Dow Snaps Winning Streak, but Nasdaq Gains

A robust profit report by Dell Computer lifted the Nasdaq composite index back toward record levels, but the Dow Jones industrial average’s streak of record highs ended Thursday as the blue-chip sector finally succumbed to a bout of profit-taking.

The Dow fell 75.48 points to 8,375.58, snapping a six-session string of record-high closings. Even with the loss, the biggest since Jan. 21, the Dow has gained about 675 points, or 8.8%, during a nearly monthlong rally.

“Valuations are stretched. This is not the end of the bull market by any stretch, but you need a pullback,” said Larry Rice, chief investment officer at Josephthal & Co.

The dollar slid on news of a surprising rise in the U.S. trade deficit and ahead of today’s announcement of a new Japanese plan aimed at stimulating its slack economy.

Oil prices closed lower as speculation about possible production cutbacks by the Organization of Petroleum Exporting Countries fizzled by the end of the day.

On Wall Street, the downturn in the blue-chip sector masked a steady day in the broader market, where decliners outnumbered advancers by only a small margin. The rally among bellwether technology issues boosted the Nasdaq composite index to its highest level since before the sell-off in late October; it rose 11.28 points to 1,727.01 on Thursday.

Leading the Nasdaq advance were Dell, the nation’s largest seller of computers by mail, and Intel, maker of the semiconductors that run most personal computers.

“If it wasn’t for Dell, you’d have a very mediocre day in technology land,” said Scott Bleier, chief investment strategist at Prime Charter. “Their business is good and their business is growing, but the market seems to feel they’ve figured out some type of alchemy in computer-making productivity.”

Dell surged $9.44 to $122.75, and Intel jumped $3.69 to $90.56.

Traders said they were little surprised the Dow would pull back after its string of gains.

They said there could be heightened volatility today because of the “double witching” expiration of certain individual stock option contracts and stock index option contracts.

“A little bit of profit-taking is highly in order here,” said Ricky Harrington, technical analyst at Interstate/Johnson Lane.

The Standard & Poor’s index of 500 stocks also backed off Wednesday’s record high, shedding 3.80 points to 1,028.28. The New York Stock Exchange composite fell 2.22 points to 535.01. Both measures had closed at record highs Wednesday.

Smaller-company measures held up better: The Russell 2,000 index slipped 0.42 point to 454.27.

NYSE volume totaled 589.38 million shares, down slightly from the pace of the previous two sessions.

The yield on the benchmark 30-year Treasury bond edged up to 5.85% from Wednesday’s 5.83%.

In economic news on Thursday, the Commerce Department reported that the nation’s trade deficit widened slightly in December. Analysts said the figures reflect only a scant impact from the Asian financial crisis, which is expected to hit the U.S. in force in the spring.

In a separate report, the Labor Department said new claims for unemployment benefits unexpectedly fell by 2,000 last week to 301,000, and that the four-week average of claims dipped to 302,000, the lowest since last August.

Among Thursday’s highlights:

* Following Dell’s and Intel’s lead was Hewlett-Packard, the Dow’s strongest component, rising $1.94 to $64.31 and gaining ground for a second straight session despite that company’s slightly disappointing earnings report late Tuesday.

* Merck, which surged $4 on Wednesday, was the Dow’s weakest issue, falling $2 to $122.25. The Dow was also weighed down by financial components American Express, off $1.94 at $86.69, and J.P. Morgan, down $1.81 to $111.31, as well as by Procter & Gamble, down $1.88 to $82.50.

In currency trading, the dollar was quoted at 126.16 Japanese yen in late New York trading, down from 126.40 yen Wednesday. It also fell to 1.8160 German marks from 1.8220 marks.

Overseas, London’s FTSE-100 closed down 0.09%. In Tokyo, the Nikkei closed up 0.02%.

Market Roundup, D8