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Dow sets a record
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April 7, 1999: 6:54 p.m. ET
Earnings optimism helps blue chips, but earnings jitters hurt tech stocks
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NEW YORK (CNNfn) - A dose of healthy earnings news gave investors confidence to drive the Dow industrials sharply higher and to a record close Wednesday.
But lingering worries about earnings growth among technology companies, dampened sentiment in the tech sector, leaving the Nasdaq with a loss for the day.
The Dow Jones industrial average plowed ahead, rising 121.82 points to a record 10,085.31.
But market breadth was negative with losers beating gainers by a margin of 1,602 to 1,379 as trading volume on the New York Stock Exchange reached a hefty 833 million shares.
Barry Hyman, senior equity analyst at Ehrenkrantz, King, Nussbaum, said Wall Street will need a broadening of the market rally, as well as continuing leadership from the technology sector if the current bullish market trend is to continue. If one or both of these factors fail, Hyman warned investors to expect a market correction soon. (806K WAV) or (806K AIFF)
Technology stocks were not leaders Wednesday. The Nasdaq Composite, the broadest indicator of the performance in the technology sector, fell 18.74 points to 2,544.43.
The S&P 500 index rose 9.00 points to 1,326.89, also a record high.
The bond market finished an uneventful trading session mixed, with the bellwether 30-year Treasury bond rising 5/32 of a point in price for a yield of 5.50 percent.
The dollar made modest advances against both the yen and the euro.
Earnings ambivalence
Investors in the stock market got one of their first whiffs of the upcoming first-quarter earnings reporting season when Alcoa (AA), the world's largest aluminum producer, became the first of the Dow 30 to reveal its January-March performance..
Alcoa, whose profit per share slipped from a year earlier but came in well above market projections, saw its stock gain 2-15/16 to 44, helping encourage buying in the broader market for blue-chip stocks.
However, the enthusiasm was tempered by jitters over Yahoo! (YHOO), which announced its results after the market closed. The company is the leading Internet portal, and analysts say its earnings will set the tone for the technology sector in general. After a strong opening rally followed by several zigzags in and out of positive territory, Yahoo! shares fell 6-7/16 to 208-7/16 in regular trading.
However, those who bet on Yahoo!'s performance were not disappointed. Half an hour after the closing bell, Yahoo! said it earned a pro-forma profit of 11 cents a share in the first quarter, handily beating forecasts for 8 cents a share.
Hugh Johnson, chief investment officer at First Albany, said some deeper hesitation contributed to the market jitters. He called the inability of the broader market to catch up to the Dow and other large-cap indexes "a danger sign," and noted that rising oil prices could play a part in bringing the euphoria to its inevitable end.
Tech giants regroup
As an example of these undercurrents moving in the market, shares of technology blue chips were mixed as traders finally dipped in to take profits from the Nasdaq's recent record run.
Intel (INTC) rose 1-11/16 to 132-1/8 but Microsoft (MSFT) dropped 3/4 to 93-5/16. Dell Computer (DELL) edged down 3/8 to 46-7/16 as its eagerly-awaited two-day analyst conference began Wednesday, while Cisco Systems (CSCO) advanced 3-1/2 to 118-3/4.
Among the Dow techs, IBM (IBM) rose 3-7/16 to 186-7/16 and Hewlett Packard (HWP) slipped 1/4 to 69-3/4.
Sweet anticipation
In the meantime, Internet bulls eagerly awaiting the Yahoo! earnings got confirmation of an agreement between two giant music firms to create what could be the biggest music store on the Web. Universal Music, a unit of Seagram (VO), and BMG, a unit of Germany's Bertelsmann (FBTG), announced a joint venture to sell their products on the Internet. Bertelsmann isn't publicly traded in the United States, but Seagram shares climbed 4-1/16 to 59.
Investors also bought into news that cable-Internet provider @Home (ATHM) is poised to make a big splash in the Japanese home-networking market, driving shares up 3-11/16 to 165-13/16.
Anticipation also pushed shares of Revlon (REV) up 3-9/16, or nearly 18 percent, to 23-9/16 after the cosmetics giant admitted it is studying the possibility of selling one or more of its businesses. Shares of Revlon rallied sharply a little over two weeks ago on speculation Anglo-Dutch consumer conglomerate Unilever (UL) might be interested in buying the company.
Financial shares pick up
Much of the strength on the Dow industrials came from impressive gains among the index's financial components. The financial services sector has enjoyed a strong performance recently amid expectations for stable interest rates and positive earnings.
Shares of discount broker Charles Schwab (SCH) climbed 8-3/4 to 116 amid speculation the company may announce a stock split after its annual meeting next month.
Broker and investment bank Donaldson, Lufkin & Jenrette (DLJ) gained 5-11/16 to 78 on news the company's online arm, DLJDirect will team up with Japan's Sumitomo Bank to offer trading in Japanese securities on the Internet.
Among the Dow components, shares of American Express (AXP) gained 3-3/16 to 126-7/16, Citigroup (C) climbed 4-9/16 to 71-9/16 and J.P. Morgan (JPM) finished up 3-1/2 to 127-7/16.
(Click here for a look at today's CNNfn's market movers.)
(Click here for a look at today's CNNfn technology stocks report) 
-- by staff writer Malina Poshtova Zang with Robert Scott Martin
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