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Record rally for Dow
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April 21, 1999: 5:06 p.m. ET
Technology recovery and solid earnings lead to broad market rally
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NEW YORK (CNNfn) - Investors rediscovered their appetite for technology stocks Wednesday, and in the process helped push the broader stock market into a rally that led to a record close for the Dow industrials.
A continuous stream of earnings reports that kept meeting or beating market expectations helped underpin the market's gains.
The Dow Jones industrial average gained 132.87 points, or 1.3 percent, to close at an all-time high of 10,581.42. On the New York Stock Exchange, advances beat declines 1,940 to 1,094 as 921 million shares changed hands.
The Nasdaq Composite rallied 78.65 points, or 3.3 percent, to 2,488.29, extending Tuesday's advance two days after suffering one of its worst tumbles ever. The S&P 500 index rose 29.95 points, or 2.3 percent, to 1,336.12.
Buying was broad based and even smaller stocks joined the rally. The Russell 2000 index of small-cap stocks climbed 11.23 points, or 2.7 percent, to 426.57, its third-largest one-day point gain.
Still, Todd Eberhard, stock strategist at Eberhard Investment Associates, warned individual investors to be cautious when buying stocks on market dips and advised investors to set up limits at which they would either sell the stocks they hold, or buy them back at cheaper levels.
"Eventually, (the market) will go down, people will buy on the dip and it will continue to go down," he said. (464K WAV) or (464K AIFF)
The bond market slipped as the stock market's gains solidified. The benchmark 30-year Treasury bond was 3/32 lower in price, to yield 5.51 percent.
The dollar climbed sharply against the yen and kept the euro under pressure amid confidence the U.S. economy is powering ahead, while an International Monetary Fund report predicted Japan's economy will remain in the throes of recession for the rest of the year.
Dow profits keep spirits high
Back in the stock market, two more members of the Dow industrials and several big airlines joined in the generally bullish chorus, reporting first-quarter earnings that narrowly triumphed over Wall Street predictions.
Coca-Cola (KO) confessed that sagging sales pushed profits down to 30 cents per share, but the beverage behemoth's bottom line remained firmer than the 29 cents analysts had been predicting. Shares surged 2-5/16 to 67-9/16.
Oil blue-chip Exxon (XON) also beat consensus forecasts by a penny per share, reporting first-quarter earnings of 47 cents. However, investors paid more attention to the fact that Exxon's profits plunged nearly 40 percent from a year ago, sending the stock down 2-5/16 to 78-7/16.
Out of the 16 members of the Dow 30 to report this quarter, 12 have beat expectations and four have met forecasts.
The transportation sector also got an earnings-related lift, with the Dow transports soaring 62.541 points, or 1.8 percent, to 3,556.46 after index heavyweight AMR (AMR) came in a penny above expectations. Shares of the company, the parent of American Airlines, climbed 2 to 69-13/16, while US Airways (U), which also reported strong profits, jumped 2-11/16 to 55-9/16.
Techs suffer mixed outlook
Investors once again proved ambivalent about technology issues, as earnings from Microsoft (MSFT), one of the industry's leaders, came wrapped in a warning of softer growth in the future.
Shares of Microsoft dropped 1-1/8 to 82. Late Tuesday the company said it earned 35 cents a share in its fiscal third quarter, 3 cents above market expectations amid strong sales of its MS Office software applications.
However, Microsoft also said it expects a slowdown in the following quarter, once again sounding a cautionary note about possible Y2K-related problems. As a result, Prudential Securities downgraded Microsoft, the world's largest maker of software, to "hold" from "accumulate."
PC maker Compaq (CPQ) also weighed in with mixed news, reporting early Wednesday that first-quarter earnings were in line with significantly lowered expectations. The company warned recently its profit would fall more than 50 percent below consensus Wall Street forecasts, forcing a shake-up at the company's highest levels while analysts reevaluated their ratings of the stock. Shares of Compaq slipped 1/2 to 24-1/2.
Other technology bellwethers were generally firmer, as shares of networking giant Cisco (CSCO) surged 6-3/8 to 107-15/16 and Intel (INTC) gained 1-7/8 to 58-7/16. On the Dow, Hewlett Packard (HWP) climbed 1-1/4 to 72-5/8 and IBM (IBM) rose 2-1/8 to 171-7/8 ahead of its own earnings announcement due after the market close.
Big Blue said it earned $1.55 a share in the first quarter, above the $1.41 a share the market had expected. IBM's revenues grew 15 percent.
Telecoms tempt; Cadence falters
In another corner of the high-tech world, investors rewarded shares of Qualcomm (QCOM), rallying the stock up 54-7/16, or nearly 39 percent, to 195-1/16 after the maker of wireless communication technologies reported earnings that sharply outstripped market expectations.
In the same division, QWest Communications (QWST) saw its stock gain 2 to 92-1/2 after it reported first-quarter profit of a penny a share, compared with a loss of 6 cents a share a year earlier.
Finally, among the day's bitter losers, shares of software maker Cadence Design Systems (CDN) plunged almost 40 percent, falling 8-5/16 to 12-1/2 after disappointing profits led numerous analysts to conclude the company's technological momentum is slowing.
Although the company met earnings estimates of 31 cents per share after the bell Tuesday, it also warned of slowing revenue and earnings growth throughout the year. As a result, no fewer than four Wall Street firms cut their ratings on the stock, with BankBoston Robertson Stephens lowering its recommendation to "attractive" from "buy" and Merrill Lynch cutting its outlook to "neutral" from "accumulate."
Outside the main technology sector, Amgen (AMGN) tanked 5 to 64 even after the biotech firm reported earnings that surpassed expectations. Shares surged 16 percent, more than 8 points, Tuesday ahead of its earnings release, but fell prey to some profit-taking and nervousness after Morgan Stanley Dean Witter downgraded the stock to "neutral" from "outperform."
(Click here for a look at today's CNNfn market movers.)
(Click here for a look at today's CNNfn technology stocks report.) 
-- by staff writers Malina Poshtova Zang and Robert Scott Martin
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