Late Rebound Lifts Dow; Tech Issues Struggle

Blue-chip stocks rebounded from hefty early losses Monday to end higher, but technology and smaller-company shares remained depressed as long-term interest rates crept higher.

Meanwhile, many financial services stocks were roiled by news of heavy losses at credit card issuer Advanta Corp.

On Wall Street, the revamped Dow Jones industrial average--which changed four of its 30 stocks Monday--rose 20.02 points to 6,955.48 after recovering from a loss of more than 80 points.

But the market overall remained broadly lower. Declining issues beat advancers by a nearly 2-1 margin on the Big Board.

The Nasdaq composite index, heavy with tech stocks, slumped 13.54 points to 1,279.43, although it too pulled up from deeper losses.

Stocks followed bonds all day, as fears of an interest rate increase by the Federal Reserve Board at next week’s meeting initially pushed the 30-year Treasury bond yield to just under 7%, before it fell back to close at 6.95%, up from 6.94% on Friday.

Comments by Fed Gov. Edward Kelley, who is generally perceived as a moderate, that the central bank could lose credibility if it delays tightening credit helped dampen the bond market Monday.

Also pressuring bonds were comments from Robert Parry, president of the Federal Reserve Bank of San Francisco. He said the central bank may need to take preemptive action to slow the economy before seeing clear evidence of accelerating inflation.

It didn’t help the stock market that billionaire financier Warren Buffett, in his annual letter to shareholders, said most stocks are overvalued.

Among Monday’s highlights:

* IBM led tech issues lower, falling 4 1/8 to 139 1/2. Other tech losers included Intel, down 1 1/2 to 136 3/8; Dell, down 2 1/4 to 67 7/8; Computer Associates, down 2 5/8 to 39 1/8; and Ascend Communications, off 2 9/16 to 51 1/2.

* Advanta plummeted 8 1/2 to 31 7/8 after revealing mounting losses in its credit card business. The news depressed other financial stocks, as investors worried that consumer loan problems may be worse than thought.

Among consumer lenders, Wells Fargo lost 3 7/8 to 302 7/8, Norwest fell 1 to 49 3/8, MBNA dropped 2 to 31 3/8 and Money Store sank 3/4 to 25 3/8. But Citicorp rose 2 1/8 to 118.

* The Dow was weighed down again by Philip Morris, which fell 2 1/2 to 126 5/8 after the Supreme Court rejected an industry challenge to a Florida law that makes it easier for the state to sue for Medicaid money spent to treat smoking-related illnesses. RJR Nabisco fell 1 1/8 to 32 3/4, UST declined 4 1/8 to 29 1/4 and Loews lost 1 5/8 to 102.

* The new components of the Dow index got off to an inauspicious start. Hewlett-Packard rose 1/4 to 55 5/8, Travelers lost 1 3/8 to 51 7/8, Johnson & Johnson ended unchanged at 57 7/8 and Wal-Mart rose 1/4 to 28 7/8.