Nasdaq Ekes Out Its First Gain of Week

Investors sent blue-chip stocks higher for a fourth straight session Wednesday, while technology stocks recovered from an early loss to post their first gains of the week.

Analysts said Wall Street is still gravitating toward non-tech issues, which are viewed as safer in a slower economy, as it has done since Labor Day. They attributed the tech rally to selective bargain hunting rather than an overall endorsement of the sector.

“There is still a feeling out there that tech stocks are still not over-cheap, that it’s still not time to go into a sector that’s still sorting out its wounds from a speculative bubble,” said Charles Pradilla, chief investment strategist at SG Cowen Securities. “So these blue chips are more attractive.”

The Dow Jones industrial average closed up 110.72 points, or 1.0%, to 10,803.16, extending a rally that began last Thursday.

The Nasdaq composite index gained 45.83 points, or 1.8%,to 2,539.35, and the Standard & Poor’s 500 index climbed 13.73 points, or 1.0%, to 1,328.92.

A day after selling off many computer networking issues, investors bid up shares of Ciena, which rose $5.69 to $79.88, and JDS Uniphase, up $5.50 at $47.38.

But many tech bellwethers lagged, including Microsoft, down 44 cents to $46.44; IBM, off 13 cents to $84.69; and America Online, down $2.75 to $35.75. Analysts say it may be a while before tech stocks rally and keep their gains for more than a few sessions.

“Each time you get any rally on the Nasdaq, investors step right up and use what little upward trend there is to sell,” said Mark Minervini, head of Quantech Research Group. Nasdaq, off nearly 50% from its March high, hasn’t risen more than two days in a row since August.

Investors sought refuge in drug, industrial, retail and consumer products stocks. Pfizer climbed 56 cents to $45.25 and Johnson & Johnson hit a 52-week high before closing at $103, up 63 cents. Boeing rose $1.06 to $64.06, 3M was up $4.19 at $119.19, Wal-Mart climbed $1.94 to $52.56 and Procter & Gamble surged $2.06 to $76.50.

Transportation stocks were strong, too, including Southwest Airlines, which rose $2.07 to $34.01, a 6% gain.

Wall Street got another indication that the economy is slowing. The Conference Board, an industry-funded research group, said its index of leading economic indicators, which measures future growth, slipped 0.2% in November.

Still, Treasury bond yields rose from recent lows. The yield on the benchmark 10-year Treasury note ended at 5.10%, up from 5.03% Tuesday.

Meanwhile, the euro was basically flat against the dollar, at 93 U.S. cents. The dollar continued to surge against the yen, reaching 114.35 yen from 113.63.

Energy prices were mixed. Crude oil for February delivery slid 17 cents to close at $26.47 a barrel on the New York Mercantile Exchange. But February heating oil rose 0.75 of a cent a gallon to 89.10 cents, helped by a rise in January natural gas futures to an intraday record high of $10.10 per million British thermal units on that contract’s last trading day.

Advancing issues outnumbered decliners more than 2 to 1 on the New York Stock Exchange, where trading was active. On Nasdaq, where 1.97 billion shares changed hands, winners outnumbered losers by 11 to 9.

Among Wednesday’s highlights:

* Retail stocks shook off their recent blues. Besides Wal-Mart, Home Depot, another Dow component, was up $2.06 at $42.75, AnnTaylor Stores climbed $2.56 to $24.69, and Nordstrom gained $2 to $18.31 as some investors decided the companies’ prospects may brighten next year after a disappointing holiday shopping season.

The S&P; specialty retail index, which includes Gap--up $2.13 to $25.56--rose a hefty 9.7%. The S&P; department stores index added 8.8%, reflecting gains by Kohl’s, up $4.69 to $60.63, and others.

* Network Associates, which tumbled 49% on Tuesday, lost another 61% of its value Wednesday, falling $7.25 to $4.50. The maker of McAfee anti-virus software said it will miss earnings estimates and will replace its top management.

Network’s problems infected others in the computer security field. Entrust Technologies lost $1.88 to $10.44 and CheckFree fell $7.69 to $41.75. The Bloomberg Internet security index declined 4.8%.

Market Roundup, C7-8