Microsoft Surge Leads Return to Tech Issues

A surge of buying interest in Microsoft’s beaten-down stock helped power the Nasdaq index and the Dow Jones industrial average higher Wednesday, while the broader market was mixed.

In other markets, Treasury bond yields jumped as oil prices rose again, apparently disregarding the Organization of Petroleum Exporting Countries’ plan to raise output.

On Wall Street, Microsoft was large and in charge, as its stock jumped $5.75 to $80.69 on word that the judge presiding over the company’s landmark antitrust case had delayed imposing restrictions on the company’s business.

Microsoft now is at its highest level since April 11.

Lifted by Microsoft and by gains in other technology stocks, the Nasdaq composite rose 50.65 points, or 1.3%, to 4,064.01, highest since April 10.

The latest gain, Nasdaq’s fifth in a row, left the index down just 0.1% year-to-date, and cut its loss from its March record high to 19.5%.

The Dow industrials, of which Microsoft is one of 30 stocks, gained 62.58 points, or 0.6%, to 10,497.74. The Dow still is down 8.7% year-to-date.

But broader “old-economy” indexes were weak Wednesday, continuing the trend of recent weeks that has seen investors return to tech stocks while shunning shares of slower-growing companies viewed as more vulnerable to a U.S. economic slowdown.

Bank stocks led the market lower Wednesday after the parent of Bank of Hawaii, Pacific Century, became the latest financial firm to warn of weaker earnings because of rising bad loans. Pacific’s shares tumbled $3.56 to $16.25.

In the tech sector, by contrast, Apple Computer jumped $5 to $55.63 (post stock split) and Advanced Micro Devices gained $3.75 to $95, a record closing high.

“We’re seeing the continued shift out of industrial and value companies and into growth companies,” said Tom Galvin, chief equity strategist at Donaldson, Lufkin & Jenrette in New York.

Even so, falling stocks slightly outnumbered winners on Nasdaq, and losers had a 16-to-13 edge on the New York Stock Exchange. Trading volume slowed.

In commodity markets, near-term oil futures rose 72 cents to $31.37 a barrel despite OPEC’s pledge to increase production by 708,000 barrels daily. Many analysts think that’s insufficient.

Oil’s rise weighed on the bond market, where long-term Treasury yields jumped. The 10-year T-note yield ended at 6.11% versus 6.02% on Tuesday. Traders said there also was nervousness in advance of the Federal Reserve’s meeting next week. Economists remain divided on whether the Fed will raise rates again.

Among Wednesday’s highlights:

* Tech shares rising included Dell, up $1.44 to $50; Emulex, up $8.81 to $68.69; Qualcomm, up $1.56 to $64.50; and Scientific Atlanta, up $6.25 to $76.50.

Also, Oracle ended up 14 cents at $86.19 after falling as low as $80.31. The company Tuesday reported sharply higher earnings but weaker-than-expected sales.

* Bank stocks falling after the latest earnings warning included Bank One, down $1.44 to $27.56; Citigroup, down $1.88 to $62.50; SunTrust, down $1.13 to $48.19; and Bank of America, down 88 cents to $47.63.

Brokerage stocks also slumped, led by Goldman Sachs, down $2.38 to $86.63 despite a strong earnings report.

* Retail shares continued to slide on worries about consumer spending. Target plunged $2.56 to $52.44, May Department Stores lost $1.13 to $25.56 and American Eagle Outfitters lost $2 to $11.88.

* Energy stocks rose. Schlumberger jumped $3.56 to $77.63 and Apache gained $2.25 to $58.50.

* 3M rose $4.06 to $86.25. “Recent meetings with management have confirmed a solid outlook for 2000 and into 2001 even with a slowing economy,” said Robert Ottenstein, an analyst with Morgan Stanley Dean Witter & Co.

Market Roundup, C14-15