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Wall St. brims with records
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April 2, 1998: 5:41 p.m. ET
Stocks soar as money pours in, but Dow stops short of 9,000
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NEW YORK (CNNfn) - U.S. stocks surged to new records Thursday in a nervous rally that left the Dow industrials within less than 14 points of the coveted 9,000 level.
Signs that the U.S. economy is chugging along at a healthy pace, while inflation remains absent, built confidence in U.S. stocks, as did Japan's continuing economic woes and the dismissal of a sexual harassment lawsuit against President Clinton. Investors, impressed by the market's strong performance, rushed to pour money into blue chips at the beginning of a new quarter.
Late in the day, optimistic words from Federal Reserve Chairman Alan Greenspan triggered a buying wave that at one point brought the Dow industrials up to 8,996.86.
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Explaining how increased productivity has helped maintain a market notion that corporate earnings will keep rising, Greenspan said the markets are "appropriately priced." (301K WAV) or (301K AIFF)
The Dow Jones industrial average rallied 118.32 points to close at 8,986.64, a new record and a level only an arm's length away of the coveted 9,000. The Dow's previous record of 8,906.43 was set March 20.
About 675 million shares changed hands on the New York Stock Exchange, with advancing issues leading declines 1,764 to 1,214.
Other major markets also set new highs. The Nasdaq Composite rose 5.30 to 1,852.96, the S&P 500 index gained 11.86 to 1,120.01, the Russell 2000 index of smaller companies climbed 1.49 to 486.42, the New York Stock Exchange Composite rose 5.63 to 582.04, and the AMEX finished up 2.88 to 747.03 -- all new records. (Look here for the performance of widely held stocks.)
Brian Finnerty, head of Nasdaq stock trading at C.E. Unterberg Towbin, said there was nothing to keep the stock rally from carrying on. (631K WAV) or (631K AIFF)
The bond market closed higher after news that all 12 Fed policy makers voted to keep interest rates unchanged at the Feb. 3 and 4 policy meeting spurred a late buying spree. On Tuesday, the Fed's Federal Open Market Committee also opted to leave rates alone.
The benchmark 30-year Treasury bond rose 19/32 of a point in price, for a lower yield of 5.84 percent as investors abandoned caution ahead of Friday's February non-farm payrolls report.
The dollar held on to steady gains against the battered yen, drawing strength from a 3.3 percent drop in Tokyo's Nikkei 225 stock market index and a shocking drop in the "tankan" index to -31 in March from -11 in December. It was the worst decline the "tankan" has seen in 3-1/2 years. Warnings from the chairman of Sony Corp. that Japan's economy verges on collapse further drained strength from the yen.
Blue chips lead the way
Most of the gains on Wall Street were based on buying of stocks of large multinational companies, as investors once again favored big blue chip names, the market's best performers over the past three years.
Among Dow members leading the way up, shares of American Express (AXP) rose 2-1/8 to 94-1/2, IBM (IBM) gained 1-3/8 to 105-13/16, and Johnson & Johnson (JNJ) climbed 2-7/8 to 76-1/4.
Another market favorite -- Internet related stocks -- also had a blast, as several analysts spoke positively about the sector. Shares of search engine provider Yahoo! (YHOO) surged 6-1/16 to 103-7/8. Yahoo! is expected to report a first-quarter profit of 4 cents a share next Wednesday, with some on Wall Street speculating the final results could beat expectations.
Other Internet gainers included Yahoo! rival Lycos (LCOS), rising 7-3/4 to 58-7/8, and online book retailer Amazon.com (AMZN), adding 4-15/16 to 95-1/16.
More profit warnings
Thursday also brought an avalanche of earnings warnings, with a group of stocks on the Nasdaq taking a pummeling from investors after telling them profits would fall short of expectations.
The latest group of losers was led by Rogue Wave Software (RWAV), which tanked 6-7/16, or more than 41 percent, to 9-1/16 after announcing that fiscal second-quarter earnings per diluted share will be between 4 and 5 cents, sharply below consensus estimates for 13 cents a share.
Respironics (RESP) was a close second, losing 10-11/16, or almost 37 percent, to 18-3/8 after saying late Wednesday that its fiscal third-quarter results will fail to meet estimates. CIBC Oppenheimer downgraded the stock to "hold" from "buy." Respironics makes respiratory medical products.
Thursday's list of warnings also included shares of Security Dynamics Technologies Inc. (SDTI), a maker of security systems for remote access computers, whose shares tumbled 15-9/16, or more than 36 percent, to 26-15/16 after the company said first-quarter results will fall short of its operating plan. Following the news, Goldman Sachs removed the company from its recommended list. Security Dynamics was the most actively traded stock and the leading net loser on the Nasdaq.
And the stock of Smartalk TeleServices (SMTK), a maker of phone cards, shed 8-11/16, or almost 28 percent, to 22-7/16 after the company said it expects to lose 5 cents a share in the first quarter. Wall Street analysts had expected Smartalk to earn 6 cents a share.
Adding to the list, shares of Applied Microsystems (APMC) fell 1-1/8, or more than 15 percent, to 6-1/4 after the maker of software for ATMs and fax machines said it would lose between 8 and 12 cents a share in the first quarter, due to slow business in Asia and North America.
Also joining the list of decliners, shares of Interferon Sciences (IFSC) bled 4-29/32, or more than 69 percent, to 2-5/32. The stock plummeted after the Food and Drug Administration told the company results from a clinical trial of its AIDS drug were not sufficient to file for approval.
But shares of Cor Therapeutics (CORR) shot up 9-27/32, or almost 79 percent, to 22-5/16 after the FDA said it would allow the use of Cor's blood-clot fighting drug Intergrilin in a wider-than-anticipated group of patients.
Also on the winning side, shares of Chase Manhattan (CMB) gained 4-1/16 to 139-5/16 on news the bank is negotiating the purchase of Morgan Stanley Dean Witter's (MWD) custody and clearing operation for over $600 million. Shares of Morgan Stanley rose 1 to 73-7/8.
-- by staff writer Malina Poshtova Zang
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