Nasdaq Racks Up Record Point Gain

The Nasdaq composite index ended a tumultuous week with its biggest point gain ever Friday as investors continued to plow back into tech stocks.

In the bond market, Treasury yields tumbled on news of muted wage growth despite the booming economy.

Nasdaq rocketed 178.89 points, or 4.2%, to 4,446.45, topping its previous point-gain record of 168.21 set Feb. 22. In percentage terms, Friday’s jump did not rank in the top 10, however.

“Old-economy” stocks again took a back seat to Nasdaq: The Dow Jones industrial average slipped 2.79 points to 11,111.48.

But most broad stock indicators were higher. The Standard & Poor’s 500 rose 15.01 points, or 1%, to 1,516.35, and the Russell 2,000 index of smaller companies gained 2%.

The tech rally rounded out a week of extraordinary volatility on Wall Street. Nasdaq, which plunged 7.6% on Monday and as much as 13.6% on Tuesday before recovering, ended the week down just 2.8%. The Dow rose 1.7% over the week.

Friday’s trading was relatively calm overall, with the New York Stock Exchange recording its lowest regular-session volume of the year so far. Nasdaq volume also was well below recent levels, despite the size of the gains in key stocks.

Still a bit wary of the volatile technology sector after the early-week chaos, investors confined much of their buying to tech issues that have proven earnings growth. America Online jumped $3.88 to $68.75, Qualcomm rose $13.13 to $152.25, Intel jumped $7 to $136.81, Sun Microsystems surged $6.13 to $98.81, and Oracle gained $4.94 to $87.13.

But many smaller tech names also posted sharp gains. Inktomi surged $25 to $180.88, Network Solutions soared $20.13 to $184.75, and Wireless Facilities added $4.13 to $93.63.

Rising stocks outnumbered losers by a strong 25 to 16 on Nasdaq.

“This market continues to be driven by the . . . enthusiasm of technology investors,” said Alan Skrainka, chief market strategist at Edward Jones of St. Louis.

An analyst at Prudential Securities repeated his “strong buy” rating on Intel, the No. 1 semiconductor company, and said the shares could reach $165 in 12 months, a 21% rise from current levels.

Projections for strong first-quarter earnings appear to be fueling the tech stock comeback.

Analysts polled by First Call/Thomson Financial expect telecom and computer-related companies in the S&P; 500 to report 26% average earnings growth for the first quarter versus a year earlier, up from the 24% forecast at the beginning of the year. Profit for the entire index is expected to rise about 20%.

“Companies are going to report a lot better earnings than people expected,” said Joe Joshi of Systematic Financial Management in Fort Lee, N.J.

Faith in earnings is offsetting worries about additional Federal Reserve rate increases. Even as the government reported Friday that the increase in average hourly earnings in March was a mild 0.4%--a 3.7% annual rate--Fed Chairman Alan Greenspan was defending the central bank’s five interest rate increases over the last 10 months in a speech in St. Louis.

“We need to be careful to keep inflationary pressures contained,” Greenspan said in remarks to the National Technology Forum. “The evidence that inflation inhibits economic growth and job creation is too credible to ignore.”

But Treasury bond yields fell sharply Friday, responding to the wage data, analysts said.

The benchmark 30-year yield dropped to an 11-month low of 5.70% from 5.80% on Thursday. Treasury yields have fallen for four straight weeks.

Among Friday’s highlights:

* Computer chip stocks led tech issues higher. Motorola rose $9 to $153.75, Texas Instruments surged $6.50 to $166.50, and Vitesse Semiconductor gained $4.69 to $92.69.

* Biotech shares pulled back after soaring Thursday. Celera Genomics eased $12.63 to $130.38, Human Genome Sciences lost $7.06 to $93.94, and Amgen lost $1.38 to $60.94.

* Financial stocks were weak despite the drop in bond yields. Chase Manhattan fell $1.06 to $86.38, and Fleet Boston slid $1.44 to $36.25.

* Among other old-economy names, Alcoa slumped $3 to $67.94 despite a bullish earnings report.

* Mapics plummeted $5.31 to $8.19 after the manufacturing management software maker said that fiscal second-quarter revenue will miss analysts’ estimates and that operating profit will fall “significantly below” the year-ago quarter’s 9 cents a share. Analysts polled by First Call had expected 15 cents.

* Cognos leaped $11.13 to $76.75 as the Canadian maker of data analysis software said fourth-quarter earnings rose 24% and announced a 2-for-1 stock split payable around April 27 for shareholders of record April 20.

Though a split doesn’t increase a company’s value--it simply redistributes its equity among a larger number of shares--it often helps a stock rise because it makes the shares seem more accessible to retail investors.

* Starbucks advanced $2.50 to $40.06. After markets closed Thursday, the firm said same-store sales of its specialty coffee, tea and other products rose 10% in March. Starbucks has gained 55% this year.

* Among Southland stocks, Digital Insight rallied $6 to $46.63 after the Calabasas-based Internet banking company was raised to “buy” from “hold” by CIBC World Markets.

* In the new-offerings market, Saba Software (ticker symbol: SABA) jumped $18 to $33. The company provides online training sites and software for businesses and government agencies.

Opus360 (OPUS) rose $2.50 to $12.50 in the first day of trading for the online marketplace for freelance information technology professionals.

Overseas, Germany’s DAX rose 1%, Britain’s FTSE-100 gained 1.8%, and France’s CAC-40 climbed 1.4%. In Latin America and Asia, indexes were mostly higher.

Market Roundup, C4

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Battling Back

The technology-oriented Nasdaq composite index has recovered in recent days, though it remains 12% off its March 10 closing peak. Daily closes:

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Nasdaq composite

March 10: Index hits peak of 5,048.62

Friday: 4,446.45, up 178.89

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Other indexes

The major stock indexes notched mixed results for the volatile week:

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Source: Bloomberg News