Dow Up 314.59; Nasdaq Takes Drop
Dow Up 314.59; Nasdaq Takes Drop
Mar. 16, 2000
NEW YORK (AP) _ Technology stocks extended their slide today, pushing the Nasdaq composite index as much as 11 percent below its peak last week, into what many on Wall Street consider a correction.
The Dow industrials roared higher, however, sending the blue-chip index up more than 300 points for a second straight day as they attracted money that is leaving the technology sector.
In morning trading on Wall Street, the Nasdaq composite index was down 61.43 at 4,521.19, extending its sharp decline this week. Since the Nasdaq closed Friday at a record 5,048.62, the index has shed 10.4 percent. In earlier trading, the Nasdaq was down more than 100 points.
Market watchers consider a loss of 10 percent a correction, which signifies a sudden reversal of a market trend but doesn't necessarily mark a long-term change. Many analysts believed the Nasdaq, which had risen 24 percent in the year to date, was overdue for a correction.
By contrast, the Dow Jones industrial average fell into a correction in mid-February, and has struggled until this week. Today, the Dow was up 314.59 at 10,446.00, extending a 320-point gain on Wednesday that represented its biggest surge in 17 months.
Broader indicators were mixed. The Standard & Poor's 500 index was up 17.87 at 1,410.01.
The Nasdaq reversed an early gain as investors sold stocks that have performed best in the year to date. Xilinx fell 3 1/16 to 66 1/8, 3Com fell 2 to 59 1/16, and Cisco Systems fell 3 5/16 to 125 5/16.
``A lot of these high-growth stocks had gotten to such extreme valuations,'' said Matt Finn, chief investment officer of the growth and income group at Evergreen Funds in Boston. ``They were due to come down.''
Meanwhile, a wide range of stocks led the Dow higher. American Express rose 8 1/8 to 141, Johnson & Johnson rose 2 3/4 to 79 11/16, and 3M rose 3 5/16 to 85 13/16. Many of those shares have been beaten down in recent weeks as investors poured money into technology stocks, and are now enticing investors as relative bargains.
Stocks rose even after the Labor Department's Producer Price Index showed that wholesale prices surged 1 percent in February, the largest gain in nearly 10 years, as gasoline, home heating oil and other energy costs rose.
Inflation figures, including the Consumer Price Index due for release on Friday, are sure to be closely watched by the Federal Reserve as it weighs whether still higher interest rates are needed to cool the economy. In a continuing effort to keep inflation at bay, the Fed has raised rates four times since last June, and it meets again Tuesday, when investors are expecting a fifth rate hike.
Still, investors were heartened by the fact that the ``core'' rate of inflation at the wholesale level, which excludes the volatile energy and food categories, matched expectations with a 0.3 percent gain in today's report.
``The core rate was in line with what we expected,'' said Finn. ``The Fed is on its way to taking the edge off inflation, and it's looking like they aren't going to have to be excessive to do it.''
The bond market improved modestly, lending support to stocks. The yield on the 30-year Treasury bond fell to 6.04 percent from 6.07 percent late Wednesday.
Advancing issues outnumbered decliners by an 8-to-3 margin on the New York Stock Exchange, where volume came to 428.11 million shares at late morning, well ahead of Wednesday's heavy pace.
The Russell 2000 index of smaller companies fell 9.84 to 549.03.