The Nasdaq Stock Market continued to resurge Monday as investors rushed into a range of semiconductor, networking and biotech stocks on the heels of their strong recoveries late last week.
America Online's surprise proposed deal for Time Warner sent investors scurrying into Internet and entertainment stocks amid predictions of more marriages between richly priced Internet giants and old-line media and publishing companies.
But Nasdaq's 167.05-point, 4.3% rise, its biggest point gain and ninth-best percentage advance, was broader than that. Following its 155-point spurt Friday, investors who had held off buying tech stocks during their downturn last week rushed in Monday as they feared prices would get ahead of them.
In semiconductors, for example, Novellus Systems leaped $13.69 to $138.56, KLA-Tencor bolted $11.25 to $116.56, and Linear Technology rose $4.94 to $86.94. In software, Oracle jumped $12.38 to $115.75, and in biotech, Amgen advanced $4.13 to $72.13.
Many of the non-tech stocks that moved up last week, such as drugs, financials and utilities, lagged Monday. But market watchers said that was expected given that tech news dominated the day, and was not a sign that the resurgence of cyclicals will be short-lived.
Market watchers were encouraged that the number of advancing stocks outpaced that of decliners by 18 to 13 on the New York Stock Exchange and by 13 to 8 on Nasdaq, continuing last week's positive trend.
The leaders this year "are still going to be high tech and communications and the Internet, but not at the expense of everything else," said Alfred Goldman, chief market strategist at A.G. Edwards. "Investors have been going back to basic Americana. I don't think it's a one-time shot."
Nasdaq ended at 4,049.67, still shy of its record close of 4,131.15 set Jan. 3. The market notched its third-largest trading volume of more than 1.7 billion shares.
The Dow Jones industrial average rose 49.64 points, or 0.4%, thanks to big gains in its tech contingent, led by Intel, Hewlett-Packard and IBM. The Standard & Poor's 500 climbed 1.1%.
Foreign stock markets also rallied strongly, with Mexico and Canada reaching new highs, and with a range of European and Asian bourses seeing broad gains.
On the negative side, bond yields rose back near their highest levels in 28 months as investors worried that the Federal Reserve is likely to boost short-term interest rates several times in the next few months in an effort to slow inflation. The yield on the 30-year Treasury bond climbed to 6.59%, up from 6.54% on Friday.
If there was any doubt remaining after Friday's 4.2% romp in the Nasdaq, Monday's advance clearly showed that last week's three-day tech sell-off had run its course. On an intra-day basis, the Nasdaq slipped 11.5% from top to bottom last week, surpassing the 10% mark that's commonly defined as a correction. But experts hesitated to use that term because of the speed of the turnaround.
Hedge funds accounted for the bulk of last week's selling, and individuals largely held their shares and mutual funds sought to buy on weakness, said Scott Bleier, chief investment strategist at Prime Charter Ltd., a New York investment bank. He thinks the market could consolidate in the short term, but believes tech will have another strong showing this year because investors are continuing to throw money at the sector.
"I know plenty of people who are dying for another dip because they haven't put all their money to work," Bleier said.
In recent years, experts said, tech stocks have been strongest from November through January, solid from February through April, then weakened in the summer, experts said.
In NYSE trading, AOL slipped $1.13 to $72.63, and Time Warner leaped $27.50 to $92.25.
A host of entertainment conglomerates--including Walt Disney, CBS, Fox Entertainment Group and Seagram--jumped sharply in the hope that other deals will follow. Likewise, some Internet stocks surged on the perception that the deal validates the idea that Net companies are a potent economic force.
"The virtual world is getting more and more expensive [in market value], and the real world is getting cheap, to the point where the virtual world is sensing value in the real world and is buying it," Bleier said.
Of the gains among entertainment companies, Disney rocketed $4.75, or 15%, to $35.88. Seagram added $5.38 to $54, Fox tacked on $2.50 to $24.75 and CBS spurted $4.38 to $62.38.
Because of Time Warner's large cable TV franchise, cable stocks also rallied. Cox Communications bolted $6.31 to $51.50, Cablevision Systems darted $7.50 to $81.75 and Comcast climbed $5.44 to $47.81.
Among Internet names, Yahoo jumped $28.81 to $436.06, Lycos advanced $9 to $79.75 and CMGI rocketed $31.50 to $306.50. Shares of TiVo, which is developing an interactive TV service with AOL, jumped $21.13, or 42%, to $71.50.
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