The technology driven Nasdaq index logged a record gain yesterday as leading analysts argued the US central bank was nearing its goal of reining in a raging economy. There was a stampede for relative bargains, as buyers appeared after last week's listless trade that yielded declines in many leading technology names.
Wall Street's table-pounding also helped on this count as Dan Niles, a technology analyst newly arrived at Lehman Bros, issued a largely positive report on several leading high-tech companies.
The Nasdaq composite built on a morning rally, climbing rapidly in the final two hours of the regular trading day to end with the largest point gain in the nearly 30-year history of the market barometer.
The composite closed up 254.37 points, or 7.94 percent, at 3,459.48, the highest finish in six trading days.
Meanwhile, the Dow Jones Industrial average added 227.89 points, or 2.21 percent, to close at 10,527.13.
For the year, the Nasdaq composite is down 15 percent, the Dow is off 8.4 percent and the S&P 500 is 3.2 percent lower.
"Bulls like us believe that higher interest rates and shrinking money supply are already slowing the economy and, as a result, that 50 basis points or less are left in the Fed's anti-inflation gun," said Thomas Galvin, chief investment officer at Donaldson, Lufkin & Jenrette, in a strategy report.
"We expect the Fed to tighten (interest rates) by 25 basis points on June 28, but if forthcoming data are also soft, the Fed may pass," Merrill Lynch chief economist Bruce Steinberg said in a note to clients.
Earlier this month, the Fed increased its ongoing effort to cool the economy through interest-rate increases.
It raised interest rates by 50 basis points, twice the increase in each of a series of increases begun last June.
Lehman analyst Dan Niles said the expected installation of Windows 2000 systems is prompting corporate information technology departments to buy faster processors and higher-capacity memory chips.
"We believe the average memory per box will increase from about 90 Mb (megabytes) per system towards 128 Mb by the end of the year," he said.
