|
Party on Wall Street
|
 |
January 14, 2000: 5:42 p.m. ET
Dow sets record and Nasdaq soars as worst rate hike fears ease
By Staff Writer Jake Ulick
|
NEW YORK (CNNfn) - U.S. stocks rallied for the second straight session Friday, pushing the Dow Jones industrial average to a record high, after government data and words from the nation's most powerful banker convinced investors that only a small interest rate hike lies ahead.
And a surprisingly strong profit report from chipmaker Intel sparked broad gains among technology shares, lifting the Nasdaq composite index to its fifth biggest point gain on record.
Financial stocks, ever vulnerable to higher interest rates, catapulted. Gains in American Express, Citigroup and J.P. Morgan, in addition to those of Intel, lifted the Dow to its third new high of the week. The index of blue chip stocks rose 140.55 points, or 1.21 percent, to a record 11,722.98. The Dow is up 1.9 percent on the year.
The tech-heavy Nasdaq composite index jumped 107.06 points, or nearly 3 percent, to 4,064.27, wiping out all of the week's earlier losses. Illustrating extreme volatility, Friday's was the seventh session this year when the Nasdaq swung more than 100 points. The index is virtually unchanged year-to-date.
The broader S&P 500 gained 15.47, or 1 percent, to 1,465.16, making it also essentially unchanged on the year.
More stocks rose than fell, as advancers on the New York Stock Exchange led decliners 1,617 to 1,398. Trading volume was heavy; a billion shares changed hands.
In other markets, bonds fell and the dollar soared against the euro and fell vs. the yen.
Friday's trading came before the start of a long holiday weekend. U.S. financial markets are closed Monday in observance of the holiday honoring Dr. Martin Luther King Jr.
Quarter point hike?
The Consumer Price Index, the government's most widely used inflation gauge, rose just 0.2 percent in December, the Labor Department said. The modest rise, less than economists expected, comes one day after news that prices at the producer level also made scant gains last month.
Taken together, analysts say the reports show inflation remains tame enough to limit the Fed's interest rate hike next month to a quarter percentage point, rather than the half point some had feared.
"The data should still be taken as further confirmation of the Fed tightening in February being limited to 25 basis points," Donaldson, Lufkin & Jenrette said in a note to clients Friday.
Alan Skrainka, chief market strategist at Edward Jones, agreed.
"It doesn't get any better than this," Skrainka said. "You have strong growth and no inflation. While everyone's in agreement the Fed's going to act, there's no urgency or panic."
Stock investors fret that higher interest rates will mean steeper borrowing costs, hurting corporate profits.
Soothing speech
Words from Fed Chief Alan Greenspan further calmed investors' worst fears about tighter credit ahead. In a speech in New York, Greenspan hinted that a rate hike is coming in February, but suggested the nation's central bank will not raise rates aggressively.
"Once we read the speech we knew it would be a gradual increase," James Annable, chief economist at WingspanBank.com, told CNNfn's Before Hours. "The Fed doesn't want to be aggressive without the smoking gun of inflation."
Similarly, David Mead, chief investment officer at Harris Bank, sees the speech as easing investors' worst rate hike fears. (264K WAV) (264 AIFF)
With concerns of tighter credit ebbing, rate-sensitive financial stocks gained. J.P. Morgan (JPM) rose 5-3/16 to 128. Citigroup (C) jumped 2-3/8 to 58. American Express (AXP) climbed 3-1/2 to 159-/12.
Intel the unstoppable
Intel (INTC), whose shares rose all week, continued to surge following its better-than-expected profit announcement after the close of trading Thursday. The world's biggest chip maker earned 69 cents per diluted share before a charge, handily beating earnings tracker First Call's consensus estimate of 63 cents per share. Intel stock jumped 12 to 103-1/16 Friday.
"(Intel) did a great job," Christopher Chaney, semiconductor analyst at A.G. Edwards, told CNNfn. "They really had a blowout quarter." Chaney upgraded Intel shares Friday to "buy" from "accumulate," and set a $145 price target on the chipmaker's stock.
Intel brought some of the sector along for the ride. Analog Devices (ADI) gained 7-9/16 to 101-3/8, and Advanced Micro Devices (AMD) jumped 2-5/8 to 40-3/8. But Micron Technology (MU) fell 4-5/8 to 73-1/4.
Changes at the top
Microsoft (MSFT) rose 4-7/16 to 112-1/4 after Bill Gates late Thursday handed day-to-day management of the software company to Steve Ballmer, the company's president. Gates will retain his post as chairman and add a new title as chief software architect.
But that wasn't the only major leadership change.
Wal-Mart (WMT) fell 5/8 to 64-1/2 after David Glass said Friday he is stepping down as the retailer's president and chief executive officer effective immediately.
Edward Jones' Skrainka said neither change is cause for concern.
"Both of those companies are larger than one man," he said. "There's plenty of management depth at both companies."
(Click here for a look at CNNfn's hot stocks)
(Click here for a look at CNNfn's tech stocks) 
|
|
|
|
|
 |
|
