Blue Chips Rise, but Nasdaq Rally Fails

Blue-chip stocks advanced Monday, while bonds were mixed and the dollar fell, as investors sifted through data showing more evidence of a slowdown in the U.S. economy.

An afternoon rally in technology stocks faded, leaving the Nasdaq composite index with another loss.

The Dow Jones industrial average climbed 186.56 points, or 1.8%, to close at 10,560.10. The blue-chip index was boosted by gains in “old-economy” names such as DuPont, which rose $3.06 to $45.88, and Caterpillar, up $2.63 to $43.31, after Barron’s magazine said the stocks could be undervalued.

The broader Standard & Poor’s 500 index was up 0.7%.

But the Nasdaq composite slid 29.54 points, or 1.1%, to 2,615.75, weighed down by lingering fears that many tech companies will be left high and dry as the U.S. economic expansion runs out of steam.

The market got a midday lift from court rulings that appeared to give a legal victory to George W. Bush over Al Gore in the protracted battle for the White House. Those rulings raised investors’ expectations that the uncertainty over the contested U.S. presidential election may end soon.

“But if the last two weeks have taught us nothing else, it’s that ‘It ain’t over till it’s over,’ and it still may not be over,” said George Rodriguez, head of trading at investment firm Guzman & Co. in Jersey City, N.J.

Long-term bond yields rose on the election news because a tax-cut proposal by Bush is viewed as mildly negative for the debt markets. Tax cuts could bite into government funds that would otherwise be used to keep paying down the national debt.

The yield on the benchmark 10-year U.S. Treasury note rose to 5.55% from 5.52% Friday. But short-term Treasury yields fell.

The dollar fell against both the euro and the Japanese yen on the latest signs of a slowdown in the U.S. economy. A weaker economy could make the United States less attractive to foreign investors.

In New York trading the euro rose to a two-month high of 88.8 U.S. cents from 87.9 cents Friday, while the dollar slid to 111.11 yen from 111.24 Friday.

Some analysts said the stock market could rally today, after another Florida judge’s ruling after the close of regular trading Monday appeared to hand a victory to Bush in the long fight for the White House.

A Florida court rejected Gore’s legal challenge to Florida’s presidential election results, leaving Bush with a wafer-thin lead.

If the ruling is not overturned, it would remove the uncertainty that’s been plaguing Wall Street for weeks.

The Florida decision followed a U.S. Supreme Court action earlier in the day setting aside a ruling that extended the deadline for hand-counted Florida ballots and sending the case back to the Florida Supreme Court for more proceedings.

On Monday, drug, retail, chemical and food stocks led blue chips’ advance.

“That is where people are going to hide out--either in the bond market or in the ‘old-economy’ stocks,” said Jere Estes, portfolio manager at Investment Counsellors of Bryn Mawr in Conshohocken, Pa.

Many investors remain unwilling to buy depressed tech stocks. Analysts in the last two months have cut their estimates for earnings growth at high-tech companies by half, to 14%, for the fourth quarter. Investors’ worries about slowing growth made November the Nasdaq market’s worst month since October 1987.

Among Monday’s highlights:

* Old-economy names rising included Alcoa, up $2 to $31; United Technologies, up $2.06 to $72.56; and Phelps Dodge, up $3.44 to $54.69.

Drug stocks also gained. Pfizer rose $1.06 to $44.50 and Johnson & Johnson rose $1.88 to $99.63.

* Retail stocks, which fell over the last week because of declining consumer confidence, also ended higher. Wal-Mart soared $2.31 to $53.50, and Gap advanced $1.69 to $26.44.

* In the tech sector, Cisco Systems slumped $2.69 to $45.81 to finish the day just above the 52-week low of $45 hit earlier in the session. Cisco pulled up from its lows after affirming its target for revenue growth.

Intel, among the Nasdaq market’s most heavily traded shares, lost $1.19 to $32.94.

* Troubled Xerox tumbled to its lowest level since 1982, dropping $1.25 to $5 on concern that a cash crunch at the world’s largest copier company may push it toward bankruptcy. The 20% drop brought Xerox’s year-to-date decline to 78%. Last week, Moody’s Investors Service cut the rating on Xerox’s debt to below investment grade.

* Also in the spotlight was PepsiCo’s proposed $13.4-billion acquisition of Quaker Oats. PepsiCo, the world’s No. 2 beverage company, added $1.44 to close at $43.81 and was one of the most active stocks on the New York Stock Exchange. Quaker rose $2.44 to $91.06.

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Market Roundup: C14, C15