New York Market: Internet stocks gain in Wall Street rally
Sunday 15 August 1999
"At the first sign [tech stocks] are bottoming, people just fall all over them," said Timothy Stevenson, a money manager for First Union, which oversees $50bn (pounds 31bn). While the index itself climbed 9 per cent, some of the biggest gainers reported larger advances. F5 Networks jumped 70 per cent, Audible gained 43 per cent and Ariba climbed 46 per cent.
America Online, the No 1 online service, which makes up 25 per cent of the market-value weighted index, gained 14 per cent last week. The Nasdaq Composite Index, which includes stocks trading at high price-earnings multiples, including QWest Communications International and Microsoft, had lost as much as 13 per cent from its 16 July closing high of 2,864.48 on interest rate concerns.
The index closed last week at 2,637.81, up 3.5 per cent. The Dow Jones Industrial Average rose 2.4 per cent to 10,973.65 for the week, and the Standard & Poor's 500 Index gained 2.1 per cent to 1,327.68. It was the first time the three indexes each posted a weekly gain since 16 July, when they last closed at records.
"The bulk of the correction is over," said Howard Kornblue, a money manager for Phoenix-based Pilgrim Capital which oversees $7.4bn. "That's contingent on the economic data still to be released, but we should not be negatively surprised."
While investor concerns about rising interest rates helped send share prices lower in late July and early August, investors are now optimistic that the Federal Open Market Committee, which sets policy, will raise rates just once more this year, when it meets on 24 August.
For US bonds, down 10.6 per cent this year, the worst may be over. At least that's the conclusion of one analyst who has surveyed the performance of bonds during the past decade after yields crossed a key threshold: 4 per cent more than the inflation rate.
According to Charles Reinhard, a market strategist at ABN Amro, bond yields have fallen more than 80 per cent of the time during the 12 months after the real yield ranged between 4 per cent and 5 per cent.
This week, real yields, or the rate above the inflation rate, could top 4.01 per cent when a US government report shows that consumer prices climbed 0.3 per cent in July, or 2.1 per cent for the trailing 12 months.
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