Nasdaq, Russell Ride Technology Wave Again

The stock market was carried higher Wednesday by new signs of economic strength, with smaller issues again leading the way.

Meanwhile, the bond market seemed largely unfazed by the economic news, and yields were mostly unchanged. In commodities trading, energy prices fell and grains rebounded.

On Wall Street, continued buying of many technology stocks helped lift the Nasdaq composite index of mostly smaller issues 9.14 points, or 0.8%, to a record 1,199.66--the 10th consecutive new high.

The Nasdaq index has surged more than 9% just in the last three weeks, as tech issues and other small-company stocks have returned to favor amid signs of a healthier-than-expected U.S. economy. The Nasdaq composite is up 14% so far this year.

The blue-chip Dow industrial average, which led the market early in the year, has faded from the spotlight as smaller stocks have roared. The Dow added just 6.14 points to 5,575.22 on Wednesday. It is up 9% year-to-date.

In the broad market, winners outnumbered losers 13 to 10 on the New York Stock Exchange and 21 to 17 on Nasdaq.

New economic data Wednesday from the government and from private research groups appeared to confirm that business activity is improving, albeit at a modest pace.

The index of leading economic indicators, for example, rose 0.2% in March, while construction spending gained 3.1%.

Although bond yields edged higher early Wednesday on the reports, yields fell back by the close. The bellwether 30-year Treasury bond ended at 6.90%, unchanged from Tuesday. Shorter-term yields ended modestly lower.

“We continue to thread a needle. There’s a little pickup in strength in the economy, but the factors that affect inflation are modest,” said Russ Labrasca, senior vice president of Sutro & Co. in San Francisco.

Bond yields surged in March and early April on concerns that a rebounding economy might stoke inflation. But a report from the National Assn. of Purchasing Management on Wednesday showed that the number of companies reporting higher raw materials costs in April remained low--suggesting little inflation in the pipeline.

Another key report on the economy--the April employment report--is due Friday.

In commodities trading, energy prices continued to drop from recent highs on expectations of rising supplies. At the New York Merc, June gasoline futures lost 2.06 cents to 67.42 cents a gallon.

But in Chicago, wheat and corn prices snapped back after two days of losses as changing weather forecasts and fears about this year’s crops sparked fresh buying by speculators and commercial processors. At the Chicago Board of Trade, May wheat futures jumped 34 1/2 cents to $6.76 a bushel. Corn prices also rallied sharply.

On Wall Street, stocks were helped by the usual large heavy inflow of money into mutual funds from corporate pension plans on the first day of the month, some analysts said. The market has risen on the first day of the month for the last seven months, said Jerry Hegarty, equity market analyst for Thomson Research in Boston.

Among Wednesday’s highlights:

* Many technology and telecommunications issues continue to gain in the wake of MFS Communications’ $2-billion takeover bid for Internet-access provider Uunet Technologies, announced Tuesday. MFS jumped 2 5/16 to 37 and Uunet surged 3 1/4 to 62.

Among other Internet-related issues, Netcom On-Line shot up 6 5/8 to 42 1/2, Spyglass surged 4 1/8 to 33 1/4, PSInet leaped 3 3/4 to 17 7/8, Cybercash gained 2 3/4 to 37 1/4 and Yahoo rose 1 7/8 to 31 5/8.

* Elsewhere in the tech sector, which has been rebounding from a deep winter sell-off, Sun Microsystems rose 1 3/8 to 55 5/8, Iomega surged 4 49/64 to 59 33/64, Microsoft added 1 7/8 to 115 1/8, BMC Software jumped 3 3/8 to 64 1/4, PairGain Technologies rocketed 6 to 101 1/2 and 3Com gained 2 to 48 1/8.

But visual effects firm Discreet Logic plummeted 7 1/4 to 9 3/8 after warning that it expects a third-quarter loss.

* Besides tech issues, other Nasdaq stocks leading that market higher included Starbucks, up 1 to 28 1/8; Cintas, up 1 to 54 3/4; and Protection One, up 5/8 to 16 3/8.

* Some retail stocks appeared to advance on optimism about the economy. Sears gained 1 to 51, J.C. Penney jumped 1 3/4 to 51 1/4, Dayton Hudson surged 2 3/8 to 97 7/8 and Toys R Us was up 1 1/8 to 28 7/8.

* Energy stocks were hit by profit taking again. Exxon lost 1 3/8 to 83 5/8, Mobil slid 2 3/8 to 112 5/8 and Pennzoil dipped 1/2 to 43 3/4.

* Among blue chips, PepsiCo rose 1/2 to 64 after the company raised its dividend 15% and announced a 2-for-1 stock split.

Overseas, many foreign markets were closed for May Day.