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Stocks Rise on the Eve of Fed Meeting

August 22, 2000|From Times Wire Services

Stocks rallied Monday on confidence that Federal Reserve policymakers will leave interest rates alone when it meets today.

The Dow Jones industrial average rose 33.33 points, or 0.3%, to 11,079.81.

Broader stock indicators were also higher, though trading was light.

The Standard & Poor's 500 index gained 7.76 points, or 0.5%, to 1,499.48, while the Nasdaq composite index rose 22.81 points, or 0.6%, to 3,953.15.

Technology issues, led by chip maker Intel, extended a rally Monday that began last week.

Intel rose $1.50 to $72.06 after an analyst raised his earnings forecasts for the leading maker of computer chips.

The analyst said Intel's third-quarter inventory is already sold out, news that bodes well for the entire computer industry.

Telecom makers also remained strong, following up on last week's gains. Ciena rose $5.38 to $182.06 and Copper Mountain Networks climbed $5.31 to $69.31.

But the retail sector continued to show weakness on fears that second-half profits may be hurt by the cooling economy. Dow component Wal-Mart Stores slid $1.88 to $49.

Declining issues outnumbered advancers by a 6-5 ratio on the New York Stock Exchange, while winners had a tiny edge on Nasdaq.

Treasury yields climbed for the first time in three sessions as rising oil prices stoked concern about faster inflation, despite the Fed's expected inaction today.

Traders say that oil prices, which are up 27% this year, could lead to higher rates later in the year.

The 30-year yield rose to 5.71% from 5.69% on Friday.

Among the other equity highlights:

* Financial shares gained as investors looked forward to a possible end to this year's interest-rate increases. Citigroup rose $2.13 to $76.88, Morgan Stanley Dean Witter climbed $1.44 to $101.88, Bank of New York gained $1.63 to $50.13 and E-Trade Group added 75 cents to $17.13.

"The lesson of the past is, when the Fed shifts to neutral, financial shares take off because lending activity increases," said Alan Skrainka, chief market strategist at Edward D. Jones in St. Louis.

* Health-care shares rebounded from Friday's rout, which was sparked by criticism from Vice President Al Gore in his acceptance speech at last week's Democratic National Convention in Los Angeles.

Bristol-Myers Squibb rose $2.69 to $53.69, Abbott Laboratories climbed $1.63 to $41.81, Pfizer gained $1 to $43.75, Eli Lilly rose 69 cents to $77.19 and Schering-Plough advanced $1.06 to $41.56.

* Despite Intel's rise, the Philadelphia semiconductor index fell for the first time in seven sessions, dropping 2%.

Texas Instruments lost $2.88 to $67.75 after rising 23% last week; Lattice Semiconductor shed $3.25 to $64.38; and Advanced Micro Devices dropped $2.06 to $68.19.

* VeriSign rose $2.94 to $162.69 after a Merrill Lynch analyst raised his near-term rating on the maker of online security software to "buy" from "accumulate" and said the stock could reach $210 within 12 months.

* Luby's fell $1.75 to a new low of $6.25 after the cafeteria-style restaurant operator said it will close 15 locations and take a pretax charge of $12 million to $15 million in the quarter ending Aug. 31.

* Among Southern California stocks, applications software maker Peregrine Systems of San Diego rose $3.25 to $30, networking products maker Micro General of Santa Ana gained $2.25 to $14, and medical products maker MiniMed of Sylmar jumped $7.13 to a new high of $78.94 after a 2-for-1 split took effect.

But pharmacy services provider Syncor International of Woodland Hills sank $4.19 to $39.75. The stock is still up 173% year to date.

In foreign markets, leading indexes fell 1.5% in Japan, 0.5% in Germany, 0.3% in France and 1.3% in Brazil.

Market Roundup, C11-12

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