Nasdaq to Record Close
The Nasdaq composite index climbed to a record closing high Monday as the promise of strong corporate earnings pumped up technology stocks.
The Nasdaq index climbed 29.38 points, or 1%, to 2,915.95, surpassing its previous record close of 2,887.06 set Sept. 10.
But most major market indicators ended an otherwise quiet session little changed on what was the ninth anniversary of the 1990s bull market.
The Dow Jones industrial average slipped 1.58 points to close at 10,648.18, having given up an earlier gain of as much as 69 points.
The blue-chip Standard & Poor’s 500 also eased slightly. Smaller stocks fared better: The Russell 2,000 index rose 0.6% to 430.19.
Traders said the modest performance for blue chips was expected after last week, when key indexes rebounded sharply to their best weekly gain since early July.
Also, with banks and the bond market closed Monday in observance of Columbus Day, trading was slow.
Nasdaq, however, benefited from strong performances by tech industry leaders and highflying newcomers alike.
Since the 1990 bear market bottom for stocks on Oct. 11 of that year, the Nasdaq index has rocketed 796%, compared with 350% for the Dow index.
On Monday, Ask Jeeves, the maker of a Web-search service that allows users to seek information by asking questions rather than typing in keywords, soared $17.88 to $68.31 after the company signed a deal with Microsoft.
Among established firms, Adobe Systems surged $5.38 to $120, Vitesse Semiconductor leaped $6.06 to $88.44 and Apple Computer rose $1.13 to $66.69.
Earnings reports from a range of companies are expected to drive market activity this week. First Call/Thomson Financial expects the companies in the S&P; 500 to report average profit growth of 19.3% for the recently ended third quarter, the strongest period since the second quarter of 1995.
“The perception of improving earnings momentum is moving the market,” said A. Marshall Acuff Jr., equity strategist at Salomon Smith Barney.
Some investors returned to industrial stocks Monday, perhaps on optimism about third-quarter earnings amid an improving global economy. Caterpillar picked up $1.81 to $58.44, Illinois Tool Works gained $1.06 to $79.56 and Alcoa rose $1.38 to $63.
“Strong earnings should help the market’s bulls get the first shot at establishing the trend for the fourth quarter,” said Gregory Nie, technical analyst at First Union Securities in Chicago.
Acuff cautioned that most companies face fairly easy comparisons with profits in the third quarter of 1998, when U.S. businesses were hampered by the Asian financial crisis.
But he said the market’s strength may be fleeting if the optimism about tech stocks fails to catch on in other sectors.
“We’d like to see the market broadening out more,” he said. “That could increase odds of some sustainability.”
Among Monday’s highlights:
* Qualcomm jumped $8.56 to $222.50 as the maker of cellular phones and semiconductors said it expects Globalstar Telecommunications, the satellite telephone operator for which it’s making equipment, to have 600,000 customers by the end of its first year of operation.
* Chevron gained $1.50 to $86.88 after an analyst at Morgan Stanley Dean Witter raised the stock’s rating to “outperform” from “neutral” and said he expects the shares to reach $100 within 12 months.
Morgan Stanley raised Texaco to “outperform” from “neutral” and said the stock should reach $70. Texaco gained $2.13 to $62.94.
Energy stocks in general were higher, after recent losses.
* General Electric fell $1.63 to $123.13 from last week’s record high after a column in Barron’s noted that a large portion of GE’s recent earnings have come from the company’s pension plan income.
* MGM Grand shot up $3.69 to $49.25. Credit Suisse First Boston raised the casino stock’s rating to “buy” from “hold.”
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Market Roundup, C14
