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Nasdaq hangs tough
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June 9, 2000: 5:40 p.m. ET
But Dow finishes an off week, hit by Procter & Gamble and financials
By Staff Writer Jake Ulick
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NEW YORK (CNNfn) - Coming off its best week in history, the Nasdaq composite index extended its gains over the last five sessions to close within 200 points of wiping out its losses for the year Friday.
But the week wasn't as kind to the Dow Jones industrial average. The blue chip index tumbled after Procter & Gamble issued its second earnings warning in three months.
Still, a tame inflation report Friday lifted the broader market as investors bet that interest rates, which were raised six times over the last year, can't go much higher.
"The number today struck me as neutral," Donald Selkin, chief investment strategist at Joseph Gunnar, told CNNfn's Talking Stocks. "More stocks are up than down, and that's the ultimate test."
The Producer Price Index came in flat last month, a sign that the Federal Reserve's credit-tightening campaign may be near an end.
 That helped lift Nasdaq 49.28 points, or 1.3 percent, to 3,874.84 Friday, bringing its gains for the week to 1.5 percent. The index needs just 195 points, a move of 5 percent, to erase its loss for 2000.
But the Dow fell 54.66 to 10,614.06. The index of 30 blue chip stocks shed 1.6 percent for the week, and is off 8 percent for the year.
The S&P 500 shed 4.72 Friday to 1,456.95.
 More stocks rose than fell amid light trading volume typical of a summer Friday. Advancing issues on the New York Stock Exchange topped declining ones 1,665 to 1,191, on volume of 784 million shares. Nasdaq winners beat losers 2,400 to 1,577, as more than 1.2 billion shares changed hands.
PPI is friendly
In the week's most closely watched economic indicator, wholesale prices as measured by the Producer Price index were flat in May, below Wall Street expectations. The core rate, which excludes food and energy costs, rose 0.2 percent, which was above forecasts.
Still, analysts focused on the good inflation news.
"Overall, this is not too bad a report, but clearly there's some pressure in some sectors," said Ian Shepherdson, chief U.S. economist at High Frequency Economics.
Stocks rallied after early morning the report, giving up some of those gains later in the session.
"It was a livable number," said Alan Ackerman, senior vice president at Fahnestock & Co. "It encouraged some bargain hunters to go to work."
 The day's action comes after a batch of data last week showed that the economy is slowing, triggering a record 19 percent jump for the Nasdaq.
Economists say the PPI and other recent data suggests the Fed's six rate hikes over the last year are slowing the economy and containing inflation.
"Inflation remains benign," Ethan Harris, senior economist at Lehman Bothers told CNN's In the Money.
Lower rates, by making it cheaper for companies to borrow, can help corporate profit. Looser credit also lowers bond yields, making stocks a more attractive investment than bonds.
With PPI out of the way, economists are focused on next week's data on consumer prices and retail sales.
Those are the last major number the market will digest before Federal Reserve policy makers meet late this month to set interest rates. Calling that rate decision a close call, Lehman's Harris forecasts the central bank leaving the benchmark lending rate unchanged at 6.50 percent.
Techs lead
Lifting the Nasdaq, Cisco Systems (CSCO: Research, Estimates) climbed 11/16 to 64-3/8 and Qualcomm (QCOM: Research, Estimates) gained 1-5/8 to 79-1/16.
Microsoft (MSFT: Research, Estimates), meanwhile, was unchanged at 68-13/16. Still, the world's No. 1 software maker has held up well in the day's trading after a federal judge ordered the company split in two.
But financial stocks fell, hurting the Dow. American Express (AXP: Research, Estimates) shed 1-3/16 to 53-13/16, J.P. Morgan (JPM: Research, Estimates) lost 4-3/16 to 128-9/16, and Citigroup (C: Research, Estimates) dipped 1/2 to 64.
 And McDonald's (MCD: Research, Estimates) fell 2-1/16 to 33-3/8. The fast-food restaurant operator said sales in the first five months of 2000 rose 5 percent, a slower-than expected pace. U.S. sales were up just 2 percent, and weakness in the euro was blamed for a 1 percent revenue decline in Europe.
Procter & Gamble (PG: Research, Estimates) fell 13/16 to 56-11/16 after sliding 7 percent Thursday. That's when the consumer product maker's CEO resigned amid the company's second earnings warning in four months.
The Nasdaq has risen 20 percent since May 26, while the Dow has gained 4 percent in the period. That out-performance comes in sharp contrast to prior months, when technology lagged blue chips.
Still, Bob Smith, portfolio manager at T. Rowe Price, told CNN's In the Money that stocks are likely to trade in a narrow range until investors are certain the economy is slowing. (389K WAV) (389K AIFF). 
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