High on Tech, Nasdaq Powers to Another Record
The Nasdaq composite index rallied to a record Friday, capping its best week in more than a quarter of a century as investors moved money to tech stocks from industrial companies that might see profits hurt by rising interest rates.
In the Treasury bond market, meanwhile, the week’s wild ride continued. Yields surged after a report showed the U.S. jobless rate dropped to a 30-year low in January. Confusion among bond investors helped send gold prices rocketing.
On Wall Street the tech-stock juggernaut rolled on: The Nasdaq composite rose 33.16 points, or 0.8%, to a new high of 4,244.14, topping its previous peak of 4,235 set on Jan. 21.
For the week Nasdaq gained 9.2%, its best performance since 1974. The surge wiped out last week’s 8.2% plunge in the tech-heavy index. But Nasdaq’s Friday rally faded late in the day. And the broad market was mixed. The Dow industrial average fell 49.64 points, or 0.5%, to 10,963.80, though it rose 2.1% for the week.
“Money continues to shift from the real world to the virtual world,” said Scott Bleier of Prime Charter Ltd. in New York. “Money managers are going to the stocks that they know will perform”--meaning techs. Indeed, even in the face of rising interest rates, many investors believe that fast-growing tech companies are less vulnerable to higher rates--and a potentially weaker economy--than old-line industrial companies.
Market rates rose further on Friday, as bond traders fretted that the January employment report assures more rates hikes by the Federal Reserve ahead. The 30-year Treasury bond yield, which plunged to 6.14% Thursday after the Treasury announced plans to buy back debt this year, rebounded to 6.25%.
Shorter-term yields rose even faster. The five-year T-note yield zoomed to 6.66% from 6.51%.
The bond market volatility, and fears that the strong U.S. economy will fuel inflation, helped send gold prices up $23.20 an ounce to $310.40. But the trigger for the rally was news that Placer Dome, the world’s fifth-largest producer, will no longer sell borrowed gold as a hedge against lower prices because it now expects a rally.
Among Friday’s highlights:
* Tech stock leaders included Microsoft, up $2.94 to $106.56; Cisco Systems, up $3.31 to $121.13; Apple, up $4.69 to $108; and Hewlett-Packard, up $4.50 to $118.
* Foreign telecom stocks rose as investors looked for more major deals in the wake of the Vodafone Airtouch-Mannesmann merger accord. British Telecom’s U.S.-traded shares jumped $6.81 to $168.94 and Alcatel’s rose $2.31 to $50.94. Telmex climbed $9.69 to $129.31 after exceeding fourth-quarter profit hopes. That helped send the Mexican market up 2.7%.
* Financial shares were mostly lower as bond yields rose. J.P. Morgan fell $3.63 to $119.13 and Citigroup lost $1.56 to $54.75.
* Gold shares soared in tandem with the rally in bullion. Placer Dome jumped $2.13 to $10.88 and Echo Bay rose 44 cents to $1.75.
* Mattel continued to fall, losing 13 cents to $10.75 in heavy trading, after CEO Jill E. Barad resigned.
Overseas, Poland’s stock market leaped 5% to an all-time high, paced by--what else?--tech and telecom shares. Other European indexes were mixed, but stocks rallied strongly in Latin America and surged 3.5% in Canada.
Market Roundup, C4
