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Bulls in charge on Wall St.
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October 29, 1999: 5:42 p.m. ET
U.S. markets rise sharply on tame inflation news; Nasdaq closes at record
By Staff Writer Jill Bebar
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NEW YORK (CNNfn) - Wall Street staged another powerful rally Friday, extending Thursday's broad-based gains. Additional market-friendly economic news showed inflation remains in check and allayed investors' fears of rising interest rates.
Sharp gains among technology issues pushed the Nasdaq composite index into record territory.
The Dow Jones industrial average rose 107.33 points, or 1.0 percent, to 10,729.86. For the week, the Dow advanced 2.5 percent, and is now up 16.89 percent for the year.
Although the blue chip index was extremely volatile in October, the Dow still gained 3.8 percent in the month.
On the New York Stock Exchange, advances widely outnumbered declines 2,176 to 975, as trading volume reached an active 1.1 billion shares.
The Nasdaq composite soared 91.21 points, or 3.2 percent, closing at a record 2,966.43. The previous closing record of 2,915.96 was established on Oct. 11.
Nasdaq volume also reached a record at 1.43 billion shares.
For the week, the Nasdaq advanced 5.32 percent, and is now up 35.29 percent for the year. The Nasdaq gained 8 percent in October.
The S&P 500 index advanced 20.49 points, or 1.5 percent, to 1,362.93. For the week, the S&P rose 4.71 percent, and is now up 10.88 percent for the year.
The bond market also surged, helped by the benign inflation news. The benchmark 30-year Treasury bond rose 1-6/32 of a point in price, lowering its yield to 6.16 percent from 6.25 percent Thursday.
The dollar fell against the yen and dipped slightly against the euro.
Investors cheer latest economic news
News that new home sales fell 12.8 percent in September to an annual rate of 811,000, far below forecasts of 950,000, was viewed positively because it further alleviated concern that the Federal Reserve will raise interest rates again.
Also, the Chicago Purchasing Managers index, which measures the manufacturing economy in the region, rose to 58.8 in October from 53.8 in September. However, the closely watched prices paid component of the index fell sharply to 65.4 in October from 71.0 in September. With prices falling, some investors believe inflation does not appear to be a problem.
"The market got itself deeply oversold after six months of correction. Now people are looking at fact rather than fiction and seeing the economy has already slowed to a healthy and sustainable rate," said Al Goldman, chief market strategist at A.G. Edwards and Sons.
Technology shares again in focus
The technology sector continued to attract much of investors' attention amid news of earnings and a stock split by one of the premier Web companies.
America Online Inc. (AOL) rose 2-7/8 to 129-3/8. The Internet services giant announced late Thursday it would split its stock two-for-one.
But online auction service Priceline.com (PCLN) dropped 7-5/8 to 60-1/4 even after reporting a smaller-than-expected third-quarter loss of 8 cents per share, excluding charges; analysts were expecting a 10-cent-a-share loss. The company also posted higher revenue. The stock had gained strong ground before Priceline's earnings were announced.
In other Internet issues, Amazon.com (AMZN) slipped 3/8 to 70-5/8, but Yahoo! (YHOO) rose 4-1/16 to 179-1/16.
In the day's corporate alliance news, shares of Go2Net Inc. (GNET) and Net2Phone Inc. (NTOP) rose sharply after the companies signed an Internet telephone services deal. Go2Net jumped 11-1/4, or more than 19 percent, to 70-3/8, while Net2Phone advanced 1-3/4 to 54-1/4.
Intel Corp. (INTC), the world's largest chip marker, jumped 5-1/4 to 77-7/16. The company issued a positive earnings forecast for its upcoming quarter, citing strong demand for its products in a conference call with analysts Thursday. In addition, it expects Y2K issues to have little impact on its business.
On the skids was Lockheed Martin Corp. (LMT), plummeting 2-11/16, or almost 12 percent, to 20-1/4. The defense firm Friday reported a 32 percent drop in third-quarter income and warned its earnings next year will be lower than originally expected.
Also suffering was eToys Inc. (ETYS), tumbling 10-7/8, or more than 15 percent, to 59-3/4, although the online retailer posted a second-quarter loss that was a penny smaller than analysts had expected.
Financial shares were mixed Friday, relinquishing some recent gains. Dow component American Express Co. (AXP) slid 7 to 154 on a downgrade by Morgan Stanley Dean Witter to "outperform" from "strong buy."
Fellow Dow member International Paper Co. (IP) fared better, jumping 4-3/16 to 52-5/8. The paper and chemicals producer benefited from positive comments by a Merrill Lynch analyst.
Elsewhere in the market, Electronic Data Systems (EDS) also gained, closing up 4-1/2 at 58-1/2. Brown Brothers Harriman reiterated its "buy" rating on the computer systems consulting firm founded by Ross Perot.
Greenspan keeps mum on interest rates
Federal Reserve Chairman Alan Greenspan didn't directly comment on interest rates in a speech to a business group Thursday evening. The Fed chairman did warn that strong productivity growth could slow down in the future. Strong gains in productivity have helped temper inflation in recent years, even as the job market remains extremely tight.
His comments, although reassuring to the market, had little impact.
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