Blue Chips Move Up for 3rd Day
Investors gave blue chips another boost Friday, but nudged tech stocks slightly lower as they dealt with conflicting signals about the economy.
Working in Wall Street’s favor were comments Thursday by Federal Reserve Chairman Alan Greenspan, who said the recession could be over soon.
But with many companies still unable to confirm a pickup in business, the market’s gains were limited and, in many cases, were attributed to bargain hunting rather than a shift in investor sentiment.
Bond yields, meanwhile, spiked again on concerns the Fed may begin raising interest rates as soon as the second quarter. U.S. Treasuries wrapped up their roughest week since early December.
The yield on the benchmark 10-year Treasury note climbed to 5.07%, from Thursday’s close of 5.01%, while the yield on the two-year T-note rose to 3.18% from 3.14%.
The Dow Jones industrial average finished up 44.01 points, or 0.5%, at 9,840.08. The Dow pulled out a three-session winning streak for the first time since Jan. 2 to 4, after advancing 65 points Thursday on Greenspan’s comments and 17 on Wednesday due to bargain hunting.
The Dow rose 0.7% for the week, breaking a two-week losing streak.
The broader market was mixed Friday, but, like the Dow, ended the week with small gains. The Nasdaq composite index slipped 4.88 points, or 0.3%, to 1,937.70. For the week, the tech-dominated index rose 0.4%. The Standard & Poor’s 500 index inched up 1.13 points, or 0.1%, to 1,133.28, moving up 0.5% for the week.
Losers outnumbered winners by 8 to 7 on Nasdaq and were about even on the New York Stock Exchange. Trading was active.
Gains by blue-chip stocks were attributed by analysts largely to cheaper prices and somewhat to Greenspan’s comments. Procter & Gamble rose $1.36 to $79.14, Honeywell climbed $1.10 to $32.70 and Caterpillar gained $1 to $50.10.
Better-than-expected earnings helped other stocks, including Lockheed Martin, up 59 cents to $50.
In tech trading, PMC-Sierra rose $2.29 to $24.15 after reporting a fourth-quarter loss of 15 cents a share, a penny better than expected. And Goldman Sachs raised its rating on the maker of semiconductor equipment.
But disappointing reports and outlooks kept the overall tech sector from advancing. Fiber-optic maker JDS Uniphase fell 73 cents to $7.16 on a wider-than-expected loss.
Computer maker Gateway slid nearly 18%, down $1.14 to $5.22, after saying Thursday it will cut 2,250 jobs and close 19 stores and several offices as it deals with sluggish sales and declining market share. Several investment banks downgraded Gateway’s shares.
Speculation that the Bush administration may move to limit liability for asbestos lawsuits was credited with boosting some stocks.
Topping the list of gainers on the NYSE were companies facing asbestos liabilities, including chemicals company W.R. Grace, up 50 cents to $2.41, and building materials maker Owens Corning, up 47 cents to $2.42.
Stocks have largely fallen this month amid a lack of positive forecasts from companies. Analysts said the sell-off wasn’t surprising, given how strongly investors snapped up shares late last year based on hopes of a rebound in profits rather than evidence of growth.
“The fourth-quarter rally was an anticipatory rally that comes as you believe the worst is over. Some pullback from that was expected,” said Ronald J. Hill, investment strategist at Brown Bros. Harriman & Co. “When earnings start to come through in earnest, there will be a second, more fundamental leg up. We’re kind of in a hiatus right now.”
