Tuesday, December 29, 1998

Nasdaq sets mark, but most stocks fall in post-Christmas lull

By BRUCE MEYERSON

Associated Press

NEW YORK -- Most stocks fell Monday in sleepy post-Christmas trading, although it was business as usual in the high-flying Internet group, which drove the Nasdaq market to another record.

The Dow Jones industrial average barely finished higher, rising 8.76 to 9,226.75, but extended its winning streak to seven sessions. The Dow has gained 436 points in that span, and now sits less than 150 points from the Nov. 23 record of 9,374.27.

The Nasdaq composite index rose 17.27 to a record 2,180.30, but most broad-market indexes posted slender losses in the lifeless session, with many investors staying home for an extended break between Christmas and New Year's.

Actually, with just a few days left before the close of such a difficult year, those who did show up for work on Monday were playing it cautiously to preserve what's shaped up as a surprisingly happy ending to 1998.

As recently as early October, the Dow was trading in the 7,000's and heading for its first losing year since 1990, plagued by a global financial crisis that threatened to send the U.S. economy into recession.

Now, thanks to a series of interest rate cuts by the Federal Reserve, the Dow is up 16.7 percent in 1998, the S&P 500 is up 26.3 percent and the Nasdaq composite index is up 38.8 percent.

Internet stocks soared yet again on Monday amid reports that online holiday shopping was even more robust than expected.

SkyMall surged 23 points to 35 9/16 as the most active Nasdaq issue after the in-flight retailer reported that its Internet sales have more than tripled to $1 million in the fourth quarter. And clothing retailer named Active Apparel rallied an astonishing 460 percent, rising 5-3/4 to 7, after announcing the launch of its Web site.

Meanwhile, among the more established Nasdaq Internet names, Yahoo! rallied 28-3/8 to 275-1/2 and Amazon.com rose 27-1/8 to 351 15/16. Likewise, America Online rose 20-5/8 to 157-1/4 as the most active issue on the New York Stock Exchange.

"I don't know of anyone that thought Internet stocks would be anywhere near these valuations a couple of months ago, even the most bullish Internet person," said Anthony O'Bryan, a market analyst at A.G. Edwards & Sons in St. Louis, issuing a cautionary note to individual investors.

"It's really late for somebody to get on board," said O'Bryan. "It's difficult to sit on the sidelines and watch them go up, but it will be difficult to get out on way down. Somewhere along the line, these companies will have to show tangible evidence of earnings, not just revenue growth, and they all won't be big successes. There will be a shakeout."

Economically sensitive stocks were instrumental in the Dow's advance, with United Technologies rising 2-1/8 to 108 13/16 and Caterpillar rising 2 to 44 15/16.

The Dow, which also posted a seven-session winning streak in October, hasn't advanced for eight consecutive sessions since the rally that followed President Clinton's re-election in November 1996.

In other trading Monday, the Standard & Poor's 500 fell 0.78 to 1,225.49, edging lower for a second session from Wednesday's new high.

Decliners outnumbered advancers by about 6-to-5 margin on the New York Stock Exchange and the Nasdaq Stock Market.

NYSE composite volume totaled 687.12 million shares, down from 873.13 million on Wednesday. The market closed early on Thursday for Christmas Eve.

The NYSE composite index fell 0.06 to 589.01, and the American Stock Exchange composite index fell 0.91 to 665.58, but the Russell 2000 index of smaller companies rose 2.72 to 408.28.

Overseas, Japan's Nikkei stock average fell 0.6 percent. Germany's DAX index rose 1.9 percent, Britain's FT-SE 100 fell 0.7 percent, and France's CAC-40 finished a shade higher.