Market Takes A Roller-Coaster Ride

Frenzied selling gave way to bargain hunting Friday, boosting some stock measures to record highs despite a steep tumble triggered by a profit warning from Intel.

The Dow Jones industrial average finished nearly unchanged, rising 0.86 to 7,331.04 after swinging from an 88-point loss to a 41-point gain.

But the most incredible turnaround came in the technology-laden Nasdaq market, which finished slightly higher after tumbling nearly 50 points, or about 3.5 percent, at the open.

A rebound of that magnitude would be akin to the Dow industrials erasing a 250-point crash.

Broad-market indicators also recovered from the early slide, with the New York Stock Exchange composite index closing at a new high and the Russell 2000 list of smaller companies setting its sixth straight record.

“It’s obvious we had some money lurking out there dying to be invested,” said Bill Meehan, a market analyst at Prudential Securities, noting that a strong bond market and some reassuring comments from Compaq Computer gave investors enough confidence to view the drop as a buying opportunity.

Before the start of Friday’s trading, Intel warned that weak demand, especially in Europe, would hurt its results for the current quarter.

The announcement aggravated fears that company profits won’t justify the stock market’s lofty levels, particularly in the high-flying blue-chip and technology sectors. The market was rattled on Thursday by a profit warning from Nike and reports suggesting weak demand for computer drive maker Seagate Technology and paper products maker Kimberly Clark.

Intel, which accounts for about 8 percent of the Nasdaq market’s value, initially tumbled nearly 24 points, or 14.5 percent, to 140, but rebounded to 151.50, still down 12-17/64 on the day.

Leading computer-related shares also recovered after sliding on the implication that Intel’s fortunes are a barometer for the health of the entire industry.

The initial shock wore off as analysts focused on Intel’s assertion that it couldn’t keep up with demand for its new MMX Pentium chips, which boost a computer’s video and audio capabilities. An lingering concerns were wiped out just before the close, when a leading Compaq executive reassured investors that demand for its computers has remained strong.

“What we have is a product transition story for Intel, rather than a slowdown that could affect technology from from end of the spectrum to another,” said Meehan.

Compaq rallied back from a 4-point deficit iun active trading on the New York Stock Exchange, rising 6-3/8 to 108-1/8 on the day. In Nasdaq trading, meanwhile, rival Dell Computer swung from a nearly 11-point deficit to a gain of 2-7/8, closing at 113-1/4.

Stocks drew support throughout the day from the bond market, where interest rates fell from worrisome levels after the Commerce Department reported that sales of new single-family homes fell 7.7 percent in April.