Technology Issues Fuel Stock Rally

Fervor for economically sensitive stocks plus a powerful rally in selected technology issues hoisted the market to new heights Tuesday.

The buying that lifted Wall Street out of its late-summer lethargy started slowly and gradually gathered momentum as the session progressed.

The Dow Jones industrial average climbed 22.54 to 4,670.08, adding to Friday’s 36.98-point surge. The blue-chip average remained below its all-time high of 4,736.29, which was set July 17.

Gainers beat losers by about 15 to 8 on the NYSE, where volume expanded to 332.66 million shares as of 4 p.m. from Friday’s holiday-stunted 255.73 million shares. U.S. financial markets were closed Monday for Labor Day.

Stocks broke out of a narrow trading range in the afternoon as buyers flocked back to the technology sector.

Ricky Harrington, senior vice president and technical analyst at Interstate/Johnson Lane, said tech issues overcame concerns that surfaced last week when reports indicated that the huge Magellan Fund, Fidelity’s flagship, was steering away from the group.

“The market weathered that storm and the technology sector has regained its leadership position,” he said.

Some of the stocks that moved substantially or traded heavily Tuesday:

NYSE

USAir, up 1-3/4 to 9-3/4.

The stock took off after the carrier said it expects to post a profit for the third quarter and the full year.

International Business Machines, down 1-5/8 to 101-1/8.

IBM Chief Financial Officer Jerome York resigned to become vice chairman at Tracinda Corp. Shares of Chrysler, which has been targetted by Tracinda, rose 2-1/2 to 57-1/8.

General Motors, up 3/4 to 49-1/4.

Stocks of the Big Three automakers rose after strong August sales reports encouraged investors. Ford rose 1-1/8 to 32-3/8.

NASDAQ

Bank South, up 2-3/16 to 25-7/16.

The bank’s stock rose on news that NationsBank has agreed to buy Bank South for stock in a deal valued at about $1.6 billion. NYSE-listed NationsBank fell 5/8 to 60-7/8.

Microsoft, up 5-1/4 to 95.

The stock’s investment rating was reinstated to midterm “above average” by Merrill Lynch & Co.

Intel, up 2-13/16 to 63-11/16.

Semiconductor issues were among the technology stocks that led a broad advance on Wall Street.