Old Economy stocks prop US markets

Eric Wahlgren

NEW YORK: Blue-chip stocks bounded up in late trading on Friday as investors

swapped technology shares for "Old Economy" issues, which are seen as

having more stable earnings growth in volatile times.

"I think that the (Dow Jones industrial average .DJI)) is pretty much

what it has been before: A place where investors go when they don't know what to

do with tech stocks," said Wit SoundView technology strategist Arnold

Berman. "The fundamentals are not universally as great as they had hoped

for prior to earnings season."

The technology-stacked Nasdaq Composite Index .IXIC) was up 1.27 points, or

0.03 per cent, at 3,761.26, erasing an early loss of more than one per cent.

"The Nasdaq is still coming to grips with the idea that demand for tech

products may not be surging every quarter," said Primark Decision Economics

senior economist Pierre Ellis. "The message from the economic numbers is

that the Fed will still probably be on hold. That is basically good for blue

chips."

Mixed economic data did little to elucidate whether the US economy is truly

slowing, but analysts said the latest numbers did not raise the odds that the

Federal Reserve will jack up interest rates when it meets on Aug. 22.

Investors were breathing a sigh of relief after the July Producer Price Index

showed inflation at the wholesale level was under control.

The Street was not as happy, however, about strong retail sales for July,

analysts said. The numbers indicated that consumer demand, seen as one of the

major engines of the blockbuster US economic expansion, remained robust.

"The Producer Price Index is right in line and the good news is there is

little inflationary characteristics," said Ehrenkrantz, King, Nussbaum Inc

market strategist Barry Hyman.

But Hyman added: "We got another confusing consumer strength number on

the consumer sales."

The Dow jumped 148.71 points, or 1.36 per cent, to 11,057.47. The broader

market followed suit, sending the Standard & Poor's 500 Index .SPX) up 11.81

points, or 0.81 per cent, at 1,472.06.

In the Dow, Philip Morris Cos Inc., the world's largest cigarette maker, led

the way with a gain of 2-14/16 at 31-9/16 after a Goldman Sachs analyst said the

stock was severely undervalued.

Goldman's upbeat assessment of Loews Corp., whose broad interests include

tobacco, also lifted that company's stock. Loews, which is not a Dow component,

rose 5-5/16 to 81-3/8.

Automobile giant General Motor Corp., which rose 1-7/8 to 63-1/2, and No. 1

US chemical company DuPont Co., which climbed 2-1/8 to 49-1/8, also helped the

Dow.

But the Nasdaq market picked itself back up again after being slapped lower

by a high-tech selling frenzy sparked by Wall Street disappointment over

quarterly results at technology bellwether Dell Computer Corp.

Dell, the day's most heavily traded issue on the Nasdaq, tumbled 4-3/16 to

37-9/16. After Thursday's close, Dell reported strong earnings but a 25 per cent

gain in revenues fell short of expectations.

(C) Reuters Limited 2000.