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TALE OF TWO MARKETS
Dow rockets 320;
Bond prices up Associated Press
Nasdaq falls 124NEW YORK -- The Dow Jones industrial average soared more than 300 points today as investors moved money that has streamed out of the technology sector this week into long-forgotten industrial stocks.
The Dow rose 320.17, or by 3.26 percent, to close at 10,131.41. It was the fourth-biggest point gain ever for the Dow, but wasn't close to a record in percentage terms. The blue-chip index rose as much as 368.41 points before slipping back a bit.
Meanwhile, investors continued shedding technology shares. The Nasdaq composite index fell 123.95 to close at 4,582.68, bringing its loss for the past three days to 465 points, or 9.2 percent from its record close of 5,048.62 on Friday. Market watchers consider a drop of 10 percent to be a "correction."
"What a rare day," said Vernon Winters, chief investment officer at Mellon Private Asset Management. "A lot of money managers have been forced to sell blue-chips to buy technology stocks, and today, they're reversing course."
The blue-chip Dow, which has dramatically underperformed the Nasdaq so far this year, rose today on the strength of old-line industrial companies like DuPont, Johnson & Johnson, and 3M.
"So much damage has already been done in these old economy stocks," said Arthur Hogan, chief market analyst at Jefferies & Co. "We're finally seeing money coming into some of the bargain stocks that have been created by the selling pressure of the past few weeks."
Blue-chip technology shares were mixed. Intel rose, but Hewlett-Packard fell steeply.
The S&P 500, meanwhile, rose 32.99, or 2.43 percent, to 1,392.14.
Advancers led decliners by a nearly 5-to-3- margin on the New York Stock Exchange, with 1,914 up, 1,122 down and 419 unchanged. NYSE volume totaled 1.3 billion shares vs. 1.088 billion yesterday.
The NYSE composite index rose 16.59, or 2.8 percent, to 605.02; the American Stock Exchange composite index fell 19.39, or 1.9 percent, to 996.12; and the Russell 2000 index fell 14.12, or 2.46 percent, to end at 558.87.
Even with today's dramatic gains, the Dow remains down about 12 percent for the year to date, while the Nasdaq is up 12.6 percent.
Weakness in some of the Nasdaq's top performers suggested that investors are taking profits from their sharp gains this year, analysts said.
"The Nasdaq has been on a rocket ship, and I think investors will work a bit harder to bring it down before it can start moving higher again," Hogan said. "The Nasdaq is in the midst of a corrective process, which is healthy."
PMC-Sierra, which had risen 143 percent in the year to date, fell steeply. Veritas, a developer of storage-management software that was up about 75 percent this year, also dropped back.
Biotechnology companies, which led the market's decline yesterday after the United States and Britain agreed to share data on genetics, regained some ground today. Human Genome Sciences rose.
Oracle rose. The company, a leading maker of business software, said after the close of trading yesterday that third-quarter profits soared 160 percent, easily surpassing analysts' estimates.
Bond prices up
Bloomberg NewsNEW YORK -- U.S. Treasury bonds rose for a third day as declines in the Nasdaq composite index fueled expectations the economy may soon slow, prompting some investors to buy fixed-income assets.
There's "some shift out of equity investments into fixed income," said Zane Brown, who has loaded up on high-yield and municipal bonds for the $12 billion he oversees at Lord, Abbett & Co. A sustained drop in "the Nasdaq could cause some people to reassess expectations for stocks in general."
The 30-year bond rose 6/32 point or $3.44 per $1,000 face amount; its yield, which moves in the opposite direction from its price, fell 2 basis point to 6.07 percent. Two-year note yields were little changed 6.46 percent. Treasury bonds pared gains of almost point earlier in the day.
Some of the bond buying was spurred by the Nasdaq composite's poor performance today. Further losses in the index, which is down about 9 percent this week, may cap consumer spending and limit interest-rate increases by the Federal Reserve, investors said.
Fed policy-makers have cited gains in stocks -- the Nasdaq is up 12.6 percent this year and rose 86 percent in 1999 -- as a pillar of the booming economy, which grew 6.9 percent in the fourth quarter.
"A weak stock market is one harbinger of a softer economy," said Hal Woolley, who helps invest $5 billion in fixed income at Bessemer Trust Co. It's one change that "will make the Fed stop raising rates," he said.
Bonds fell in early trading on speculation that reports later this week will show faster inflation and bolster expectations for a series of interest-rate increases by the Fed, starting next week. The Fed already raised its target for overnight lending between banks in four quarter-point increments since June, to 5.75 percent to rein in growth. The government releases its February Producer Price Index tomorrow, followed by the Consumer Price Index on Friday.