Nasdaq hits new high Exxon talks fuel rise

In light day of trading prices zoom for oil, computer shares

November 28, 1998|By BLOOMBERG NEWS

NEW YORK -- U.S. stocks, led by oil shares, rose yesterday amid speculation that Exxon Corp.'s talks to buy Mobil Corp. will spark more mergers. A rally in computer shares such as Microsoft Corp. and Internet stocks sent the Nasdaq Composite Index to its first record since July 20.

The possibility of an Exxon-Mobil combination "is going to start merger mania again," said Tim Chesterfield, who helps manage $2.65 billion at Pavilion Asset Management in Brighton, England. Chesterfield said he owns Exxon and may buy more oil stocks.

The Dow Jones industrial average rose 18.80 to 9,333.08. The Standard & Poor's 500 Index gained 5.46 to a record 1,199.33. The Nasdaq rose 31.23 to a new high of 2,016.44. The Nasdaq, dominated by computer-related issues, is up 28 percent this year.

The Russell 2000 index of smaller companies rose 2.77 to 402.09.

Five stocks rose for every four that fell on the New York Stock Exchange.

Exxon rose $1.6875 to $74.375, after the biggest U.S. oil company confirmed that it is in talks to combine with Mobil in what would be one of the largest takeovers ever. Exxon said there's "no assurance" that an agreement will be reached.

Mobil soared $7.625 to $86.

Chevron, the fourth-largest U.S. oil company, rose $5.25 to $85.625, adding 22 points to the Dow average. Texaco Inc., the third-largest, rose $3.4375 to $60.0625.

After the Thanksgiving holiday, trading closed three hours early yesterday, at 1 p.m. About 257 million shares changed hands on the New York Stock Exchange, the lightest trading of the year.

For the week, the Dow gained 1.9 percent, the S&P gained 2.5 percent and the Nasdaq rose 4.6 percent.

Internet companies soared, partly on optimism that consumers will do much of their holiday shopping online.

"Everyone's saying Internet shopping is going to be so big," said Patrick Davis, co-head of Nasdaq trading at PaineWebber Inc. "And people who use the Internet are buying the stocks. But they're not going to stay up forever."

Internet auctioneer Onsale Inc. soared $37.625, or 63 percent, to $97.625. Egghead.Com Inc. gained $10.1875, or 48 percent, to $31.625; Open Market Inc. zoomed $8.3125, or 67 percent, to $20.75; and Connect Inc. more than quadrupled, gaining $4.75 to $6.125.

America Online Inc., the No. 1 online service, rose $2.625 to $94.875. The month-old Street.com Internet index had its best day to date, soaring 20 percent. Microsoft Corp. gained $3.8125 to $128.0625, and Sun Microsystems Inc. rose $4.625 to $80.375.

Internet shares got a lift earlier this week after AOL agreed to buy Netscape Communications Corp. Sun Microsystems is also involved in the transaction.

Books-A-Million Inc. more than doubled for a second day, rising $26 to $38.9375, after the bookseller said it introduced an enhanced Web site to sell more books over the Internet.

The Dow industrials are up 18 percent for the year and could be headed for a fourth year of 20 percent-plus gains, after a July-October slump knocked them down 1,798 points. Investors began pushing up U.S. stocks again after the Federal Reserve cut benchmark interest rates three times to calm financial markets roiled by Russia's debt default and by the economic turmoil in Asia.

"The U.S. economy continues to expand and create jobs, and corporate profits continue to rise in most industries, despite sluggish conditions abroad," wrote Abby Joseph Cohen, Goldman, Sachs & Co.'s investment strategist, in a note to clients Thursday.

Cohen, one of the most optimistic and closely followed strategists, repeated her year-end target of 1,150 for the S&P 500 and 9,300 for the Dow. She said she expects operating earnings for companies in the S&P 500 to rise 5 percent to 7 percent in coming quarters.

Pub Date: 11/28/98

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