Blue Chips Rise Despite IBM Probe, While Nasdaq Hits High for Past Year
INTERNATIONAL BUSINESS MACHINES announced an accounting investigation by the Securities and Exchange Commission and, to the surprise of many stock traders, the market shrugged off the news.</br></br>The Dow Jones Industrial Average, which includes IBM, still rose 25.14 points, or 0.28%, to 8922.95 -- a gain that would have impressed no one on an ordinary day. But yesterday, it was taken as a sign of the market's resilience, reflecting how much market psychology has changed in the past year.</br></br>Last summer, that kind of news would have tanked the market, traders said. "IBM obviously was negative news and the market fought it off," said Todd Leone, head of listed trading at New York brokerage firm SG Cowen. "We have had a lot of other accounting scandals crush the market, but this time people said it was isolated at IBM."</br></br>Investors were buoyed by another cautiously optimistic comment on the economy from Federal Reserve Chairman Alan Greenspan, which fueled hopes that the Fed will hold interest rates down to push the economy ahead. Some analysts think the Fed will cut its target short-term interest rates at its policy meeting later this month and could buy back bonds in the open market to prevent bond yields from rising. The benchmark 10-year Treasury note jumped in price and its yield, which falls when the price rises, hit 3.333%, virtually back to the 45-year low of 3.326% set last month.</br></br>The Nasdaq Composite Index, which doesn't include IBM but includes most other tech stocks, pushed through the 1600 mark to its highest close in more than a year, rising 0.81%, or 12.81 points, to 1603.56. It is up 20% this year and up 26% since the market began its most recent run on March 11.