Rally Leaves Most Indexes With Big Gains
Stocks rallied on a sharp pickup in trading volume Thursday, as Treasury bond yields slid on the latest signs of a slowing economy.
Thursday’s surge left most key stock indexes with hefty gains for August--a month more often associated with losses in recent years.
The Nasdaq composite jumped 102.54 points, or 2.5%, to 4,206.35, its highest close since it topped out at 4,274.67 on July 17--before taking a steep dive.
The Dow industrials added 112.09 points, or 1%, to 11,215.10, though the index had been up as much as 207 points before fading.
Some analysts expressed surprise at Thursday’s rally, coming just before today’s government report on August employment trends, and with the three-day holiday weekend looming.
“I think investors feel that as . . . they come back from vacation, they’re going to see interest rates down, relatively benign inflation, double-digit corporate earnings and feel very, very good about the economy,” said Donald Berdine, chief investment officer at PNC Advisors in Pittsburgh.
The bond market supported stocks: Yields fell across the board after the government said factory orders fell 7.5% in July--pointing to economic weakness the Federal Reserve has insisted is crucial to guaranteeing lower or stable interest rates.
The 10-year Treasury note yield slid to 5.73%, from 5.80% on Wednesday.
On Wall Street, the advance was broad-based, with winners topping losers by 17 to 11 on the New York Stock Exchange and by 25 to 16 on Nasdaq. Nasdaq trading volume topped 1.9 billion shares, heaviest since June 30.
The Dow gained 6.6% in August, but is still down 2.5% for the year. Nasdaq jumped 11.7% in July and is up 3.4% for the year.
In 1997 and 1998, August saw stocks take sharp hits, largely because of worries about foreign economic crises.
Among Thursday’s highlights:
* Major technology stocks paced Nasdaq’s advance, led by Dell Computer, up $3.69 to $43.63 in heavy trading. A Wall Street Journal story Thursday focused on Dell’s efforts to boost sales.
Also gaining were Apple, up $1.44 to $60.94; Cisco Systems, up $2.06 to $68.63; Oracle, up $2.69 to $90.94; and Vitesse Semiconductor, up $1.69 to $88.81.
* In the telecom sector, Nokia gained $2.50 to $44.75, JDS Uniphase surged $6.48 to $124.48 and Qualcomm rose $1.56 to $59.88.
* Many Internet names also continued to rally, led by Juniper Networks, up $9.88 to $213.75, and Inktomi, up $4.38 to $130.38. The Interactive Week Net stock index rose 1.4%.
* Biotech stocks surged again, with Genentech up $3.13 to $190.50 and Amgen up $2.75 to $75.81.
* Financial stocks led blue chips higher. The merger plans announced this week between Credit Suisse Group and Donaldson, Lufkin & Jenrette have boosted expectations for more consolidation among banks, brokerages and insurance companies.
J.P. Morgan helped pull the Dow higher, rising $14.38 to $166.25. Also gaining were Bear Stearns, up $3.75 to $69; Goldman Sachs, up $5.81 to $129.50; Chase Manhattan, up $2.63 to $55.88; and mutual fund giant Amvescap, up $5.94 to $107.
* On the down side, Ford Motor slid $1.69 to $24.19. The auto giant faces growing investor concern over defects in Firestone tires, which were included as original equipment on Ford’s popular Explorer sport-utility vehicle.
GM fell $2.38 to $70, and DaimlerChrysler lost 31 cents to $52.06.
* Many retail stocks weakened after downbeat August sales reports. Target slumped $2.88 to $23.19, Sears lost 44 cents to $31.19 and Best Buy fell $8.38 to $62.63.
* Coca-Cola lost $1.60 to $52.63. A Sanford C. Bernstein analyst cut his 2001 per-share earnings estimate for the beverage maker to $1.75 from $1.79 because of weakness in the euro.
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Market Roundup: C7-8
