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Nasdaq on winning streak
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February 3, 2000: 5:52 p.m. ET
Internets, high-tech stocks boost the composite index; Dow recovers
By Staff Writer Jill Bebar
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NEW YORK (CNNfn) - The Nasdaq composite index rose for the fourth consecutive day Thursday, posting its third-largest point gain in its history, as demand for Internet stocks and many bellwether tech companies lifted the index to near-record territory.
In addition, a surging bond market provided support. Treasury prices soared for the second consecutive day, following the U.S. Treasury Department's announcement Wednesday that it will issue less debt than expected and begin buying some of its outstanding securities.
The Nasdaq composite index rallied 137.02 points, or 3.4 percent, to 4,210.98, nearing its record high close of 4,235.40 on Jan. 21.
 The Dow Jones industrial average rose 10.24 points to 11,013.44, and the S&P 500 index gained 15.85 points, or 1.1 percent, to 1,424.97.
"It was a strong day for technology and small stocks. But most major stocks were mediocre performers," said Phil Roth, chief technical market analyst at Morgan Stanley Dean Witter.
Breadth was positive on the New York Stock Exchange, with gainers widely outnumbering losers 2,072 to 1,044, as trading volume reached 1.1 billion shares. On the Nasdaq, gainers led losers 2,549 to 1,552, on heavy volume of 1.74 billion shares.
The bellwether 30-year Treasury bond gained nearly two full points in price, lowering its yield to 6.14 percent, its lowest level since November, from 6.28 percent late Wednesday.
In the currency markets, the dollar fell against both the yen and the euro.
In the wake of the Fed
On Wednesday, the Federal Reserve increased short-term interest rates by a quarter point, in line with expectations. The central bank continued the tightening process it began last year when it raised interest rates by a quarter point three times in an effort to cool a red-hot economy.
Wednesday's action brings the fed funds rate, the rate at which banks charge each other for borrowing money, to 5.75 percent. The central bank also raised the discount rate, the rate it charges its member banks for loans, by a quarter point to 5.25 percent.
With the U.S. economy now in its longest economic expansion in its history at 107 months, and with no signs of a slowdown, market strategists expect more rate hikes from the Fed to keep inflation in check. Policy makers meet again March 21.
Marshall Acuff, equity strategist at Salomon Smith Barney, told CNN's Ahead of the Curve the tightening process could even continue through the fall. (105K WAV) (105K AIFF)
Nevertheless, Phil Dow, stock market strategist at Dain Rauscher Wessels, told CNNfn's market coverage that Fed Chairman Alan Greenspan's efforts to prolong the economic recovery appear to be working. (84.8K WAV) (84.8K AIFF)
With the Fed out of the way, investors once again focused on economic news as analysts expressed caution about Friday's report on January U.S. employment data. Analysts polled by Briefing.com forecast a gain in January non-farm payrolls of 270,000.
A volatile Dow
Speculation that the rally in the 30-year Treasury bond was causing large trading losses at several U.S. primary dealers pressured the Dow Jones industrial average in early afternoon trade, particularly in the financial services sector.
 The index fell as much as 160 points along with the speculation. The rebound followed a statement by the Federal Reserve Bank of New York denying rumors of a meeting of primary dealers concerning the Treasury market's rally.
Analysts said the weakness in the Dow was also due to Wednesday's Fed rate hike, with blue-chip stocks being more sensitive to the increase.
"The Fed made it reasonably clear they will raise rates again," said Alan Kral, vice president and portfolio manager at Trevor Stewart Burton & Jacobsen, a money manager. "The Fed is impacting the Dow stocks and not impacting the Nasdaq stocks."
Elizabeth MacKay, chief investment strategist at Bear Stearns, agreed. She told CNNfn's market coverage technology issues are less impaired by the rising interest rates.
Financial services stocks extended Wednesday's losses. Among the Dow components, American Express (AXP: Research, Estimates) declined 1-5/16 to 162-7/8 and Citigroup (C: Research, Estimates) retreated 1-1/2 to 56-1/4. But J.P. Morgan & Co. (JPM: Research, Estimates) rose 1-9/16 to 122-3/4.
Supporting the Dow were two of its high-tech components with robust gains - Intel Corp. (INTC: Research, Estimates) and Hewlett Packard Co. (HWP: Research, Estimates). Intel rose 4-1/8 to 104-3/16, amid reports it agreed to supply Telefon AB LM Ericsson, the world's No. 3 cellular phone maker, with $1.5 billion in flash-memory chips during the next three years.
Hewlett Packard advanced 2-15/16 to 113-1/2, after announcing a new alliance with Eastman Kodak Co. (EK: Research, Estimates). In a separate deal, Ford Motor Co. (F: Research, Estimates) said Thursday it plans to give its workers Hewlett-Packard personal computers to use at home.
Dow component Eastman Kodak gained 1-5/8 to 63-1/8, and Ford edged up 1/8 to 48-3/4.
Mergers take center stage
Mergers in the pharmaceutical and technology sectors also dominated investors' attention Thursday.
Drug maker Warner-Lambert (WLA: Research, Estimates) has agreed to the hostile bid by Pfizer (PFE: Research, Estimates) in a deal worth about $85 billion, according to sources close to the talks. However, the two parties will need to negotiate a break-up of Warner's proposed merger with American Home Products (AHP: Research, Estimates) before a deal can finalized.
Warner-Lambert fell 2 to 93-1/2, and Pfizer eased 3/8 to 35-5/8. But American Home Products rose 1-9/16 to 47-11/16.
VA Linux Systems (LNUX: Research, Estimates) tumbled 8-7/8 to 128, after the maker of servers using the Linux operating system announced it will acquire Andover.Net (ANDN: Research, Estimates) in a stock swap.
Andover.Net, a Web site that offers downloads of Linux software, surged 9-1/8, or more than 25 percent, to 45-1/8.
Internets soar
Amazon.com (AMZN: Research, Estimates) was one of the most actively traded stocks on the Nasdaq Thursday, jumping 14-3/4, or more than 21 percent, to 84-3/16. The online retailer late Wednesday posted a greater-than-expected fourth-quarter loss of 55 cents a share, but made positive comments about future earnings.
Following Amazon's results, numerous Wall Street brokerage houses, including Merrill Lynch, upgraded their ratings on the stock to "near-term buy" from "near-term accumulate" and Banc of America Securities to "strong buy" from "buy."
 Other Internet stocks also performed well. Yahoo! (YHOO: Research, Estimates) advanced 32-1/4, or nearly 10 percent, to 360-1/4, and eBay (EBAY: Research, Estimates) added 14 to close at 165.
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