YOU ARE HERE: LAT HomeCollections


Tech Issues Retake Lead as Nasdaq, Dow Rally Strongly

April 23, 1999| From Times Staff and Wire Reports

U.S. stocks rose for a third day Thursday as investors, encouraged by higher-than-expected earnings at IBM, piled money back into computer-related shares.

The Dow Jones industrials rocketed 145.76 points, or 1.4%, to a record 10,727.18, with IBM contributing 105 points to the advance as its shares soared $22.63 to $194.50.

The Nasdaq composite index, dominated by tech stocks, jumped 72.53 points, or 2.9%, to 2,561.61--leaving it just 1.4% below its record high of 2,598.81 reached April 12.

The broader market also continued to advance, which many analysts said is encouraging for the bull market's health. Standard & Poor's index of 400 mid-sized stocks gained 0.7%.

Winners topped losers by a 17-13 margin on the New York Stock Exchange and by 21 to 18 on Nasdaq, in heavy trading.

On Monday, the Nasdaq index plummeted 5.6% amid a sell-off in many tech and Internet shares. But as has been the case so many times in recent years, the deep decline merely brought bargain hunters into the market in droves.

Although tech investors have grown worried about many companies' sales outlooks this year, IBM's robust earnings report Wednesday helped calm those fears.

The three most active stocks Thursday were computer-related: Dell jumped $3.44 to $41.88, Intel rose $3.06 to $61.50 and Microsoft gained $2.94 to $84.94.

IBM reported first-quarter earnings of $1.55 a share, far exceeding analysts' average forecast of $1.41.

Late Thursday, another surprise set the stage for what could be a surge in telecom stocks today: AT&T offered to buy MediaOne, the fourth-largest U.S. cable TV operator, for $85 a share, or $58 billion. The offer would break up MediaOne's planned merger with Comcast.

The AT&T offer for MediaOne "is going to hike the valuation on other cable companies as well, such as Comcast, Adelphia and Cox Communications," said Tom Marsico, who owns almost 5 million MediaOne shares and heads Marsico Capital Management in Denver.

MediaOne, which closed up $2.56 at $69.50 in regular trading on the NYSE, soared to $78.75 in after-hours trading.

AT&T fell to $54.50 after hours, after closing at $56.75, down 25 cents. Comcast's non-voting shares, up $2.56 to $67.63 in regular trading, jumped to $70 after hours.

For the broader market, analysts say the bigger issue is that first-quarter earnings reports in general have been stronger than expected.

Lucent Technologies, CNet, American Express, AirTouch Communications, Bell Atlantic and Quaker Oats all met or beat analysts' earnings forecasts Thursday.

"If you continue to see this kind of earnings growth, then stocks are going to work a little bit higher," said Charles Henderson, chief investment officer for Chicago Trust.

The Dow already is up 16.8% year-to-date. The Nasdaq composite is up 16.8% as well.

The bad news Thursday was in the bond market: Treasury bonds posted their worst loss in more than seven weeks as stocks' rally reduced demand for "safe" Treasury debt.

The yield on the 30-year Treasury bond jumped to 5.60% from 5.52% on Wednesday and now is the highest since April 1.

Other Thursday highlights:

* Many Internet shares were in demand again, with Yahoo up $9.13 to $184, Verticalnet up $22.50 to $140 and Mindspring up $14.44 to $106.94.

* Drug stocks also powered ahead. Pfizer gained $4.94 to $128.31 and Bristol-Myers leaped $3.75 to $68.

* Oil service shares rose as crude oil futures topped $18 a barrel. Halliburton rose $2.50 to $43.88 and Schlumberger surged $3.25 to $63.63.

* Not all the earnings news was good. Procter & Gamble fell $4.81 to $94.13 after the largest U.S. maker of household products warned that continued slow sales overseas will pull the current quarter's profit below forecasts.

Market Roundup, C7

Los Angeles Times Articles