NEW YORK -- U.S. stocks advanced yesterday as technology stocks extended a four-day rally, overshadowing a weak dollar and rising interest rates.
Semiconductor, computer hardware and software stocks posted the day's largest gains. Telephone, bank and electric utility companies paced the losers.
High-tech stocks "will be able to produce good earnings and good returns, regardless of how weak or strong the economy is this year," said Philip Orlando, money manager at First Capital Advisers with assets of $100 million. "Technology is clearly an area where the earnings growth is expected to be materially above the market as a whole."
The Dow Jones industrial average rose 9.68, to 3,989.61, as International Business Machines Corp. climbed $2.625, to $79.875, its highest point in 2 1/2 years, and Goodyear Tire & Rubber Co. surged $1.375, to $37.125. For the week, the average fell 22.13, or 0.55 percent, after closing at a record 4,011.74 last Friday.
Among broad market indexes, the Standard & Poor's 500 stock index edged up 0.29, to 485.42. The index closed at an all-time high of 488.26 last Friday.
Fueled by such technology stocks as Intel Corp., Oracle Systems Corp., Bay Networks Inc., 3Com Corp. and DSC Communications Corp., the Nasdaq composite index jumped 5.11, to 798.79, just 1.4 percent below its record high of 803.93, reached last March 18.
The Russell 2000 index of small stocks rose 0.74, to 256.9, and the Wilshire 5000 index added 2.39, to 4,787.87.
Fewer than 11 stocks declined on the New York Stock Exchange for every nine that rose. Trading volume totaled 330.8 million, matching this year's daily average.
Hewlett-Packard Co. helped touch off a frenzy in technology shares by announcing it will cut prices up to 11 percent and offer the industry's first $1,500 personal computer powered by Intel's Pentium chip.
Technology stocks had already received a boost earlier this week. One reason was a severe shortage of computer memory && chips used to power multimedia and interactive applications, which caused their prices to skyrocket. And Texas Instruments Inc. predicted the worldwide market for computer chips will swell 21 percent, to $124 billion, this year.
Hewlett added 87.5 cents, to $116.625. Micron Technology Inc. spurted $2.125, to $68; Compaq Computer Corp. added $1, to $34.625; Intel rose $2.89, to $81.875; Texas Instruments leapt $3.125, to $86.50; Advanced Micro Devices Inc. surged $1.75, to $31.50; and Xilinx Inc. advanced $1.375, to $69.375.
"The whole group has been hot as a pistol for a long time," said Charles Howley, senior trader at SoundView Financial Group.
Computer Associates International Inc. spurted $2.25, to $61. The software maker said it will announce Monday that Hewlett-Packard will resell its network management systems.
Stocks tumbled in the first hours of trading in reaction to rising Treasury bond yields and a plunge in the dollar, which fell to postwar lows against the Japanese yen and Swiss franc and a 28-month low against the German mark. The currency plunged even as the Federal Reserve and a group of European central banks bought dollars.
By midday, though, stocks began to rebound, led by gains in IBM, Philip Morris Cos. and Hewlett-Packard.
"A lot of the enthusiasm has been shaken from the market by the weakness in the dollar," said Hugh Johnson, chief investment strategist at First Albany Corp. "Obviously, when the dollar's declining, foreign investors back away from our markets and it becomes very demoralizing."
Yields on the Treasury's benchmark 30-year Treasury bond rose to 7.54 percent from 7.49 percent as the dollar slid, raising concern that overseas investors won't be attracted to dollar-denominated assets and that U.S. prices of imported goods will rise.