Dow Surges 101 Points as Technology Issues Zoom

Investors stampeded into technology stocks on Friday on optimism about 1997 growth prospects, and the buying spread across the broad market.

The Dow Jones industrial average leaped 101.60 points, or 1.6%, to 6,544.09, in a rally that built steam all day.

The Nasdaq composite index, heavy with tech issues, rocketed 29.98 points, or 2.3%, to 1,310.68.

After downbeat sessions on Wall Street on New Year’s Eve and on the first trading day of the new year, Friday’s buying spree was a reminder that many investors are still eager to get on board the now seven-year-old bull market.

“Usually this is a time of year when people are optimistic,” noted Robert Streed, money manager at Northern Trust Co. “Lots of pension and profit-sharing money is flowing into stocks. . . . I call this normal seasonal strength.”

In the broad market, winners topped losers by 19 to 7 on the New York Stock Exchange and by 26 to 14 on Nasdaq.

The rally recouped the Dow’s 101.10-point loss on New Year’s Eve, when stocks fell in response to rising bond yields. The Dow now is just short of its record high of 6,560.91 set on Dec. 27.

One catalyst for Friday’s tech rally was brokerage Salomon Bros.’ announcement that it raised earnings estimates for Intel, the computer chip giant and a bellwether for the tech industry. Salomon said it boosted its 1997 earnings estimate for Intel by 16% to $9 a share and its 1998 estimate by 42% to $11. The brokerage also raised its investment opinion to “strong buy” from “hold.” A Merrill Lynch analyst also touted Intel on Friday.

Intel shares leaped 8 to 138 3/8 in heavy trading on Nasdaq. The company next week is set to unveil its MMX Pentium chip, designed to enhance the experience of computer games and other more complicated personal computer software.

Besides tech stocks, many industrial issues also were bid higher Friday. Some analysts said the demand for such issues was a sign that investors are confident in decent economic growth in 1997.

“I think there’s renewed confidence the economy is still going to grow moderately,” said Peggy Farley, chief executive at Amas Securities.

Meanwhile, bonds had a relatively tame session. Yields had jumped on Tuesday and Thursday as traders focused on economic data that suggested greater-than-expected strength.

The benchmark 30-year Treasury bond yield ended at 6.73%, off slightly from the two-month high of 6.74% reached Thursday.

Elsewhere, the price of gold fell to a three-year low, which traders said reflected investors’ continuing desire to be in financial assets like stocks and bonds rather than in “hard” assets like commodities.

Near-term gold futures on the New York Merc dropped $4.60 to $361.10 an ounce.

Among Friday’s highlights:

* Tech shares up sharply included IBM, up 5 7/8 to 159 1/8; Micron, up 2 1/4 to 32; Dell Computer, up 4 5/8 to 55 7/8; Texas Instruments, up 3 3/8 to 67; Microsoft, up 3 to 84 5/8; Cisco Systems, up 2 3/4 to 65 5/8; and 3Com, up 3 3/8 to 75 3/4.

But Irvine-based FileNet sank 8 3/4 to 23 after the maker of optical storage systems said profit in the fourth quarter will fall 60% short of expectations.

And Cybercash tumbled 4 1/2 to 18 3/4 after brokerage Hambrecht & Quist questioned whether the Internet commerce firm had enough business to meet its revenue projections.

* Industrial issues gaining ground included Alcoa, up 2 7/8 to 68; DuPont, up 2 5/8 to 98 1/8; Caterpillar, up 1 3/4 to 74 3/4; PPG Industries, up 7/8 to 55 7/8; and Stanley Works, up 3 to 32 3/8.

* Drug stocks also were strong. Merck surged 2 3/4 to 82 5/8, Lilly jumped 2 3/4 to 75 1/4 and Bristol Myers zoomed 2 1/4 to 109 3/8.

* State Street Boston jumped 8 1/8 to 71 on takeover speculation set off by news Bank of New York, up 7/8 to 24 1/8, was seeking approval to increase its stake in the company.

Meanwhile, the dollar surged against most key currencies, boosted by stocks’ rally and optimism about the health of the domestic economy.

In New York the dollar ended at 116.43 Japanese yen, up from 115.52 Thursday and the highest since March 1993.

Market Roundup, D4