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Blue-chip stocks surge,

Nasdaq sets new record

NEW YORK: Blue chips surged as higher crude oil prices ignited a rally in oil stocks on Tuesday, while smaller technology stocks enjoyed another day of voracious buying.

The Dow Jones industrial average ended up 23.85 points at 5,588.59.

The Nasdaq composite index, which is laced with technology stocks, closed up 13.26 points, or 1.1 percent, at a record 1,166.76, its fourth high in row.

The American Stock Exchange index gained 3.36 to 590.73, its sixth consecutive record high.

In the broader market, advancing issues led declines 1,348 to 1,006 on heavy volume of 452 million shares on the New York Stock Exchange.

The rally in the 30-stock Dow index was aided by strength in Chevron, which gained 1-7/8 to 57-5/8, Texaco, up 1-3/4 to 85-5/8, and Exxon, up 2-1/2 to 84-1/2.

On the New York Mercantile Exchange, the pacesetting June oil delivery contract soared $1.17 to close at $22.70 a barrel on dimming prospects that Iraq would soon resume limited oil sales. U.N. sanctions were imposed on Iraq following its 1990 invasion of Kuwait.

Prospects of an early pact were dashed after the chief Iraqi negotiator said Monday that the United Nations, apparently under pressure from the United States and Britain, had "changed almost every paragraph" of a provisional accord drafted earlier this month.

Iraq said talks would be postponed until Wednesday.

David Shulman, chief equity strategist at Salomon Bros., said prospects for energy and oil services stocks remain solid even if oil prices fall from their lofty levels.

"Investors don't have to be overly fearful" of an oil stock price plunge, he said. "Oil stocks will probably be fine and on oil services we've been looking at the long-term demand for energy."

But the rise in oil prices pressured the inflation sensitive bond market. The Treasury's benchmark 30-year bond fell 13/32, raising its yield 6.78 percent from 6.75 percent Monday.

Meanwhile, technology stocks drew avid buying.

"Some fund managers and analysts played the funeral dirge for techs but clearly that song was premature," said Phil Orlando, chief investment officer at Value Line Asset Management.

Shulman detected enthusiasm for smaller capitalisation tech stocks, noting the flat performance of large companies such as International Business Machines Corp., which lost 1/4 at 107, Intel, up 23/64 to 68-7/64, and Microsoft, off 1/8 to 112-5/8.

"If you believe in an economic recovery in the second half, then techs will stand to do better," Shulman said.

The American Stock Exchange's Internet index, which measures the group's performance, jumped nearly 4 percent.

"People are sensing how powerful the Internet is," Shulman said. "Hardware is extraordinarily concrete - there's demand for the Internet and Intranet. Software is harder to figure out but people want to own it conceptually."

He said hardware names included U.S. Robotics, which gained 13-1/2 to 151 after posting quarterly earnings that exceeded analysts' estimates.

Sun Microystems added 4-3/8 to 54-3/8, Silicon Graphics rose 1-1/2 to 28-1/8 and Cascade Communications rose 4-3/4 to 91-1/4.

Among other issues, Travelers/Aetna Property Casualty Corp., a unit of Travelers Group Inc., rose 2-1/2 to 27-1/2 in its first day of trading.

Readers Digest slumped three to 42-3/8 as its quarterly results fell below expectations.

Also slumping on disappointing quarterly reports was Ralston-Purina, off 2-1/2 to 59-1/4, Walt Disney, down one to 61-5/8, and Southwest Air, off 2-1/8 to 30-3/4.

Iomega surged 10-5/8 to 51-7/8 after its board approved a two-for-one stock split, which will be paid as a 100 percent stock dividend.

The Standard & Poor's composite index of 500 stocks rose 3.69 to 651.58.

The NYSE Composite index of all listed common stocks rose 1.78 to 349.60. The average share was up 21 cents.

The Wilshire Associates Equity Index - the market value of NYSE, American and Nasdaq issues - was 6,467.738, up 41.939 or 0.65 percent.-Reuter