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Late run-up helps stocks
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January 7, 1999: 5:02 p.m. ET
Erasing morning losses, Dow ends nearly flat, Nasdaq scores new record
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NEW YORK (CNNfn) - It was supposed to be a day of profit taking after a powerful rally. But Wall Street's insatiable bulls could not resist the temptation Thursday, lifting the Nasdaq to a new record high and leaving the Dow nearly unchanged.
Concerns that the market may have run up too fast, a slight drop in the equity allocation in the model portfolio of Goldman Sachs' Abby Joseph Cohen, as well as shaky performances in markets overseas and a severe sell-off in Brazil, all put their weight on stocks in the morning, at one point driving the Dow down 118 points.
But the desire to own stocks proved stronger than the urge to take profits, and the market clawed its way back from the lows to end narrowly mixed.
The Dow Jones industrial average lost 7.21 points to close at 9,537.76. Trading volume on the New York Stock Exchange reached 859 million shares, with declines leading advances 1,953 to 1,131.
The Nasdaq Composite gained 5.23 to 2,326.09, its fifth straight record high. The S&P 500 index dropped 2.61 to 1,269.73.
Liz Ann Sonders, chief market strategist at Avatar Associates, said Thursday's early pullback was nothing unusual for the market after the previous day's ravishing rally, adding that the state of economic growth would probably be the major driving factor in the market over the near term. (376K WAV) or (376K AIFF).
Investors appeared to pay little attention to the start of the Senate's impeachment trial against President Bill Clinton.
Financial, and especially brokerage, stocks showed strength, as did many Internet shares. After retreating in the morning, most technology issues also gained ground late in the day.
The bond market finished lower, hurt again by renewed declines in the dollar against the yen. The benchmark 30-year Treasury bond was down 31/32 of a point in price for a yield of 5.22 percent.
The dollar resumed its slide against the yen overnight and remained lower in U.S. trading. The U.S. currency also traded lower against the euro.
Merger saga continued
In stocks, the ongoing competition for the buyout of AirTouch Communications (ATI) entered a new phase following a USA Today report that MCI WorldCom (WCOM) may also enter the bidding war. That would put MCI WorldCom in competition with Bell Atlantic (BEL) and British group Vodafone (VOD), which have already offered to pay $45 billion and $55 billion for AirTouch respectively.
Shares of AirTouch bucked the overall market trend, rising 2-1/8 to 82. But the stocks of most of its bidders fared worse. MCI WorldCom lost 3-1/4 to 75-1/8, Bell Atlantic ended up 1/8 to 56 and American depositary receipts of Vodafone dropped 4-1/2 to 176-1/4.
Financials shine
Financial stocks were also among the day's focus sectors following better-than-expected earnings reports from two of Wall Street's premier outposts. Shares of Lehman Brothers (LEH) inched up 1/2 to 54-1/8 after climbing in the morning when the brokerage said it earned 51 cents per diluted share in the fourth quarter, well above consensus expectations for 21 cents a share.
Fellow financial firm Morgan Stanley Dean Witter (MWD) saw its shares rally 3-1/2 to 84-3/16 after posting earnings of $1.49 a share in the fourth-quarter, compared to $1.30 a share a year earlier and well above market expectations for 96 cents a share.
Elsewhere in the financial world, shares of Merrill Lynch (MER) gained 3/4 to 77-5/8 and Dow component Citigroup (C) rallied 4-1/8 to 58-1/2.
Technology stocks lost little of their luster as investors pocketed some gains from the sector's recent run-up in the morning and used the late part of the session to buy more stocks.
Shares of Dow component IBM (IBM) rose 1-7/16 to 190-3/16. Dell Computer (DELL) inched up 1/16 to 78-3/16, Microsoft (MSFT) lost 3/4 to 150-1/2 and Intel (INTC) eased 1/4 to 129-1/4.
Cisco Systems (CSCO) defied gravity, rising 3-7/8 to 103-5/8. Cisco announced it had teamed up with General Instrument (GIC) to develop a system for AT&T (T) that would allow consumers to surf the Internet, send faxes, watch television and talk on the phone at the same time.
Finally, among the day's biggest losers, shares of Borders Group (BGP) tumbled 5-1/16, or more than 20 percent, to 20 after the company late Wednesday warned that its fourth-quarter earnings would not live up to expectations. Goldman Sachs, J.P. Morgan and Brown Brothers Harriman downgraded the stock.
(Click here for a look at today's CNNfn market movers)
(Click here for a look at today's CNNfn tech stock report) 
-- by staff writer Malina Poshtova Zang
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