Nasdaq Nears 5,000 as Stocks Soar on Jobs News
The Nasdaq composite rocketed Friday to within easy reach of 5,000 as stocks rallied after a government report showed fewer jobs were created than forecast in February, dampening concern the economy is overheating.
The struggling Dow Jones industrial average also surged, wrapping up its best week since July as heavy-industry stocks led the way. The gain reversed a streak: The blue-chip gauge had fallen six straight Fridays.
“The jobs report indicates the economy is slowing, and investors now believe” the Federal Reserve will maintain a moderate approach to interest-rate increases, said Gil Knight, a portfolio manager with Allied Investment Advisors in Baltimore. “That’s good for stocks.”
The Nasdaq index jumped 160.28 points, or 3.4%, to 4,914.79, its 14th record high of the year. It now stands just 1.8% below 5,000. A year ago the index was below 2,400.
The Dow climbed 202.28 points, or 2%, to 10,367.20 on Friday. The Standard & Poor’s 500 also climbed 2%.
For the week, Nasdaq leaped 7.1%, the Dow 5.1% and the S&P; 5.7%. The gains brought Nasdaq’s year-to-date surge to 20.8% and trimmed the Dow’s decline to 9.8% and the S&P;’s drop to 4.1%.
In another sign that stocks--especially Nasdaq’s tech shares--are in their own world, Friday’s rally occurred without much help from the bond market, where yields closed little changed despite the jobs report.
The 30-year Treasury bond yield was unchanged at 6.13%, same as a week earlier, though it is down from 6.27% three weeks ago.
The two-year T-note yield, very sensitive to Fed rate expectations, eased to 6.50% from 6.53% Thursday. It peaked at 6.68% on Feb. 8.
“I don’t think one [economic] number is going to change anything” with regard to the Fed, said Reno Martini, who oversees $4.8 billion at Calvert Group in Bethesda, Md. “The important thing is if we see the same kind of weakness going forward.”
But in the equity market, the bulls found all the reason they needed to run on Friday.
About 2.1 billion shares traded Friday on Nasdaq, which saw its third-busiest day ever. Volume was heavy too on the Big Board.
How do investors justify paying ever-higher prices for technology shares?
If the economy slows, and interest rates stop rising or fall, it will “increase the likelihood that old-economy companies will continue to invest in the Internet and telecommunications,” said Eric Barden, a money manager at Texas-based First Austin Capital Management. “That’s positive for technology stocks, and we’re probably going up to 5,000 on the Nasdaq.”
But in recent weeks, the expectation of higher interest rates was viewed as bullish for tech stocks because those companies were expected to continue growing even if old-economy companies slowed.
In other words, just about everything seems bullish for tech--or so the bulls believe.
Among Friday’s highlights:
* Tech gainers included Cisco Systems, up $4.69 to $137.44; Oracle, up $6.50 to $75; IBM, up $4.88 to $108; and Microsoft, up $2.75 to $96.13 on reports of higher-than-expected sales of Windows 2000.
But Palm plunged $14.81 to $80.25, after more than doubling in Thursday’s initial public offering. Investors took another look at the difference in the values of Palm and its 95% owner 3Com, which gained $1.25 to $83.06 after dropping the day before.
* In the chip sector, the Philadelphia semiconductor index soared 6.6%. Rambus rose $28.19 to $286.44, bringing its gain this year to 325%; Texas Instruments climbed $14.63 to $187.63 as Bear Stearns raised its price target to $200; and Altera advanced $15.13 to $97 as Goldman Sachs raised its profit estimates and Merrill Lynch upgraded the stock.
* Ariba gained $30.30 to $329.98 as the maker of software to process online purchases said it will split its stock 2-for-1 on March 31 for holders of record March 20.
* Among Southland issues, Chatsworth-based networking equipment maker MRV Communications streaked $19.81 to $169.94, after announcing a 2-for-1 split at a date to be determined. The stock is up 2,490% in the last year.
Also, Conexant Systems of Newport Beach blitzed $14.75 to $93.69, joining the chip rally. The stock had sunk 36% in the previous five sessions on worries about rising competition.
But Litronic, an Irvine-based Internet security specialist, slid $4.81 to $16.94 after saying it expects to report a loss for the fourth quarter.
* Telecom-related shares were off to the races again. Echostar surged $9.06 to $121.44, GM Hughes Electronics jumped $5.81 to $125.25 and Equant gained $3.63 to $111.63.
* In the Dow, beaten-down heavy industry shares saw bargain-hunting. DuPont soared $3.88 to $50.75, 3M jumped $3.44 to $89.50 and Caterpillar gained $1.94 to $36.38.
* Brokerage stocks were sharply higher, led by Goldman Sachs, up $6.25 to $102.50. But in the banking sector Bank One eased 81 cents to $25.50 after telling analysts their diminished first-quarter earnings estimates were still too high.
Perhaps bolstering the cockroach theory (which holds that you rarely get just one piece of bad news from a company) this was the fourth profit warning in seven months from Bank One, the world’s No. 2 credit card issuer.
* Shared Medical Systems vaulted $25.25 to $63.50 after the software maker rejected a $2-billion hostile buyout offer from smaller rival Eclipsys, whose shares fell $1.75 to $26.88.
* Among IPOs, software maker Versata (ticker symbol: VATA) rose $68.75 to $92.75; Register.com (RCOM), which records Internet addresses, gained $33.25 to $57.25; and AsiaInfo Holdings (ASIA), which provides Internet services in China, zipped up $75.56 to $99.56.
Market Roundup, C4
* JOBS ENGINE SPUTTERS
Though job growth was weak in February, economists aren’t fretting. A14
