Major Indexes Jump Despite Yield Surge
The tech-oriented Nasdaq composite index rocketed 4% on Thursday, even as a government economic report sounded the inflation alarm and sent bond yields soaring.
What’s up with that?
The Nasdaq jumped 143.94 points to 3,774.03, fueled in part by strong telecom-sector earnings.
The Dow Jones industrial average, which sank as much as 197 points in early trading, pared its loss to 57.40, or 0.5%, to 10,888.10.
Broader stock indexes were mostly higher. The Standard & Poor’s 500 inched up 0.3% while the Russell 2,000 index of smaller companies rallied 2.1%.
Although trading volume remained modest, breadth was positive on Nasdaq, as winners outnumbered losers 21 to 19.
In the Treasury market, yields jumped as reports showing wage inflation accelerated in the first quarter boosted expectations for several more interest-rate increases by the Federal Reserve.
The yield on the 30-year bond climbed to a one-month high of 5.99% from 5.94% on Wednesday.
Why were stocks seemingly unfazed by the inflation data? Some traders said investors reverted to their first-quarter mentality: If interest rates are going up, buy high-growth companies whose businesses are least likely to be hurt by rates.
We’ll see how long that lasts.
Among Thursday’s highlights:
* In the telecom sector, MCI WorldCom gained $4.50 to $45.38 after the long-distance carrier said first-quarter profit rose 72% as data and international sales offset slower growth in telephone revenue.
Nokia jumped $4.75 to $56.63 after the Finnish mobile phone maker said pretax profit rose 76% in the quarter. Elsewhere in the wireless group, Nextel Communications rose $8.31 to $112.06 and Qualcomm gained $6.25 to $103.50, buoyed by the debut of AT&T;’s wireless tracking stock.
* Tech companies rising on better-than-expected earnings reports included Asyst Technologies, a designer of clean rooms for chip making, up $9.44 to $52.94; software maker BroadVision, up $7.63 to $40; online content provider InfoSpace, up $7.95 to $72; and software maker Macromedia, up $17.50 to $78.75.
* Other tech gainers included Applied Materials, up $9.88 to $100.31; Adobe Systems, up $8.56 to $123.44; Altera, up $8.44 to $106; and Oracle, up $5.13 to $77.31.
* On the downside, financial services companies fell on interest-rate worries. J.P. Morgan sagged $3.19 to $131.38, Washington Mutual slid 81 cents to $25.94 and General Electric, owner of the world’s biggest non-bank finance company, slipped $1.75 to $161.50.
Utility stocks also weakened. The Dow utility index, which has been soaring in recent weeks, fell 1.5%.
* Some “old-economy” shares saw fresh demand. Aetna rose $4.75 to $59.94 after beating analysts’ consensus first-quarter earnings estimates.
Dow Chemical gained $3.44 to $109 and Clorox rose $2.75 to $37.56 after they also beat analysts’ projections.
* Oil-services provider Cooper Cameron zoomed $6.06 to $74 after beating profit expectations. Elsewhere in the sector, Halliburton climbed $1.88 to $45.50 after it said it would sell the rest of its slower-growing Dresser Equipment unit and buy back up to 10% of its shares.
Schlumberger rose $1.31 to $78.63 after saying it expects Venezuelan revenue to grow by $50 million this year on boosted oil output.
Among oil producers, Chevron gained $2.13 to $88.44 and Exxon Mobil rose 56 cents to $80.69.
* BioSphere Medical rose $3.38 to $24.88. The medical-device company received approval from the Food and Drug Administration for its microspheres, used to treat tumors and vascular disease by stopping blood flow.
* Among Southland issues, Jerry’s Famous Deli surged $1.03 to $3.25. The company this week said first-quarter earnings jumped 57% to 17 cents a share.
Market Roundup, C9-10
