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Another High for Nasdaq but Not Much Else

July 21, 1998|From Times Staff and Wire Reports

Investors took a cautious approach toward U.S. stocks for a second straight session Monday, leaving most key indexes modestly lower.

But the Nasdaq composite index notched its ninth straight record, boosted by one of its key technology issues.

Meanwhile, bond yields eased ahead of Federal Reserve Chairman Alan Greenspan's testimony on Capitol Hill today. The dollar fell again versus the Japanese yen.

On Wall Street, the Dow Jones industrials eased 42.22 points to 9,295.75, after hitting a record 9,337.97 on Friday.

Most broad indexes followed the Dow. The Standard & Poor's 500 slipped 2.65 points to 1,184.10. The New York Stock Exchange composite was off 1.54 points at 599.21.

The streaking Nasdaq composite, however, gained 5.49 points to a record 2,014.25, boosted by computer networker Cisco Systems, which because of its $100-billion-plus market capitalization has a major influence on the index.

Cisco shot up $3.44 to a record $103.19.

Overall, however, 2,176 Nasdaq issues fell while 2,002 rose.

On the NYSE, losers edged winners by 1,731 to 1,248.

Many analysts have been worrying for weeks that the latest rally was too narrow, focused on a handful of blue-chip and tech stocks while the broad market lagged.

Monday's pullback suggested that "a lot of the strong stocks have gotten extended and they are due for a correction," said Frank Gretz, a market analyst at Shields & Co.

But other analysts see no indication that big-name stocks are headed for a significant pullback.

For one, second-quarter earnings "are coming through OK" for many major companies, said Robert Streed, a money manager with Northern Trust Co., which oversees $200 billion.

What's more, some of Wall Street's most-followed strategists aren't pulling in their horns.

Lehman Bros. strategist Jeffrey Applegate said the Dow average could reach 11,000 by the end of 1999. And he raised his year-end forecast for the S&P 500 to 1,250 from 1,200.

A 1,250 S&P would mean a 5.6% rise from current levels.

Goldman, Sachs & Co. strategist Abby Joseph Cohen said Monday that the S&P could reach 1,250 by the summer of 1999.

In the bond market, investors awaited Greenspan's testimony. He is expected to repeat his belief that the economy is slowing significantly.

The 30-year Treasury bond yield slipped to 5.71% on Monday from 5.74% on Friday.

But unless Greenspan were to suggest that the Fed stands ready to ease credit, a bond rally is unlikely, many analysts say. That's because the Fed's key short-term rate, at 5.5%, puts a "floor" under longer-term interest rates.

Among Monday's highlights:

* Blue chips giving ground included Coca-Cola, down $1.56 to $84.56; GE, down $1.19 to $95.50; and McDonald's, down $2.69 to $70.56.

But Lucent Technologies soared $7.38 to a record $102.25, stretching its 1998 gain to 155%. Investors are betting that the communications systems and software company will top the 27-cent-a-share estimate by Wall Street analysts when it reports earnings today.

* Oil stocks were broadly lower as crude prices slid again. Exxon tumbled $1.81 to $70.56.

* Drug shares gained after Warner-Lambert reported a 46% increase in second-quarter earnings. Warner-Lambert rose $3.56 to $83.13, Pfizer rose $2.19 to $117.94 and Bristol Myers jumped $2.44 to $125.81.

* Internet-related companies were hot again, after, which transmits news, music and sports online, surged in its initial public offering Friday. rocketed $17.69 to $137.50 and America Online jumped $8.13 to $136.50. But eased $2.25 to $60.50.

* Coastcast fell 88 cents to $15.63. Investor Jonathan Vannini acquired a 6.7% stake in the Rancho Dominguez-based golf club maker and said he wants to change the company's executive pay practices, push for a stock buyback and possibly shake up its board.


Market Roundup, D14

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