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Stocks Rally Despite Report on Jobless Rate

May 06, 2000|From Times Wire Services

Renewed enthusiasm for technology issues propelled the stock market higher Friday, helping investors overlook the latest evidence that the economy is growing too fast for the Federal Reserve.

The Nasdaq composite index gained 96.58 points, or 2.6%, to 3,816.82. The Standard & Poor's 500 climbed 23.06 points, or 1.6%, to 1,432.63, as 65 of its 88 industry groups gained. The Dow Jones industrial average rose 165.37 points, or 1.6%, to 10,577.86.

But Treasuries wobbled to their biggest weekly loss in a year and half, capped by a report showing the U.S. unemployment rate fell to a 30-year low and wages rose, fueling expectations for a half-point interest rate rise by the Federal Reserve.

"Have we seen the lows in [Treasury] yields for the year? It's entirely possible," said Todd Finkelstein of money manager Boston Advisors. "You need good news on inflation for a bond rally, and we're not seeing it."

The 10-year yield shot up to 6.50% from 6.42% the day before. For the week, it climbed 30 basis points. Among other maturities, the 30-year yield rose to 6.19% from 6.16%, and the yield on two-year notes surged to 6.82% from 6.75%.

Despite Friday's stock rally, the major indexes finished with losses for the week: 1.1% for Nasdaq, 1.5% for the Dow and 1.4% for the S&P 500.

The end-of-the-week rally surprised analysts who expected the market to fall in the wake of the strong employment report.

Volume, however, was extremely low, leaving some analysts worried that the investors who bid stocks higher Friday lacked conviction. Nasdaq saw its thinnest trading of the year.

Advancing issues outnumbered decliners by a 4-3 ratio on both the New York Stock Exchange and on Nasdaq.

In other markets, the euro rose for the first time in four days on speculation that the European Central Bank will move to support its slumping currency.

Friday's equity highlights:

* Among major tech names, Applied Materials gained $4.13 to $101.88, JDS Uniphase rose $2.31 to $93.81, and Cisco Systems jumped $4.13 to $67.75 after it announced an acquisition. Hewlett-Packard helped power the Dow, rising $4.63 to $136.75.

* Cypress Semiconductor surged $6.19 to $57.75 after the circuit maker was reiterated "strong buy" by Morgan Stanley Dean Witter.

Also getting Wall Street boosts: Nortel Networks, up $7.50 to $116.81 after Morgan Stanley restarted coverage of the telecom equipment maker with an "outperform" rating; and Visx, up $3.75 to $20.56 after the developer of vision-correction technologies was raised to "buy" at Chase H&Q.

And several Internet retailers rallied after Lehman Bros. spoke up for the bruised sector. rose $3.44 to $58.50.

* On the earnings front, John Hancock Financial Services gained $2.19 to $20 after the insurance giant reported first-quarter operating profit of 65 cents a share, beating the 53-cent average estimate of analysts polled by First Call.

But P-Com slid $2.44 to $9.06 after the maker of equipment that delivers high-speed wireless Internet connections said it had a loss of 18 cents a share, versus the consensus estimate of 4 cents.

* Among Southland companies, Meade Instruments rose $3.50 to $72.50 after the Irvine-based telescope and binocular maker said it will split its shares 2-for-1 on June 19 for shareholders of record May 22. The stock has surged nearly sixfold in the last year.

Its Irvine neighbor Nexell Therapeutics rallied $1.66 to $4.69 a day after the company said French researchers appear to have cured a deadly immune disorder with gene therapy using Nexell's equipment.

Market Roundup, C4

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