Blue Chips Rally, but Techs Slip
Blue chips led the broad stock market higher Friday as growth in Midwest manufacturing and solid earnings from Walt Disney tempted investors to pick up bargains after the recent drubbing.
Still, tech stocks were sluggish as Wall Street logged its third straight losing week and its second straight losing month amid worries over a possible war with Iraq and generally cautious corporate outlooks.
The monthly decline could be the harbinger of a fourth year of bear market losses, according to the so-called January barometer, which holds that as January goes so goes the year.
“January got off to a gallop.... But we went from a gallop to a gasp,” Alan Ackerman, strategist at Fahnestock & Co., told Reuters.
Though some investors hunted for bargains Friday, “not too many people are willing to put much money to work until the uncertainty over Iraq lifts,” he said.
The Dow Jones industrial average rose 108.68 points, or 1.4%, to 8,053.81, and the Standard & Poor’s 500 index gained 11.09 points, or 1.3%, to 855.70.
Winners outnumbered losers by 5 to 2 on the New York Stock Exchange and by 7 to 5 on Nasdaq in active trading.
A downbeat outlook from top semiconductor equipment maker Applied Materials weighed on the technology sector. The tech-heavy Nasdaq composite index dipped 1.44 points, or 0.1%, to 1,320.91. Applied’s shares slid 98 cents to $11.97.
For the week, the Dow lost 0.9%, the S&P; 500 slipped 0.7%, and Nasdaq dropped 1.6%, leaving all three indexes in the red year to date.
Investors worried about the economy got a dose of relief after a survey of purchasing managers in the Chicago region showed business activity there grew in January for a third month, rising to 56 index points from 51.7 in December. A reading above 50 indicates expansion in activity.
Dow member Disney also lifted sentiment after its earnings hit the high end of targets, sending the stock up $1.15 to $17.50.
The day’s blue-chip gains left market historians unimpressed, however.
Since 1950, January has more often than not “predicted” the annual course of the market, as measured by the S&P; 500. The S&P; fell 2.7% last month.
Stock Trader’s Almanac, which tracks the barometer, said it has been right 43 times in 53 years. Last year, the S&P; fell 1.6% in January and 23.4% for the year.
In other trading Friday, the U.S. dollar gained ground against the euro and Japanese yen, and Treasury yields were mixed as some investors shifted money from government debt into stocks. The yield on the benchmark 10-year T-note closed unchanged at 3.96%.
In other equity highlights:
* Networking giant Cisco Systems added pressure to the tech sector, sliding 50 cents to $13.37 amid speculation it soon may issue another cautious forecast. Elsewhere in tech, Hewlett-Packard lost 79 cents to $17.41, chip equipment maker KLA Tencor dropped $1.11 to $32.64 and Microsoft sank 78 cents to $47.46.
* Honeywell International rose 94 cents to $24.44 after a deal was announced Thursday shielding the company from asbestos claims related to its Bendix brake business.
* Health-care stocks were strong, led by Wellpoint Health, up $2.68 to $72.68, and Johnson & Johnson, up $2.07 to $53.61.
Market Roundup, C4-5
