Techs Lead Blue Chips Higher

U.S. stocks, turning a blind eye to the crises in Washington and the Persian Gulf, jogged higher Friday, led by feverish buying in technology shares.

The Dow Jones Industrial Average advanced 27.81 to close at 8,903.63.

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Meanwhile, U.S. and British airstrikes on Iraq continued for the third day.

On the week, the Dow added 81.87 points, or 0.9 percent.

On the year, the Dow is up 995.38 points, or 12.6 percent, following gains of 33 percent, 26 percent, and 22 percent, in 1995, 1996, and 1997, respectively.

The U.S. stock market appeared more concerned this week with the outlook for earnings in the fourth quarter and beyond than the dramas played out in Washington and Iraq.

"To the market, it's really irrelevant if Clinton stays or goes," said Robert Stovall, president of Stovall/21st Advisers. "We've got the U.S. economy moving in a fashion that bonds and stocks both just think is great. And the leadership at the Federal Reserve and Treasury Department presumably will stay on long after Clinton goes, if he has to go.

"So I don't think Clinton's problems are a factor to the stock market. There's no surprise left."

Investors also discounted the military tensions in Iraq.

"The market does not expect Iraq will turn for the worse or that something will happen to interrupt oil flows, which is what Iraq is really all about from the point of view of the market," said Hugh Johnson, chief investment strategist at First Albany Corp. "Nor does the market expect that Clinton will be impeached by the Senate, which is what impeachment is all about as far as the market is concerned.

"So with neither outcome, the markets are troubled, perhaps, by the two events, but not seriously moved by either one."
Stovall sees the earnings outlook as the key to market direction in the New Year.

"There are more open and direct and complete conessions being made in corporate boardrooms this month than have come out of Capitol Hill or the White House," he quipped. "But I think most of the [earnings warning] period is over now, and you'll start getting the real earnings next month. And there will probably be enough good earnings reports to outweigh the negative ones."

In Friday's trading, volume surged amid "triple-witching," or the quarterly expiration of stock options, stock index options, and stock index futures contracts.

Lower oil prices and some positive news in the airline segment lifted transportation shares higher.

Once again, however, the day's stars were the Internets, with electronic commerce issues making the biggest gains.

"It's an old story but I think investors are still very optimistic about expected fourth-quarter results in the Internet group," said Ryan Jacob, portfolio manager of The Internet Fund. "Earlier in the week, AOL spoke about the amount of users that make purchases on the service and the [Oppenheimer upgrade of Amazon's price target] also gave more spark to the sector.

In the e-commerce group, uBid improved 10 3/4 to 53 5/16, Creative Computers 4 9/16 to 27 9/16, eBay 19 5/8 to 258, Onsale 5 5/8 to 45, Cyberian Outpost 2 5/8 to 30 ½, and Multiple Zones 1 1/16 to 9 5/8. Segment benchmark Amazon.com was 9 1/2 richer at 286 1/4.

And CD Warehouse (CDWI) gained 1 7/8 to 20 1/4 after trading as high as 25 1/2 intraday. It launched its Web site catering to buyers of new and used music-related compact discs.

Among Web portal and search engine issues, Yahoo! increased 7 to 212 1/2 Inktomi 7 1/4 to 142 3/4, and America Online 5 1/4 to 104 3/8.

In Friday's market indicators:

• Standard & Poor's 500 Index rose 0.7 percent.
• York Stock Exchange advancing issues led decliners by 8 to 7. Ninety stocks reached 52-week highs, while 67 issues sank to 52-week lows.
• The Big Board floor, 838 million shares struck the tape.
• Nasdaq Composite advanced 2.0 percent to a record. Advancing issues led decliners by 21 to 17 in the Nasdaq Stock Market, with 107 new highs and 82 new lows. Volume totaled 895 million shares.
• Russell 2000 Index of small-company stocks gained 0.9 percent.
• In the bond market, the 30-year Treasury fell 3/32 to yield 5.013 percent.

• Nike (NKE) topped Wall Street expectations by 2 cents when it reported fiscal second-quarter results of 24 cents a share. It earned 48 cents in the year-ago period. The athletic footwear manufacturer said it's "cautious" on its near-term outlook for the U.S. market. The shares eased 1 3/4 to 39 3/4.
• Aliant Communications (ALNT) ascended 6 3/8 to 37 1/4. Alltel (AT) will buy the provider of wireless, paging, phone, and Internet services in a deal worth about $1.5 billion. Alltel, which offers local telephone and wireless communications services, gave bak 1 1/8 to 55 7/8.
• Audiohighway.com (AHWY) rose 13/16 to 7 5/16 after it sold 2.2 million shares at $6.50 each in its initial public offering. The company's AudioCast system allows users to download books, news programs, and music.
• Kuhlman (KUH) stepped up 5 7/8 to 37 3/8 after the electrical system distribution component maker agreed to be bought by automotive part manufacturer Borg-Warner Automotive (BWA) for $660 million.
• Intel (INTC) was ahead 3 1/8 to 120 on favorable comments by Morgan Stanley Dean Witter. The broker raised its 1998 earnings estimates to $3.48 a share from $3.45 and lifted its 1999 view to $4.60 from $4.40. Morgan retained its $150 price target for the shares. Prudential Securities also boosted its earnings forecast for the semiconductor titan.
• Semiconductor equipment stocks notched multiple-point gains. Industry leader Applied Materials (AMAT) picked up 4 5/16 to 45 7/16, Novellus Systems (NVLS) 4 5/8 to 53 7/8, KLA-Tencor (KLAC) 2 1/8 to 43 7/16, and Teradyne (TER) 2 7/8 to 40 7/8.
• Cisco Systems (CSCO) put on 5 9/16 to 90 7/16. SG Cowen upgraded its opinion to "strong buy" and issued a price target of $105 on the stock. Robertson Stephens also spoke well of the networking heavyweight.
• Compaq Computer (CPQ) rose 2 9/16 to 42 5/8 after Morgan Stanley Dean Witter raised its price objective on the shares to $55.
• i2 Technologies (ITWO) tacked on 5 to 29 3/16. Credit Suisse First Boston analyst George Gilbert bettered his rating to "strong buy" from "buy," citing good demand for the company's products. Gilbert also issued a 12-month price objective of $40. i2 develops supply chain management software for the planning and scheduling of manufacturing and related logistics.
• Airline shares firmed as oil prices dipped. A new bill might lift the limit on foreign ownership of a U.S. carrier to 49 percent from the current 25 percent. Delta Air Lines (DAL) added 1 3/4 to 51 1/2, Continental Airlines (CAI.B) 1 1/16 to 33 15/16, and AMR (AMR) 1 7/16 to 60.