Nasdaq Stages Comeback, up 19 Percent on Week

Published June 3rd, 2000 - 02:00 GMT

Technology shares staged a comeback after a week of trading shortened by the Memorial Day holiday, with the tech-heavy Nasdaq soaring 19 percent on the week. 

The Dow Jones industrials climbed 4.81 percent, but Nasdaq was the star, erasing its loss of 5.47 percent one week earlier. The composite index remains down 24 percent from its March 10 record close of 5,048.62, but is still up 57 percent year-on-year. 

Prices on the bond market also rose, as the average yield on 10-year Treasuries slipped to 6.148 percent Friday from 6.320 percent one week earlier. Bond prices rise as yields fall. 

After nearly a year of continuous interest rate hikes, almost every day this week economic reports signaled that the US economy was finally cooling off. 

On Friday, the Labor Department reported that US job creation slowed in May and the unemployment rate edged up to 4.1 percent from 3.9 percent in April. 

The report capped a week in which data released by the government and other sources provided clear signs that the pace of the US expansion, now in its 111th month, was beginning to ease. 

Analysts said the statistics heralded a less aggressive interest rate policy by Federal Reserve policymakers, who have tightened credit six times since last June and whose interventions now appear to be bearing fruit. 

"Economic reports released this week raise the question of whether the Federal Reserve, in its efforts to slow an overheating economy, might have thrown too much water on the barbecue," said Lynn Reaser, chief economist for the Bank of America Asset Management Group. 

"Monthly numbers can be extremely volatile, however, and the trend for the past three months still looks healthy." 

Investment bank Salomon Smith Barney said the Fed could still decide on more rate increases at its June 28 meeting. 

"We are not in the camp that believes the Fed is finished tightening or that the present mix of financial conditions will prove sufficiently restrictive to force a cumulative process of slowing growth," the bank said in its analysis. 

Shares in financial services companies, particularly sensitive to the Fed's interest rate policy, benefited from the signs of an economic cool-off. 

Merill Lynch gained 19 percent to 108 dollars, Citigroup rose almost 14 percent to 66-1/4 dollars, American Express climbed 15 percent to 56-1/2 dollars and JP Morgan rose 9.5 percent to 138-13/16 dollars. 

Among high-tech shares, Hewlett-Packard jumped 20 percent to 142-1/8 dollars and Intel climbed 14 percent to 134-3/16 dollars. Cisco gained 17 percent to 64-3/8 dollars. 

Microsoft, still embroiled in the US government's antitrust case, gained eight percent to 66-5/16 dollars after a judge gave both sides in the case one last chance to present arguments next week. 

Internet shares also staged a comeback, with Yahoo up 20 percent to 134-1/2 dollars, eBay up 25 percent to 77-3/16, Amazon up 24 percent to 57-7/8, and AOL up 17 percent to 56-7/8 -- NEW YORK (AFP) 

© 2000 Al Bawaba (

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