NEW YORK -- Blue-chip stocks rose for a fifth consecutive session Thursday, a winning streak unseen since last Christmas, as a dour profit forecast by Internet media company Yahoo drove investors to companies that may better weather the soft economy.
Investors, spooked by further evidence the economic slowdown is hurting formerly fast-growing tech companies, stocked up on defensive issues. Consumer products maker Procter & Gamble (PG), which was up $2.48 at $71, and health-care giant Johnson & Johnson (JNJ), up $3.07 at $97.87, helped lift the Dow.
Intel (INTC), the world's No. 1 maker of computer chips, added to technology woes after the closing bell by warning of disappointing revenues and staff reductions in the sluggish economy.
"This is part of the process of trying to find a bottom in the technology sector," said John Bartlett, director of economics and market strategy at Commerce Trust Co., which oversees about $10 billion. "We all know business stinks today, and the question is how soon will things turn."
The Dow Jones industrial average gained 128.65 points, or 1.20 percent, to end at 10,858.25, which was also its highest finish in three weeks. The Dow has gained nearly 410 points in the last five sessions, or almost 4 percent.
The Nasdaq Composite Index dropped 55.19 points, or 2.48 percent, to 2,168.73, after three straight sessions of gains this week. Cisco Systems Inc., the world's No. 1 maker of gear that powers the Internet, led the technology-packed index lower with a $1-3/16 slide to $22-13/16.
The broader Standard and Poor's 500 nosed up 2.87 points, or 0.23 percent, to 1,264.76.
Diversified manufacturer Minnesota Mining & Manufacturing Co. (MMM), up $4.26 to $117.19, and oil giant Exxon Mobil (XOM), up $1.64 to $85.85, also boosted the blue-chip gauge.
Yahoo (YHOO) slumped $3-1/4 to $17-11/16 after falling as low as $16-1/4, a trough unseen since September 1998. Yahoo warned 2001 earnings would fall below estimates due to slack ad revenues and said its longtime chief executive would step down. The American Stock Exchange Internet index fell 4.26 percent as other Internet firms fell in sympathy.
"(Yahoo) just reminds us of the headwind the stock market has to slug its way through day after day," said Hugh Johnson, chief investment officer at First Albany Corp.
Intel, which said the soft economy is hurting personal computer demand and spreading to the networking, communications and server sectors, fell to $30-11/16 in after-hours trading. Intel, a Nasdaq heavyweight and Dow component, had closed up 5/16 at $33-1/4 during the regular session.
Semiconductor maker Cree Inc. and systems integrator TIBCO Software Inc. added to the litany of grief about soft corporate earnings spurred by companies cutting back on big-ticket technology items.
Cree dropped $7-15/16 to $17-1/2 after warning of disappointing revenues in a soft and competitive market, while TIBCO slipped 15/16 to $9-15/16 after warning of lower revenues and earnings due to order delays.
The computer storage sector felt the heat after Wall Street house Salomon Smith Barney cut investment ratings on several of the sector's stocks, including Brocade Communications Inc. and EMC Corp. Brocade (BRCD) was off $5-7/16 to $33-5/16, while EMC (EMCI) dropped $3.85 to $37.15.
Two Federal Reserve officials said the soft U.S. economy will likely pick up speed later in 2001 and downplayed recession fears. But New York Fed President William McDonough and Chicago Fed chief Michael Moskow, in separate speeches, said nothing to derail expectations for a half-percentage point cut in interest rates at the central bank's March 20 meeting.
Hopes for further interest-rate cuts by the Fed to stimulate the economy and growing speculation that the worst is nearly over for Corporate America's earnings crunch are underpinning the market, analysts said.
Wednesday, the closely followed Goldman Sachs strategist Abby Joseph Cohen shone a ray of optimism on Wall Street when she advised clients to funnel cash into stocks.
"Overall, the landscape is good," First Albany's Johnson said. "You've got all of the conditions that ordinarily accompany the end of a bear market."
But investors are treading cautiously ahead of Friday's key monthly employment report, which could yield clues to the Fed's next move on interest rates, analysts said.
The government reported jobless claims for the week ended March 3 slipped to 370,000 from a revised 374,000 in the previous week. The drop was not as steep as the 359,000 that private economists had expected.
The overall high level of jobless claims could reinforce expectations for slight weakness in the February employment report on Friday.
In a Reuters poll, economists predicted a rise of only 62,000 new jobs, after growth of 268,000 in January. The unemployment rate is forecast to remain unchanged at the 4.2 percent it rose to in January.
