Wild Ride as Blue Chips Dive, Techs Soar

Why go to Six Flags when you can get the same thrills in the stock market?

Blue-chip stocks plummeted again in volatile trading Thursday, sending the Dow Jones industrial average briefly below 10,000. But the Nasdaq composite index hit a new closing high for a second straight day.

In a session punctuated by the now-standard fears of higher interest rates, the Dow ended down 133.10 points, or 1.3%, at 10,092.63, after falling as much as 283 points before bargain-hunters moved in.

But the tech-dominated Nasdaq, which had been down about 50 points, rallied for a gain of 67.32 points, or 1.5%, to a record 4,617.65.

The Standard & Poor’s 500-stock index slipped 0.5% while the Russell 2,000 index of smaller stocks gained 0.8%, to a record 554.04.

Declining issues outnumbered advancers by a 2-1 ratio on the New York Stock Exchange in heavy trading. But losers had only a 22-to-18 edge on Nasdaq.

Such volatility--and divergent market patterns--have become the norm this year. “This is like ‘Groundhog Day.’ We know this story. We’ve seen it almost every day,” said Arthur Hogan, chief market analyst at Jefferies & Co., referring to the movie in which Bill Murray repeatedly wakes up to Groundhog Day.

The last time the Dow traded below 10,000 was Oct. 18--just before launching the powerful advance that carried it to a record 11,722.98 on Jan. 14. The blue-chip index now has fallen 14% from its peak.

The market’s split personality suggests more investors are dumping the “old-economy” stocks of the Dow in favor of the “new-economy” stocks of Nasdaq, analysts say.

Some investors also may have been frightened enough by the latest market swings to flee to Treasury securities: Yields fell across the board, with the two-year T-note sliding to 6.52% from 6.63% on Wednesday.

Among the market highlights:

* American Express, down $8.13 to $130, led the Dow lower. Among other old-economy names, Johnson & Johnson fell $2.38 to $73.75, International Paper sank $2.44 to $37.81 and Coca-Cola dropped $1.44 to $49.81.

* HMO stocks were particularly weak, led by UnitedHealth, down $4.63 to $52.63.

* Among new-economy issues, Intel surged $5.19 to a record $114.25 after a Robertson Stephens analyst upgraded the chip maker’s rating, helping power the Nasdaq.

The analyst said Intel will benefit as Microsoft’s new Windows 2000 operating system drives businesses to buy more powerful computers that use Intel’s higher-priced Pentium III processor. Microsoft rose 50 cents to $94.75.

Among other tech leaders, Dell Computer rose $1 to $42.38, JDS Uniphase rocketed $22.50 to $258 and 3Com climbed $5.38 to $83.

* Hughes Electronics jumped $11.75 to $120.50 as a Goldman Sachs analyst said General Motors will probably spin off the DirecTV unit by 2002. GM gained $2.25 to $75.25.

* America Online, which had lost nearly half its value since announcing a deal to buy Time Warner, rose $1.69 to $60 in its second day of gains on a push from Merrill Lynch analyst Henry Blodget. Time Warner rose $4.88 to $86.38.

* Merrill Lynch leaped $7.75 to $101.25 as most big brokerage stocks rallied on optimism they’ll benefit from the continuing surge in stock issuance around the world. “The word is getting out that they are having a great quarter,” Goldman Sachs analyst Richard Strauss said of Merrill.

Morgan Stanley Dean Witter rose $3.31 to $69.06 and Goldman Sachs Group gained $3.88 to $89.63. But Charles Schwab declined $1.63 to $37.94 and E-Trade Group eased 50 cents to $21.61.

* Priceline.com climbed $4.88 to $56.75 after it hired Citigroup’s Heidi Miller as chief financial officer. In 1999, Fortune magazine named Miller the second most-powerful businesswoman in the U.S.

Citigroup slid $1.69 to $49.25.

* Lucent Technologies rose $3.25 to $56.13 after it said it won a contract from Deutsche Telekom to supply Germany’s largest phone company with network equipment.

* Oil stocks fell amid speculation that producers will boost their output after March to help cool prices and temper political pressure from consuming countries. Exxon Mobil lost $1.81 to $72.81 and Royal Dutch Petroleum’s U.S. shares fell $1.31 to $51.38.

Yet shares of oil-service firms rose, because drillers and explorers would benefit from stepped-up production. Cooper Cameron climbed $3.06 to $51.13 and Schlumberger advanced $3.94 to $68.44.

* Among Southland stocks, Vitesse Semiconductor zipped $13.63 to $85.50 after PaineWebber put a “buy” rating and $135 price target on it. MRV Communications streaked $15.50 to $115.44, maintaining its momentum: The shares are now up 84% this year. Quest Software rallied $6.75 to $88.38.

But Digital Insight skidded $16.50 to $63 in a bout of profit-taking, as the Internet banking-services specialist had more than doubled this year.

Ticketmaster Online-CitySearch slumped $4.50 to $29.38, leaving it 38% off its mid-December peak, and MP3.com lost $1.81 to $17.94.

Market Roundup, C7