Technology issues spur stocks to all-time highs


NEW YORK -- U.S. stocks, led by technology issues, surged yesterday to all-time highs amid investors' conviction that corporate earnings will stay strong.

Computer-network stocks were buoyed when 3Com Corp. agreed to buy Chipcom Corp. for $775 million. Biotechnology stocks surged after Amgen Inc. said its scientists developed an experimental therapy for treating obesity.

Investors also expressed confidence that the economy will keep humming, and that there are few threats to growth, analysts said. "Investors think we're going to have a perfect world of low interest rates, low inflation and high corporate profits," said Michael Metz, chief market strategist at Oppenheimer & Co.

The Nasdaq composite index, loaded with technology companies, surged 10.48 to a record 1,010.66, benefiting from stronger-than-expected earnings from stocks such as Cirrus Logic Inc., Opal Inc., Triquint Semiconductor Inc. and Glenayre Technologies Inc.

In percentage terms, Nasdaq's 1.05 percent gain was almost twice that of the Standard & Poor's 500 index, up 3.61, or 0.64 percent, to a new peak of 565.22.

The Dow Jones industrial average was ahead 25.71, or 0.55 percent, to 4,732.77, fewer than four points shy of last week's record.

"Clearly, technology is where the earnings are, and Nasdaq is dominated by technology," said David Rolfe, chief investment officer at Wedgewood Partners Inc. in St. Louis. "Earnings have been super robust in corporate America; profitability is at historic levels."

The Dow Jones transportation average surged 35.63, to 1,907.05, the Russell 2000 index of small-company stocks rose 2.65, to 298.75, and the American Stock Exchange market value index added 0.96, to 521.58.

All three were records.

More than seven stocks rose on the New York Stock Exchange for every four that declined.

For the 14th straight day, more shares traded on Nasdaq than the Big Board: 465.1 million to 355.1 million.

The announcement that 3Com will buy Chipcom for the equivalent of about $40 a share, almost 35 percent above Chipcom's closing share price of $29.75 Wednesday, drove up other computer networking stocks.

Chipcom vaulted $7.50, to $37.25, Oracle Systems Corp. rose $1.125, to an all-time high of $43.375, Cisco Systems Inc. increased 87.5 cents, to $58.625, Alantec Corp. surged $1.875, to $36.125, Network Peripherals Inc. jumped $3 to $20.25, and Cabletron Systems Inc. gained $2 or $58.50.

Meanwhile, lower yields on Treasury bonds after a report of weaker-than-expected durable goods orders in June helped lift rate-sensitive electric utility companies.

Yields on 30-year Treasury bonds fell to 6.85 percent from 6.88 percent yesterday and 6.97 percent last Friday.

Among so-called "cyclical" stocks, United Technologies Corp. climbed $1.75, to $84.375. The maker of Otis elevators and Carrier air conditioners reported better-than-expected second- quarter earnings yesterday. The same was true of Boeing Co., up $2.125, to $67.50, after reporting unexpectedly high earnings Tuesday.

CSX Corp., parent of the Chessie System railroad, climbed $1.25, to $85.375, and lumber producer Georgia-Pacific Corp. rose $2.625, to $87.75.

Companies that largely grow independently of economic ups and downs lagged cyclicals.

The Morgan Stanley index of 30 cyclical stocks was ahead 4.01, or 1.14 percent, to 352.91; its index of 30 consumer-oriented stocks gained 1.62, or 0.65 percent, to a record 250.46.

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