The technology-laden Nasdaq composite index hit an all-time high yesterday, and other stocks soared as investors seized on remarks by Federal Reserve Chairman Alan Greenspan that a "revolution in technology" should allow the economy to keep growing without touching off inflation.
Further emboldening investors was yesterday's report that third-quarter earnings grew at their best pace since early 1995 -- and were better than predicted by Wall Street analysts.
The stock market bulls gave their performance on the 70th anniversary of the Great Crash, a Tuesday in 1929 in which the Dow Jones industrial average plunged 13 percent -- after falling 13 percent the day before.
Yesterday, technology shares led the way, with the Nasdaq spiking 91.21 points, or a hefty 3.17 percent, to close at 2,966.43. The jump was fueled by gains in such stalwarts as Cisco Systems Inc., Microsoft Corp. and Intel Corp., as well as big days by such new companies as JDS Uniphase Corp. JDS, which makes optical networking gear -- a white-hot sector with investors -- saw its shares rocket $14.4375 to close at $166.875.
For the week, the Nasdaq climbed 149.91 points, or 5 percent. Yesterday's close surpassed its previous record of 2,915, set Oct. 11.
The Dow Jones industrial average rose 107.33 points to close at 10,729.86, building on Thursday's 227.64-point gain.
Intel and Microsoft are among four "New Economy" companies -- and first two Nasdaq companies -- that will join the 30-stock Dow index Monday. The others are SBC Communications Inc. and Home Depot Inc.
The Greenspan talk, given before the Business Council in Boca Raton, Fla., on Thursday after the stock markets closed, set the stage for yesterday's gains in a week where stocks had built up a head of steam. In his speech, Greenspan extolled the virtues of productivity-enhancing technology. Such technology can allow a manufacturer to turn out more product in less time without forcing production costs higher -- which, in turn, would get passed to consumers as higher sticker prices.
"Such circumstances lead to a very favorable period of strong growth of real output and low inflation," Greenspan said during his speech.
Though the powerful Fed chairman did not rule out interest-rate increases by the nation's central bank, his embrace of productivity-enhancing technology soothed investors. Though the Fed may raise rates again next month, investors believe Greenspan excised the specter of repeated interest-rate increases throughout 2000.
"While they may raise the Fed funds rate one more time, on Nov. 16, he pretty much indicated there wasn't a need for a sustained, organized, Fed [credit] tightening campaign," said David Orr, chief economist for First Union Corp. in Charlotte, N.C. "I think that's what the financial markets are cheering, that the Fed is not going to keep on raising rates in the year 2000."
Investors also were cheered by a report this week that showed corporate profits were likely to remain robust.
U.S. companies' third-quarter profits rose 22 percent -- the biggest quarterly gain since profits rose 23 percent in the first three months of 1995, and greater than the 20 percent jump expected by analysts, said Chuck Hill, director of research for First Call, a Boston-based firm that tracks and analyzes analysts' estimates.
"Clearly it's a terrific quarter for earnings, any way you slice it," Hill said.
The fourth quarter is predicted to be nearly as strong, with a 17 percent increase expected.
The third-quarter results are far better than the historical average: 7 percent.
Said Hill: "This is the best we're going to see for awhile."
On the broad market, the Russell 2,000 index, a benchmark of small-cap stocks, rose 5.83 to 428.64; the Wilshire 5,000 index jumped 220.22 to 12,449.45; the American Stock Exchange composite index advanced 7.25 to 800.80; and the S&P; 400 midcap index added 8.42 to 399.62.
The Sun-Bloomberg Maryland index of the top 100 Maryland stocks gained 2.03 to 187.06.
Intel rose $5.25 to $77.4375. The stock will become one of the 30 Dow industrials on Monday. If it had been in the average yesterday, it would have added 26 points.
Cisco rose $3.0625 to $74. International Paper jumped $3.625 to $71.625, contributing the most to the Dow average's advance.
America Online Inc. rose $2.9375 to $129.4375. The largest Internet service company plans to split its stock 2-for-1, its second split this year and fourth in two years.
Several Internet companies climbed after reporting that sales rose. Infoseek Corp. gained $2.8125 to $31.6875, and Go2Net Inc. climbed $11.25 to $70.375.
eToys Inc. lost $10.875 to $59.75, or 15 percent, after the No. 1 Internet toy retailer said Goldman Sachs & Co., which handled the company's initial stock offering, will allow company insiders to sell 9.5 million shares earlier than expected.
American Express Co. fell $7 to $154 after analysts at PaineWebber Inc. and other brokerages cut ratings on the credit card issuer, saying its earnings growth doesn't justify a further rise in the stock price. The shares had risen 19 percent in the two weeks until yesterday.
Maryland stocks rose, led by Human Genome Sciences Inc. and Micros Systems Inc. Human Genome Sciences Inc. rose $7.125 to $87.375. Micros Systems Inc. rose $4.2813 to $46.2813.