Nasdaq rebounds 96.05, in biggest one-day gain

Bank, Internet shares end five-day slump

Dow rises 186.15

Wall Street

February 12, 1999|By BLOOMBERG NEWS

NEW YORK -- Technology stocks stormed back yesterday from a five-day rout, pushing the Nasdaq to its biggest one-day point gain ever.

The Nasdaq composite index climbed 96.05, or 4.2 percent, to 2,405.55. The gain also was the Nasdaq's largest in percentage terms since Oct. 15 and the ninth-largest in its 28-year history.

Computer and financial shares were lifted by an optimistic forecast from Compaq Computer Corp. and unexpectedly strong earnings from American International Group Inc. Internet shares climbed for the first time in six days, helped by strong demand for Web-related initial public offerings.

Other indexes also rose, and financial shares gained, after Federal Reserve Chairman Alan Greenspan said the U.S. economy is "the envy of the world," giving investors optimism that the central bank isn't considering raising interest rates.

Despite yesterday's gains, analysts' opinions opinion of the rally were mixed.

"The fact that Greenspan said nothing on interest rates benefits the entire market -- particularly bank stocks," said Tim Ghriskey, senior portfolio manager at Dreyfus Corp., which oversees $120 billion. "Technology stocks are where the earnings performance has been and it's where growth will continue to be."

"Until you can find another sector to take some leadership, I'm not convinced we're going to run a heck of a lot higher," said Elon Spar, co-head of block trading at Credit Suisse First Boston.

The Dow Jones industrial average rose 186.15, or 2 percent, to 9,363.46, its largest rise in almost a month. The Standard & Poor's 500 Index gained 30.49, or 2.5 percent, to 1,254.04.

The Dow is up 1.98 percent for the year but nearly 280 points from its all-time closing high of 9,643.32. The Nasdaq made back its losses from the previous two sessions and remains 100 points shy of its all-time closing high.

The Russell 2,000 index, a benchmark of small-cap stocks, climbed 8.20, to 406.16; the Wilshire 5,000 index rocketed 268.72, to 11,447.44; the American Stock Exchange composite index jumped 10.59, to 699.41; and the S&P 400 midcap index gained 8.33, to 367.09. The Sun-Bloomberg Maryland index of the top 100 Maryland stocks added 2.66, to 183.93.

Advancers had nearly a 3-to-2 lead on the New York Stock Exchange. NYSE volume was moderate at 815.89 million shares, but up from Wednesday's pace.

Greenspan, in testimony yesterday before the House Banking Committee, said stock prices of merging companies have gone up substantially because "the markets presume capital efficiency of the American economy has improved in a very significant manner. Indeed, the consequences of that are all around us. We have an economy which is functioning exceptionally well."

"As long as the Fed is friendly toward the market and the 30-year bond yield is below 5.5 percent, the market will continue to rise," said Tim Hayes, senior equity strategist at Ned Davis Research Inc. in Nokomis, Fla.

Birinyi Associates Inc., a Greenwich, Conn., research company, reported seven computer-guided buy programs, including two in the last hour, and one sell program. The programs had the net effect of adding 158.87 points to the Dow and 12.62 points to the S&P 500.

Compaq gained $2.4375 to $44.8125 after the world's biggest maker of personal computers said it expects shipments to Asia, excluding Japan and China, to rise about 20 percent this year. Compaq's projections echo optimistic assessments on Asia from companies such as Hewlett-Packard Co., the world's biggest printer maker, and Seagate Technology Inc., the No. 1 independent maker of computer disk drives.

IBM up $9.125

International Business Machines Corp. gained $9.125 to $178, accounting for more than one-fifth of the Dow average's gain. Dell Computer Corp. climbed $4.875 to $101.875. Oracle Corp. rose $5.875 to $59.5625, and was the biggest gainer in the S&P 500.

Lycos Inc., the No. 3 Internet search directory, rose $16 to $103.25. CMGI Inc., an Internet venture-fund company that owns about 20 percent of Lycos, said it won't vote for USA Networks Inc.'s proposed acquisition of the company at current stock levels, jeopardizing the transaction. CMGI soared $19.9375 to $112 and USA Networks Inc. rose 75 cents to $40.

AIG, the largest publicly traded U.S. insurer, rose $7.75 to $106.50 after reporting profit from operations of 94 cents a share.

Wal-Mart Stores Inc. rose $4.4375 to $85.375, leading the gain in the S&P 500. The Commerce Department reported that retail sales rose in January for a sixth straight month, led by gains at discount and department stores chains like Wal-Mart and clothing stories such as Gap Inc. Gap rose $1.375 to $63.

EntreMed Inc. rose $12.8125 to $25.6875, recovering most of Wednesday's losses, after the U.S. National Cancer Institute said it succeeded in duplicating research showing the company's experimental endostatin compound can shrink tumors in mice.

EntreMed plunged $11.625 on Wednesday after Bristol-Myers Squibb Co. ended its role in the development of a similar anti-cancer compound called angiostatin.

Electronic Data Systems Corp., the No. 2 U.S. computer-services company, added $2.4375 to $48.3125 after agreeing to buy MCI WorldCom's computer management unit for $1.65 billion. It also will provide $5 billion to $7 billion in services to MCI WorldCom, the largest such contract in the telecommunications industry. MCI WorldCom gained $4.1875 to $80.4375.

Among brokerages, E*Trade Group Inc. rose $5.50 to $48.25; Morgan Stanley Dean Witter & Co. gained $7.4375 to $92.125; and Merrill Lynch & Co. rose $4.6875 to $71.6875.

Philip Morris Cos. fell 62.5 cents to $40.8125, adding to an 8.7 percent loss Wednesday, in the wake of a San Francisco jury's verdict awarding $51.5 million in punitive and compensatory damages to a longtime smoker of its Marlboro cigarettes who has lung cancer.

Pub Date: 2/12/99

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