Dow Jumps as Fed Chief Offers No Rate Hints

Blue-chip stocks ended sharply higher for a second consecutive day Thursday as the market reversed the damage from its recent sell-off and investors got new evidence that business trends remain robust in the technology sector.

The 30-stock Dow Jones industrial average ended up 83.12 points at 6,823.86, adding to Wednesday’s gain of 85 points, which was its first bounce after five straight losing sessions. Broad-market indexes also rose smartly.

The market was also relieved that Federal Reserve Board Chairman Alan Greenspan did not reveal any surprises in his second congressional testimony in less than two weeks.

In prepared testimony before the Senate Finance Committee, the Fed chief gave little hint that the central bank was considering raising interest rates at the Feb. 4-5 meeting of the policy-setting Federal Open Market Committee.

In addition, investors heard good news in a report by the Labor Department that first-time jobless claims rose by a surprising 10,000 last week.

The price of the benchmark 30-year Treasury bond rose slightly, which lowered its yield to 6.87% from Wednesday’s close of 6.90%.

Over the last two days the Dow index has recouped two-thirds of what it lost during its five-day skid.

Semiconductor companies were among the strongest performers, boosted by Intel Corp.’s decision to hold prices steady for its high-end Pentium Pro chips in the first quarter.

The technology-heavy Nasdaq composite index climbed 15.85 points to 1,371.02.

“The underlying tone is that it’s not over in tech-land yet,” said Arnie Owen, director of equities at Kaufman Bros.

Advancing issues outnumbered decliners by 5 to 3 on the New York Stock Exchange in heavy trading.

The Standard & Poor’s 500-stock list advanced 11.67 points to 784.17, and the NYSE’s composite index added 5.11 points to 411.20.

The Russell 2000 index of small-capitalization stocks rose 2.04 points to 368.29.

Larry Rice, chief investment officer at Josephthal, Lyon & Ross, said the flow of cash into stock mutual funds has been very strong this month, especially into index funds, which try to match the performance of indexes such as the S&P; 500 by buying component shares. That has pushed big-name stocks up faster than their smaller brethren, Rice said.

“What’s surprising is how the small caps just have failed to keep up,” Rice warned, a sign that January’s gains may not be very long-lived. “You certainly want to be careful after the end of the month.”

Among Thursday’s highlights:

* Intel surged 5 3/8 points to 160 1/8, and others in the sector followed suit. Micron Technology climbed 2 1/4 to 35 1/4, Texas Instruments surged 4 3/4 to 74 1/2, and Applied Materials gained 2 1/2 to 48 3/8.

Largely left out were PC makers, which are the main buyers of microprocessors and therefore stand to lose from Intel’s pricing decisions. Gateway 2000 gained 1/4 to 60 1/4 and Dell Computer rose 3/8 to 66.

* Procter & Gamble rose 3 57/64 to 115 1/8 to lead all Dow index components.

* Drug stocks were strong, as investors flocked to the group’s solid earnings and defensive appeal.

Warner-Lambert jumped 3 1/8 to 78 after announcing that the Food and Drug Administration had approved its Rezulin anti-diabetes tablets.

Other pharmaceutical standouts included Eli Lilly, up 4 7/8 to 86 7/8, and Pfizer, up 4 1/8 to 90 3/4.

* Interest-sensitive stocks rose as bond yields fell. Citicorp gained 2 5/8 to 114 1/4, and Chase added 2 1/8 to 91 3/4.

In overseas trading, the Nikkei index in Tokyo slid 2.57%.

Market Roundup, D6