Dow Nicks 6,000, Pulls Back; Nasdaq a Record

The Dow Jones industrial average moved briefly over the 6,000 mark on Monday before falling back, while other stock measures--including the Nasdaq composite index--hit new highs.

Meanwhile, bond yields edged up after diving Friday, and oil prices surged anew on supply worries.

On Wall Street the Dow was only briefly able to extend Friday’s 60-point rally. The index bobbed above 6,000 twice in the first half-hour but then spent the remainder of the session with a small deficit. It ended down 13.05 points at 5,979.81.

But broader indexes, including the Standard & Poor’s 500 and the New York Stock Exchange composite, inched up to record highs, even though falling stocks edged winners on the NYSE.

Notably, the Nasdaq composite index of mostly smaller stocks hit its first new high since June. The index gained 3.31 points to a record 1,250.87, finally surpassing the old peak of 1,249.15 set on June 5 and completing its recovery from a 20% plunge in summer.

The Nasdaq market’s advance was led again by its biggest technology stocks, including Intel and Microsoft, which, like the 30 Dow industrials, have benefited from a more cautious attitude among investors following July’s sell-off.

The majority of Nasdaq issues, however, are smaller, more speculative companies that have failed to recover as fully from the summer slide as blue chip stocks.

Similarly, the American Stock Exchange market value index, which rose 2.33 points to 582.22 on Monday, is also dominated by speculative shares and remains more than 30 points shy of its all-time high.

Even so, many Wall Streeters say the bull market overall has powerful momentum, with interest rates having fallen and investors losing their fear that the Federal Reserve Board will tighten credit any time soon.

Indeed, Friday’s stock and bond rallies were triggered by the September U.S. employment report, which showed a small loss of jobs and added to evidence suggesting the economy is slowing.

On Monday, however, some bond investors took profits, sending yields up modestly ahead of Friday’s report on wholesale price inflation in September.

The yield on the bellwether 30-year Treasury bond rose to 6.78% from Friday’s seven-week low of 6.74%.

Investors will be watching the wholesale inflation report closely because of fears that this year’s surprisingly strong rise in average wages could lead to higher price inflation, if more companies succeed in passing through wage hikes to consumers.

Meanwhile, third-quarter corporate earnings reports are likely to be most stock investors’ main concern this week.

If the market is to extend its record-setting advance, “it’s going to be determined by what the earnings show for the third quarter, and everybody is refocusing on that now,” said Robert Froehlich, chief investment strategist at Van Kampen American Capital in Oakbrook Terrace, Ill.

Among Monday’s highlights:

* Oil stocks were bolstered by news of a planned merger of the U.S. refining and marketing operations of three of the world’s largest oil companies--Texaco, Royal/Dutch Shell Group and Star Enterprise, a joint venture between Texaco and Saudi Aramco.

Texaco rose 7/8 to 96 1/2 and Royal Dutch gained 1 3/4 to 161 5/8.

Energy company shares in general were boosted by another surge in crude oil prices, which jumped Monday on worries about a tropical storm threatening to disrupt tanker deliveries in the Gulf of Mexico, and on continuing concerns about low heating-oil inventories in the Northeast.

November crude oil futures at the New York Merc jumped 51 cents to $25.24 a barrel.

Among energy stocks, Mobil rose 2 to 118 3/4, Atlantic Richfield gained 1 7/8 to 131 5/8 and Coastal Corp. added 1 1/8 to 44 1/4.

* Many technology stocks were buoyed by speculation that the group will report upbeat third-quarter earnings. Intel surged 3 1/16 to a record 104 3/4, Microsoft gained 1 1/8 to 137 1/2, IBM added 1 1/4 to 127 7/8 and Hewlett-Packard was up 2 1/4 to 45 7/8.

Takeover news also boosted tech issues. Cheyenne Software rocketed 7 45/64 to 30 5/64 after Computer Associates agreed to buy Cheyenne for $1.2 billion in cash. Computer Associates rose 1 3/4 to 64 1/2. Also, Augat soared 4 3/8 to 25 1/4 after Thomas & Betts agreed to buy the maker of circuit connection products. Thomas & Betts lost 1 7/8 to 37 7/8.

* On the downside, Westell Technologies plunged 12 3/8 to 34. France’s Alcatel Telecom won a contract to supply modem technology to four regional Bell companies, a contract some had expected Westell to win.

* Among companies reporting earnings, Earthgrains surged 6 to 45 after the baked goods producer reported unexpectedly strong quarterly results.

But several other well-known shares continued to decline in the wake of disappointing earnings warnings issued last week: Raytheon dropped 2 3/4 to 46 1/4, Dole Food eased 3/8 to 39 3/4 and Parker-Hannifin sank 1 1/4 to 36 7/8.

* HFS leaped 3 3/4 to 78 3/8. It said it will buy Resort Condominiums International for about $625 million in cash and stock.

Overseas, Frankfurt’s DAX index rose 0.7% and London’s FTSE-100 rose 0.2%, both setting records. Tokyo’s Nikkei stock average rose 0.1%.

Hong Kong stocks staged a powerful rally, with the Hang Seng index registering its biggest point gain since March, as new records on Wall Street and strong interest in China shares kept buyers active. The Hang Seng rose 227.56 points to 12,133.07.

Market Roundup, D11