Stocks rebound as Dow surges 171

IBM leaps before split

Nasdaq sprints 1.9% after 4-day slump

May 27, 1999|By BLOOMBERG NEWS

NEW YORK -- U.S. stocks rose for the first time in five days after an economic report that factory orders for durable goods had fallen more than expected in April, dampening concern that inflation and interest rates are poised to rise.

The Dow Jones industrial average had its biggest gain since May 3, climbing 171.07, or 1.6 percent, to 10,702.16.

The Standard & Poor's 500 index rose 20.36, or 1.6 percent, to 1,304.76, and the Nasdaq composite index gained 46.28, or 1.9 percent, to 2,427.18, snapping a four-day slump that left it down 10 percent from its April 26 high.

International Business Machines Corp. accounted for more than one-third of the Dow's advance, gaining $15.0625 to $236.25. IBM is splitting its shares 2-for-1 -- its second in 20 years -- the split taking effect after the close of trading yesterday.

`Downtick' rule imposed

The New York Stock Exchange imposed its "downtick" rule 15 minutes before the close as the Dow staged a 120-point surge in the last hour and a half of trading. The rule is meant to slow market advances by forcing traders to wait until shares fall before executing orders involving groups of stocks and equity index futures.

Bank One Corp. rose $2.125 to $57.6875; Bank of New York Co. climbed $2.3125 to $36.1875; and Fleet Financial Group Inc. rose $2.375 to $41.8125.

Decliners outnumbered advancers by a 15-to-14 ratio on the Big Board, where 886.3 million shares changed hands.

Highly priced computer-related companies, which had been pummeled in recent days, rallied as interest-rate concerns eased.

"The more we see the fears of a Fed increase falling," the more these stocks are likely to recover, said Clare Zempel, chief investment strategist at Robert W. Baird & Co. in Milwaukee.

Microsoft Corp. rose $2.25 to $78.50 and Cisco Systems Inc. gained $4.75 to $109.125.

Sun Microsystems Inc. climbed $5.75 to $60.8125.

Oils participate in advance

Exxon rose $1.75 to $81.9375; Chevron advanced $3.0625 to $94.0625; and Royal Dutch Shell Petroleum Co. gained $1.4375 to $58.0625.

Bristol-Myers Squibb Co. climbed $1.75 to $66.50. SmithKline Beecham PLC won U.S. approval for its new diabetes pill, Avandia, which it will market with Bristol-Myers.

Lycos Inc., the No. 3 Internet search service that will become a member of the Nasdaq 100 tomorrow, gained $5.50 to $102. Yahoo! Inc., the No. 1 search directory, jumped $13.9375 to $140.875 and Amazon.com Inc., the No. 1 online book seller, climbed $9.375 to $120.9375.

Merrill Lynch & Co. rose $10.3125 to $78.6875 after Dan Dorfman said in the Internet newsletter Jag Notes.com that the nation's biggest brokerage is in preliminary talks to sell itself to Chase Manhattan Corp. Chase gained $1.5625 to $75.375. Both companies declined to comment on the report.

Williams Cos., gained $2.0625 to $48.875. Intel Corp. agreed to buy $200 million of stock of its Williams Communications Inc. unit, to occur at the same time as Williams' initial public offering for the Internet unit.

DLJDirect gained $10 to $30 in the online broker's first trading day, a smaller jump than some expected as investors questioned whether the prices of some Internet companies are too high for their expected earnings.

Still DLJDirect's performance was better than Juno Online Services Inc., an Internet service provider that has attracted millions of users with its free e-mail service. Juno fell below its offer price less than two minutes after it began trading on its first day and finished down $1.375 to $11.625 as 7.8 million shares changed hands on the Nasdaq market.

StarMedia Network Inc. rose $11.0625 to $26.0625 as the largest online network in Latin America soared in its first day of trading after an initial stock sale of 7 million shares, a 13 percent stake in the company at $15 each.

Pub Date: 5/27/99

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