Originally created 01/20/99

Nasdaq at new high



NEW YORK -- A powerful rally in technology stocks, fueled by the latest Internet merger, sent the Nasdaq Stock Market rocketing to new highs and pulled a laggard Dow industrials out of a slump late in Tuesday's session.

The Dow Jones industrial average, at one point down as much as 130.54, recovered to close up 14.67 at 9,355.22.

Even more impressive was the 59.97-point gain, a rise of 2.5 percent, in the Nasdaq composite index, which closed at a record 2,408.17, a lift that spilled over to the blue-chip industrials, said Larry Wachtel, market strategist at Prudential Securities.

The Nasdaq barreled past its previous closing high of 2,384.59, which was set Jan. 11.

"That's a moonshot," Wachtel said of the performance of the technology heavy Nasdaq market. "When you have powerful stocks like Microsoft, Dell and Cisco doing that well, it's very hard to keep the rest of the market sitting there doing zippo."

The Nasdaq composite opened sharply higher and pressed upward all day, after At Home Corp. agreed to purchase Internet company Excite in a $6.7 billion stock swap. Excite's stock shot up 42´ to close at 110, and At Home's shares rose 13É to 115É.

The market was not hampered, as it was for part of last week, by news from Brazil. After rocking world markets by devaluing its currency last Wednesday, Brazil's Senate passed a key austerity measure Tuesday in a first step to shore up the country's ailing economy.

Brazil's Bovespa index closed 3.8 higher in Sao Paulo, Latin America's largest market.

On the New York Stock Exchange, advancing issues barely outnumbered decliners as volume was moderately heavy at 952.96 million shares as of 4 p.m., off slightly from Friday's session. The market was closed on Monday for Martin Luther King Jr. Day.

Advances in blue-chip stocks were crimped most of the day by fears that Federal Reserve Alan Greenspan might attempt to cool the market's recent advances when he testifies Wednesday before the House Ways and Means Committee.

Investors remember well the chairman's "irrational exuberance" speech in December of 1996, when the Dow was trading at around 6,500. At the time, Greenspan questioned whether stocks were trading at values far too rich to be justified by earnings projections and general outlook on the economy.

The comment produced a brief stumble in stocks. But the Dow is now some 3,000 points higher and there continue to be jitters on whether stocks are overvalued.

Any hint that Greenspan is reasserting his "irrational exuberance" warning will squelch already dim hopes that the Fed will ease interest rates soon, said Eugene Peroni, market analyst at Janney Montgomery Scott in Philadelphia.

"Because of the big moves in Internet stocks and the fact that the down has gone on to make a new high recently, the bias seems to favor that he will be a bit more cautious," Peroni said.

A flood of earnings reports proved mixed. Chase stock rose 3´ points to 74É after the bank said it earned $1.31 per diluted share in the fourth quarter, up from 94 cents a share a year ago and topping analysts' expectations of $1.19 a share.

But BankAmerica's stock fell Ö to 64 after that bank said it earned 91 cents per diluted share, down from 94 cents a year earlier.

The Standard & Poor's 500 rose 8.74 to 1,252.00 , the NYSE composite index rose 1.44 to 594.83, and the American Stock Exchange composite index fell 1.68 to 707.61. The Russell 2000 index of smaller companies rose 3.84 to 430.89.

Overseas, the Nikkei 225 index in Tokyo fell 0.25 percent, the DAX index in Frankfurt rose 0.45 percent, the FT-SE 100 index in London fell 1.57 percent, and the CAC index in Paris declined 0.86 percent.