Tech Stocks Aid Recovery From Losses; Dow Up 1.2%
Arebound in technology stocks Thursday helped pull up the market after two days of losses.
Stocks also got a boost from some better-than-expected economic news and from a renewed slide in Treasury bond yields.
The Dow Jones industrials rose 117.56 points, or 1.2%, to 9,829.42, after falling a total of 270 points Tuesday and Wednesday.
The Nasdaq composite surged 45.29 points, or 2.4%, to 1,933.26, recouping most of its 53-point loss the previous two sessions.
Despite fears early in the week that the market was at risk of heavy profit-taking after two months of strong gains, buyers returned in force Thursday.
They were heartened by the government’s report that durable goods orders soared a record 12.8% in October.
“People are becoming more comfortable that the economic downturn is behind us. The stock market is forward-looking, and ... the notion is that we have a bottom in place, that we have made our lows,” said Brian Belski, market strategist for US Bancorp Piper Jaffray.
Rising stocks led decliners by 19 to 11 on the New York Stock Exchange and by 11 to 7 on Nasdaq.
Investors seemed quick to shake off fears that the collapse of energy giant Enron could have a domino effect in markets.
J.P. Morgan and Citigroup, which had tumbled Wednesday on worries about their financial exposure to Enron, inched higher Thursday. Morgan rose 56 cents to $38.06 and Citigroup was up 56 cents to $48.36.
Those stocks also may have been boosted by revived expectations that the Federal Reserve will continue to cut interest rates.
The bond market Thursday seemed to ignore the durable-goods report and instead focused on a report that new claims for jobless benefits rose last week, breaking a four-week streak of declines.
Buyers rushed back into bonds, driving the yield on the two-year Treasury note to 2.87% from 3% on Wednesday, and the 10-year T-note yield to 4.75% from 4.93%.
On Wall Street, technology shares drove the Dow and the Nasdaq composite: IBM rebounded $2.28 to $114.43, Microsoft added $2.04 to $64.84, Hewlett-Packard gained $1.23 to $21.40 and Dell Computer jumped $1.07 to $27.06.
“The market is looking for leadership. Ultimately, that leadership will come from technology,” said Ronald J. Hill, investment strategist at Brown Bros. Harriman.
Among Thursday’s highlights:
* Brocade Communications helped fuel the tech sector after the data-storage maker beat fourth-quarter earnings expectations and said first-quarter sales could increase modestly from fourth-quarter levels. Brocade shares gained $2.88 to $31.70. Also, Nvidia added $2.25 to $53.61. The maker of computer-graphics chips replaced Enron in the Standard & Poor’s 500 index at the close of trading Thursday, S&P; said.
* Bank of America rose $1.89 to $63.60 after the third-biggest U.S. bank said it will meet analysts’ fourth-quarter profit forecasts and set a goal of 10% earnings-per-share growth in 2002.
* Philip Morris jumped $2.05 to $46.98. Analysts said more investors may be attracted by the stock’s high dividend yield of about 5%.
* Airline stocks had a strong session after Deutsche Banc Alex. Brown analyst Susan Donofrio said the group’s rally in recent weeks is likely to continue because of falling jet fuel prices and an improving economy. Delta Air Lines jumped $1.04 to $27.94. The Amex airline stock index rose 3.9%.
* Instinet Group fell $1.40 to $9.70 on worries that the planned merger between rival electronic trading networks Archipelago and RediBook could cut into Instinet’s market shares.
* In foreign trading, Argentine markets suffered another hit on mounting concern the country will devalue its currency. Argentina’s overnight lending rate surged to 300% and its benchmark stock index slumped to a 10-year low.
Market Roundup: C6, C7
