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 to 2,915.95, surpassing its mark of 2,887.06 set Sept. 10.
But most major market indicators ended an otherwise quiet session little changed.
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. Traders said the modest performance was expected after last week, when the Dow gained almost 377 points in its best performance in three months.
The blue-chip Standard & Poor’s 500 fell 0.81 point to 1,335.21, while the Russell 2,000 index of smaller companies rose 2.48 points to 430.19.
Nasdaq benefited from strong performances by industry leaders and highflying newcomers alike. 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.
Tech sector bellwether Intel rose 81 cents to $76.50 on speculation it will report strong earnings today.
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.
A range of cyclical stocks closed higher. Cyclical companies tend to rise and fall along with the broader economy, and many are expected to show healthy earnings growth due to the economy’s strength. Caterpillar picked up $1.81 to $58.44 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.”
Declining issues outnumbered advancers by a 9-8 ratio Monday on the New York Stock Exchange, where volume was light.
The bond market was closed in observance of Columbus Day. The stock market was open for a full session, but many traders took a three-day weekend.
Among the 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.
Analysts expect tech companies in the S&P; 500 to post year-over-year earnings growth of 31% in the third quarter, according to tracker First Call. Among other tech leaders, Motorola rose $3.63 to $96.63 and Apple rose $1.13 to $66.69.
* 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.
* General Electric fell $1.63 to $123.13 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.
Overseas, Japan’s stock market was closed for a national holiday, while European indexes were mixed.
Market Roundup, C14
