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Rally Persists on Muted Volume; Yields Rise

August 08, 2000|From Times Staff and Wire Reports

Investors snapped up a wide cross section of stocks, in what turned out to be a surprising performance for a dog-day August Monday.

The Nasdaq composite gained 75.63 points, or 2%, to 3,862.99, as many semiconductor stocks and other tech issues rebounded.

The broad market also was strong, reflecting a wave of buying in such sectors as home building, energy, utilities and aerospace.

The Dow industrials gained 99.26 points, or 0.9%, to 10,867.01, the highest close since May 16.

The average New York Stock Exchange issue rose 0.9%, lifting the NYSE composite index to just under the record it reached July 14, before a sell-off hit.

"Investors are coming to the realization that the underlying market fundamentals are in really good shape," said Phil Orlando, chief investment officer for Value Line Asset Management in New York. "The economy continues to decelerate nicely, yet corporate earnings are still in decent shape."

Still, trading volume was muted Monday, at 1.3 billion shares on Nasdaq. But winners had a solid 23-17 edge over losers on Nasdaq, and a 17-11 edge on the NYSE.

Monday's gains followed a rally Friday, when the government reported a slowdown in employment growth for July. That boosted optimism that the Federal Reserve might be finished raising short-term interest rates.

After tumbling Friday, bond yields inched up Monday, in advance of the Treasury's sale of $25 billion in long-term bonds this week. The sale starts today with an auction of five-year notes.

The two-year T-note, which fell to near an eight-month low of 6.16% on Friday, rose to 6.21%.

"We're in an environment where investors may be a little confused. But I think we're out of the woods in terms of the Fed wanting to raise interest rates," said Al Kugel, strategist at Stein Roe & Farnham in Chicago.

Among Monday's highlights:

* Beaten-down semiconductor stocks rising Monday included Vitesse Semiconductor, up $5 to $62.44; Micron Technology, up $3 to $76.13; Advanced Micro Devices, up $2.25 to $65; and Texas Instruments, up $3.25 to $58.50.

Other tech leaders included EMC, up $4.38 to a record $89.88, and Sun Microsystems, up $5.13 to a record $111.75.

* In the biotech sector, Amgen jumped $3 to $72.13, Immunex gained $3.19 to $54.88, Protein Design Labs jumped $5.63 to $157 and Cephalon, which tumbled last week, rebounded $4.63 to $44.88.

* Energy stocks were strong as natural gas prices hit a five-week high. BP Amoco rose $1.38 to $55.19; Unocal rose $1.33 to $31.45.

* Electric utilities continued to surge. The Dow utilities index rose 2.1% to a record 354.04. Big gainers included Enron, up $2.27 to $80.27; Peco Energy, up $1.20 to $47.20; and Reliant Energy, up $1.33 to $36.89.

* Some industrial and aerospace stocks were hot, including PPG Industries, up $1.75 to $42.19; Emerson Electric, up $2.69 to $65.06; Black & Decker, up $2.13 to $38.13; and Northrop Grumman, up $3.25 to $76.06.

In foreign trading, South Korea's main stock index tumbled 7.4% on worries about the delayed restructuring of the country's main conglomerate, Hyundai.


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