U.S. stocks inched higher Wednesday in light pre-holiday dealings punctuated by frenetic buying of a few Internet names.
The Dow Jones industrial average gained 13.13 points, or 0.1 percent, to 9,314.28. It was the eighth win in 10 sessions for the benchmark.
The Nasdaq market posted the biggest gains as the continuing frenzy for Internet-related stocks led yet another strong day in the technology group.
The Dow fell 73 points on Tuesday after rising 214 points on Monday to an all-time high of 9,374.27, halting a four-month exile from record terrain. The gauge of 30 major companies is now up nearly 18 percent for the year despite sliding below 7,500 as recently as Oct. 8.With Japan attempting to repair its battered banking system, the Federal Reserve cutting interest rates, and the financial markets benefiting from improved liquidity, most investors eye continued mark-ups in share prices.
"I think the market can do well as long as the economy continues to grow and inflation stays low," said Alan Skrainka, market analyst at Edward Jones. "Certainly, three Federal Reserve interest rate cuts in seven weeks provides a powerful stimulus to the financial markets."
"The old saying on Wall Street is you don't want to fight the Fed."
Volume on the New York Stock Exchange was the lightest in three months as some investors got a headstart on the holiday.
Among broad sectors, the retail segment was the day's best performer in the wake of a government report indicating consumer spending remains solid.
Otherwise, there were few market sectors or groups with significant price movements. Secondary Internet shares were one exception, with a couple of stocks vaulting close to 200 percent.
Despite being long-term bullish, Peter Green, technical strategist at Gruntal & Co., notes that a few cautionary signs have popped up.
"The market's [rich] valuation and the activity in the Internet-related stocks are two negatives," he said. "Internet shares are approaching levels where profit-taking will likely ensue. n the latest Forbes magazine, it says 'Internet or Bust?' That's speculative juices flowing and something that could hurt people near-term in those names.
"Also, most analysts are saying, 'We know there is hype in the Internets and they're overvalued, but they're great long-term stocks.' That may be true, but you'd think there would be a more negative stance on that."
In Tuesday's market indicators:
- The 30-year Treasury advanced 10/32, to yield 5.187 percent.
- The Standard & Poor's 500 Index rose 0.3 percent.
- NYSE winners bettered losers by 15 to 14. Fifty-two week highs amounted to 76, with 26 stocks hitting 52-week lows.
- On the Big Board floor, turnover eased 24 percent to 586 million shares, the lightest level since Aug. 24, when 557 million shares changed hands.
- The Nasdaq Composite advanced 1.0 percent. Advancing issues led decliners by 22 to 17 in the Nasdaq Stock Market, with 95 new highs and 47 new lows. Volume totaled 811 million shares.
- The Russell 2000 Index of small-company stocks gained 0.7 percent.
Among the companies in the news:
- Ocean Energy (OEI) dipped 9/16 to 9 11/16 and Seagull Energy (SGO) gave back a point to 9 13/16 after announcing plans to merge in a $1.1 billion deal that would create the nation's 10th-largest independent exploration and production company.
- Computer networker Novell (NOVL) improved 3/4 to 18 1/8. After Tuesday's close of trading, it reported fiscal fourth-quarter profits of 12 cents a share, 3 cents more than most analysts' forecasts. It earned 2 cents in the same quarter of 1997.
- Intuit (INTU) pulled back 1 3/8 to 58 1/2. The financial software developer lost 45 cents a share on a pro forma basis in its fiscal first quarter. Wall Street had expected a loss of 46 cents, according to First Call. Most analysts look for earnings to grow 39 percent in the fiscal year ending July 31.
- The Sports Authority (TSA) rose 1/16 to 6 7/16 after the retailer of sporting goods turned in a third-quarter operating loss of 32 cents a share, 3 cents worse than most analysts' estimates. It earned 6 cents a year ago. Sales at outlets open a year or more declined 4.7 percent.
- Arts and crafts retailer Michaels Stores (MIKE) advanced 1 1/2 to 18 7/8. It netted 24 cents a share in the third quarter, 3 cents higher than most forecasts. However, Michaels warned that sales at stores open a year or more were likely "flat to slightly down" in the fourth period.
- Advanced Micro Devices (AMD) added 3 9/16 to 29 3/16 after influential Merrill Lynch analyst Thomas Kurlak improved his opinion of the semiconductor manufacturer to "accumulate" from "neutral." Kurlak also hiked his 1999 per-share earnings estimate to $1.55 from $1.00. In a research report, he noted that "because of the good value of the K-6-2 [chip], AMD has essentially created the sub-$1,000 PC market."
Mobil (MOB) added 3 7/16 to 78 3/8 on takeover speculation. The financial news cable channel CNBC reported that Exxon is reportedly in talks to buy Mobil.
- Ciber (CBR) rose 2 1/8 to 22 3/16 after CS First Boston started coverage of the provider of information technology consulting services with a "strong buy" recommendation.
- CS First Boston also initiated coverage of C Cube Microsystems (CUBE) with a "buy" rating. Stock of the data storage device maker climbed 2 9/16 to 26 1/16.
- Investors hammered shares of Sabratek (SBTK) after the medical products manufacturer said it will stop distributing its Rocap flush products on the heels of discussions with the U.S. Food and Drug Administration. The company wasn't sure when distribution of the product line would continue. Sales and earnings will suffer due to the development. The shares cratered 9 1/8, or 39 percent, to 14 1/8.
- Internet stocks scooted ahead. Similar to Tuesday, the best gains were seen among secondary Web plays, e-commerce names in particular. Onsale bolted 16 1/8, or 37 percent, to 60; Peapod, 1, or 17 percent, to 6 15/16; and Egghead.com 3 3/16, or 18 percent, to 21 7/16.
- Among other Internet stocks: eBay was ahead 7 11/16 to 204 1/2, 24/7 Media 5 7/8, or 32 percent, to 24 1/2, Rocky Mountain Internet 2 1/8 to 11 9/16, SportsLine USA 3 3/4 to 19 1/8, and Preview Travel 1 15/16 to 17 1/16.
- Wednesday's cyberstar was Books-A-Million (BAMM), jetting 8 9/16 points, or 196 percent, to 12 15/16 after pulling the wraps off its spruced-up Web site. Volume in shares of the electronic bookseller was gigantic - about 295 times normal.
- In Webville, Didax (AMEN) soared 6 3/4, or 180 percent, to 10 1/2 after launching The Music Channel, a site devoted to Christian music.