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Broad Market Rises as Net Stocks Lose Steam

November 20, 1998|From Times Staff and Wire Reports

Profit-takers tripped up the red-hot Internet rally on Thursday, but another rosy update by Intel helped lift many other technology stocks and the overall market.

Broad stock indexes posted strong gains, with the Nasdaq composite rising 22.24 points, or 1.2%, to 1,919.68--less than 100 points from its July record high of 2,014.25.

Blue chips were weaker, with the Dow Jones industrials up just 14.94 points to 9,056.05 after drifting from an early 46-point gain.

Still, winners topped losers by 17 to 13 on the New York Stock Exchange and by 22 to 19 on Nasdaq. Volume was moderate.

Wall Street has retained a generally bullish tone since the Federal Reserve on Tuesday cut interest rates for the third time since Sept. 29.

While Tuesday's cut should spark the economy with more borrowing and spending, the central bank also signaled that it doesn't plan additional cuts soon.

What's more, stock investors are running into concerns about stocks' heights relative to underlying earnings.

"When the Fed started to cut interest rates [in late September], the market was very oversold and undervalued," said Byron Wien, U.S. investment strategist at Morgan Stanley Dean Witter. "Now that the market has pretty much recovered, stocks are not as oversold and not as undervalued."

In the Treasuries market, yields were mixed, with the six-month T-bill yield rising to 4.55% from 4.51% on Wednesday while the 30-year T-bond yield slipped to 5.24% from 5.25%.

In currency trading, the dollar fell to a two-week low against the yen--down 1.66 yen to 119.99--as a political alliance in Japan and the chance of a banking rebound raised hopes that the world's second-biggest economy will shake off its worst recession in 50 years.

In commodity markets, oil prices continued to fall toward 12-year lows, with the near-term crude futures contract in New York easing 9 cents to $12.05 a barrel.

Among Thursday's highlights:

* Internet stocks were hit by profit-taking after another strong rally early in the day.

"There's a heavy population of momentum players in these stocks," said Ken Pasternak, chief executive of trading firm Knight/Trimark Group Inc. "And once they saw that they weren't going higher [Thursday], the stocks started going lower."

Losers included EBay, down $3.75 to $143.75; Inktomi, down $10.38 to $143.25; GeoCities, down $3.56 to $39.75; and, down $10.75 to $153.25, although after trading closed, Amazon announced a 3-for-1 stock split.

Also, Netscape Communications fell $2.69 to $36.56 after soaring Wednesday on rumors that it is in partnership talks with America Online.

Among the day's Net winners, EarthWeb jumped $7.88 to $47 and surged $9.94 to $42. Those stocks had been slumping in recent sessions.

* Among major techs, Intel rose $3 to a record $112.88 after a top executive said business has been even stronger than the company indicated last Friday.

Also, Texas Instruments leaped $4.88 to $77.13. BancBoston Robertson Stephens predicted the company will increase market share in digital signal processors.

* MCI WorldCom, the second-largest U.S. long-distance phone company, gained $3.56 to $58.88 after it said it would begin offering high-speed Internet connections to businesses and online services over regular phone lines by early 1999, matching rivals' plans for similar data services.

* DaimlerChrysler jumped $3.13 to $88.13 on its third day of trading on the NYSE.

Market Roundup, C7

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