Internet companies lead rise in stocks Lycos shares soar 26%

Dow jumps 66.51 points to highest close since May

Wall Street

July 07, 1998|By BLOOMBERG NEWS

NEW YORK -- U.S. stocks rose yesterday as borrowing costs fell to near-record lows and Internet mania carried Lycos Inc., Yahoo! Inc. and Egghead.com Inc. to all-time highs.

The Dow Jones industrial average rose 66.51 to 9,091.77, its highest close since May 22. The Standard & Poor's 500 index gained 10.89, or 1 percent, to a record 1,157.31, and the Nasdaq composite index climbed 15.47 to 1,909.47.

Those gains were dwarfed by advances in Internet stocks, which jumped as much as 65 percent yesterday.

Lycos sparked the rally, after the No. 4 Internet search directory company said it will split its stock 2-for-1. A stock split has little bearing on a company's prospects, but many investors take it as an optimistic signal. Lycos soared $20.50, or 26 percent, to $99.5625.

Yahoo! gained $26.375, or 15 percent, to $199.25. Its shares have almost tripled this year.

Excite Inc. rose $8.0625, or 8 percent, to $107 and NetGravity Inc. gained $7.875, or 41 percent, to $27.

Lycos and others soared to records in recent weeks on speculation that large media companies will invest in or acquire them. The expectations were fueled by NBC's investment in Cnet Inc. last month. Excite Inc., EarthLink Network Inc. and MindSpring Enterprises Inc. have announced stock splits, driving their shares higher.

Egghead.com jumped $5.8125, or 65 percent, to $14.8125 after reporting that revenue on its Internet auction site almost doubled in the first quarter ended June 27, to $13.7 million.

Inktomi Corp., which develops software designed to reduce congestion on the Internet, soared $25.625, or 53 percent, yesterday, to $73.625. Inktomi sold shares to the public June 10 for $18.

Among other broad indexes, the Russell 2,000 index of small capitalization stocks rose 1.66 to 459.97; the Wilshire 5,000 index jumped 91.13 to a record 10,855.85; the American Stock Exchange composite index gained 3.20 to 725.12; and the S&P 400 midcap index added 1.06 to 366.48.

The yield on the benchmark 30-year bond fell .03 percent to 5.57 percent, matching its June 15 level -- the lowest since the government began regular sales of the securities in 1977.

Four stocks rose for every three that fell on the New York Stock Exchange. About 513 million shares changed hands, below the three-month daily average of 604 million.

Specialty retailers rallied. Best Buy Co. gained $2.125 to $40.0625; Home Depot Inc., which split its stock 2-for-1 Thursday, jumped $3.25 to $46.1875; and Tandy Corp. gained $1.50 to $52.9375. The S&P's retail specialty index, up 5 percent, had its best day since April 1991.

General Electric Co. gained 93.75 cents to a record $91.875, boosting the market capitalization of the world's largest company to within $670 million of $300 billion. Microsoft Corp., the market cap runner-up, is valued at $266 billion.

ContiFinancial Corp. fell $6 to $19.25 after the home-mortgage lender warned that earnings for the first quarter ended June 30 will be disappointing because loans were paid off faster than expected.

PeopleSoft Inc. jumped $2.1875 to $46.625; Apple Computer Inc. gained $1.375 to $30.375; and Brooke Group Ltd. rose 75 cents to $11.50, after they were recommended by Laszlo Birinyi, president of the consulting firm Birinyi Associates Inc.

Johnson & Johnson, one of the 30 Dow industrials, fell $1.3125 to $72.375 after Prudential Securities analyst Charlene Lu cut her rating on the stock, citing the cancellation of a stroke drug and a warning from regulators that its heartburn medicine can cause severe health problems.

Walt Disney Co., another Dow member, fell 62.5 cents to $105.8125, after Goldman, Sachs & Co. analyst Richard Simon cut the 1998 earnings estimate for the entertainment company to $2.90 from $2.95, citing disappointing motion picture results.

Pub Date: 7/07/98

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