Finance, Retail Stocks Drive Up Indexes

Blue Monday it wasn’t.

Investors went bargain hunting in the wake of last week’s sell-off, driving most major indexes higher.

Some buyers focused on big-name stocks, pushing the Dow Jones industrials up 165.32 points, or 1.5%, to 10,946.77. The Dow had lost 0.8% last week.

But a key small-stock index--the Standard & Poor’s 600 index--was the day’s star. It surged 2.2% to a record-closing high of 231.01, resuming its late-January rally. The index has climbed 5.2% this year.

Meanwhile, the technology-dominated Nasdaq composite index seesawed Monday but managed to close up 18.69 points, or 0.8%, at 2,489.66. It had tumbled 7.1% last week--nearly wiping out its year-to-date gain--in the wake of Cisco Systems’ downbeat earnings report.

Investors looking for value in the tech sector weren’t grabbing with both hands: Winners held only a narrow, 20-to-18 edge over losers on Nasdaq in moderate trading.

On the New York Stock Exchange, winners had a 19-to-11 margin over losers.

Some buyers may have been looking ahead to Senate testimony today from Federal Reserve Chairman Alan Greenspan.

“My sense is that he’s going to stress that the economy needs more help to re-accelerate, setting the stage for additional [interest] rate reductions,” said Ronald J. Hill, investment strategist at Brown Bros. Harriman & Co. in New York. “That’s the most important thing investors need to know.”

The Fed cut its key short-term rate twice in January.

Financial stocks led the market higher Monday, awaiting Greenspan. Retail stocks also had a big day. Both groups would be expected to benefit from a continuing drop in interest rates.

In the Treasury bond market, however, yields rose modestly after sliding late last week.

On Wall Street, some traders said Nasdaq held up relatively well given the plunge in some key suppliers of computer networking equipment, including Emulex, which plummeted $37.13 to $40.38.

Though big-name tech shares have crumbled anew in recent weeks, investors continue to fish among smaller, non-tech stocks--which accounts for the new high in the S&P; small-cap index.

Another small-stock index, the Russell 2,000, remains far from its 2000 record high, but it is up 4.5% year to date, versus the 0.8% rise in the blue-chip S&P; 500 index.

Among Monday’s highlights:

* Financial shares rising included Citigroup, up $1.40 to $55.45; Comerica, up $1.24 to $61; Washington Mutual, up $1.49 to $52.49; American International Group, up $2.82 to $89.50; and Lehman Bros., up $3.23 to $82.88.

* In the retail sector, Federated Department Stores jumped $2.35 to $43.50, Kohl’s surged $3.75 to $69.50 and Target rose $2.20 to $36.15.

* Blue chips boosting the Dow included Boeing, up $1.73 to $59.07; GE, up $1.85 to $47.51; and Johnson & Johnson, up $3.12 to $98.10 after Banc of America Securities raised the stock to “strong buy” from “buy.”

* In the tech sector, IBM rose $2.90 to $114.90, Novellus Systems gained $3.56 to $40.25 and Qualcomm rose $3.75 to $82.88. But Brocade Communications slid $11.13 to $63 and Oplink Communications fell $2.13 to $12.13.

* Cigna rose $2.45 to $113.20. Goldman, Sachs & Co. analyst Charles Boorady raised the No. 3 U.S. health insurer to “recommend list” from “trading buy” in the wake of the stock’s slump last week after its quarterly earnings announcement. Other HMO stocks also were strong Monday.

* Polaroid rose 20 cents to $6.70, but after the market closed the struggling firm said it suspended its quarterly dividend.

Market Roundup: C13, C14