Dow Tops 5,700 as Techs Rocket; Bonds Stable

Rebounding technology shares helped drive Wall Street higher Wednesday, pushing the Dow Jones industrial average to its first close above 5,700 since July’s rout.

The Dow rose 22.56 points to 5,718.67, the sixth gain in seven sessions. The blue-chip index now is just 60 points, or less than 1%, from its all-time high of 5,778.00 set on May 22.

The broad market also rallied on Wednesday in active trading, and small-stock indexes posted bigger percentage gains than the Dow, as Wall Street’s recovery from July’s steep sell-off continued to surprise many analysts.

Indeed, the Dow has gained nearly 550 points from its intra-day low on July 16, in the depths of the pullback sparked by worries about rising interest rates and slowing corporate earnings growth.

Since then, bond yields have tumbled on signs of decelerating economic growth, which many analysts believe will keep the Federal Reserve Board from raising interest rates any time soon. And second-quarter corporate earnings reports did not show the widespread weakness that some analysts had predicted.

“The market’s going higher,” said Peter Canelo, chief investment strategist at Dean Witter Reynolds. “Earnings are great, bonds are up. The Fed’s not going to do anything” to raise rates.

Bonds again provided an encouraging backdrop for stocks on Wednesday, as yields were generally stable despite the Treasury’s auction of $10 billion in new 10-year notes. Dealers said the reception for the notes was tepid. The average yield was 6.553%.

Still, that didn’t provoke much concern in the bond market. The yield on the bellwether 30-year T-bond closed at 6.77%, up just slightly from 6.75% Tuesday. The Treasury will auction new 30-year bonds today.

On Wall Street, buyers rushed into many beaten-down technology stocks after brokerage Merrill Lynch raised earnings estimates for computer-chip maker Micron Technology. Micron shares had crashed early this year as earnings slumped because of a glut of memory chips worldwide.

“The inventory correction has bottomed after 11 months,” Merrill analyst Thomas Kurlak said. “We expect bookings to improve, and as that occurs, pressure on prices of chips will moderate.”

Micron shares rocketed 3 5/8 to 25 7/8. They traded as high as 94 3/4 last year.

Tech-share gains helped boost the Nasdaq composite index of mostly smaller stocks 12.24 points, or 1.1%, to 1,141.11. That index has rebounded 7% since July 29, though it remains off 8.6% from its record high.

Overall on Wednesday, advancing issues outnumbered decliners by a 21 to 17 margin on Nasdaq and by 14 to 10 on the Big Board.

Among Wednesday’s highlights:

* Semiconductor stocks leading the tech sector higher included Intel, up 2 31/64 to a record 82 23/64; Texas Instruments, up 3 to 48 1/2; Motorola, up 1 3/4 to 57 1/4; and Cirrus Logic, up 3 5/8 to 18 7/8.

Among other tech winners, IBM jumped 3 3/8 to 112 5/8, Applied Materials leaped 2 5/16 to 27 7/16, Hewlett-Packard rose 1 7/8 to 46, Cabletron Systems surged 2 1/8 to 62 1/2 and Seagate added 2 3/8 to 50 7/8.

* Buyers also shifted into industrial stocks, including Union Carbide, up 1 to 42 7/8; AlliedSignal, up 1 3/8 to 62 3/4; Bearings, up 2 1/2 to 30 1/8; Textron, up 1 3/8 to 83 1/8; and Thiokol, up 1 5/8 to 37 1/2.

* Smaller stocks helping to boost Nasdaq included Smartflex Systems, up 2 to 11 7/8; Ross Stores, up 1 5/8 to 36; and retailer Gadzooks, up 1 1/2 to 32.

Also, Amylin Pharmaceuticals surged 4 7/8 to 13 5/8. Phase II trials of its diabetes drug, pramlintide, found it to be effective in lowering patients’ glucose levels.

* Among Southland issues, tableware maker Mikasa rose 1 to 10 5/8. The company said it would spend $20 million to buy back stock in a “Dutch auction” tender between 9 3/8 and 11 1/4 a share. The firm also said it agreed to buy 2.2 million of CEO Alfred Blake’s shares from him at a price of 8.95 a share, and that Blake would step down as CEO, to be succeeded by President Raymond Dingman.

Market Roundup, D5