IBM triggers record Dow run
|
|
April 22, 1999: 5:15 p.m. ET
Technology stocks regain favor after sector leader posts strong profits
|
NEW YORK (CNNfn) - A strong quarter at IBM helped Wall Street regain its confidence in the technology sector Thursday and led to a broad market rally that brought the Dow industrials to their second record close in a row.
IBM's solid performance, announced late Wednesday, not only lifted the technology sector but contributed also to a broad market advance, lifting everything from big-name blue chips to small-cap issues.
The Dow Jones industrial average, of which IBM is the heaviest-weighted component, climbed 145.76 points, or 1.4 percent, to 10,727.18, its second record close in a row. Advances edged ahead of declines 1,691 to 1,293 on the New York Stock Exchange, where volume was a boisterous 926 million shares.
The Nasdaq Composite, heavily weighted with IBM's technological compatriots, soared in parallel with the Dow, climbing 72.53 points, or 2.9 percent, to 2,561.61. The S&P 500 index gained 22.71, or 1.7 percent, to 1,358.83.
The market's performance this week, with technology stocks losing heavy ground Monday and taking the rest of the week to recover, prompted Ned Riley, chief investment officer at BankBoston, to say portfolio diversification and a clear long-term perspective are key for individual investors. (986K WAV) or (986K AIFF)
The bond market retreated from early strength, as investors quickly shifted their attention and money to more rewarding stocks. The bellwether 30-year Treasury bond dropped 1-1/32 points in price, for a yield of 5.60 percent.
The dollar, however, remained strong against the euro after climbing to a new record high against the European currency overnight, but slipped against the yen.
Big Blue bolsters stocks
The crown jewel of the rally was IBM (IBM), the world's largest computer maker, which late Wednesday reported first-quarter profits that confounded skeptical outlooks on the technology sector by leaving estimates in the dust.
Shares of IBM opened with a bang and hung on throughout the session, rising 22-7/8, or more than 13 percent, to 194-3/4.
Other computer stocks rejoiced at the sign that outstanding growth in the technology sector was not yet a thing of the past. Dell Computer (DELL) surged 3-7/16 to 41-7/8 and Gateway (GTW), which is supposed to deliver its own quarterly report after the closing bell, rose 3-15/16 to 69-15/16.
But trouble-ridden Compaq (CPQ), which has fed the sector's recent gloom with sagging earnings and a corporate shake-up, eased 9/16 to 23-11/16.
Other technology issues looked to Big Blue, with Microsoft (MSFT) advancing 2-15/16 to 84-15/16, Intel (INTC) gaining 3-1/16 to 61-1/2 and Cisco Systems (CSCO) rallying 5-1/4 to 113-3/16.
Helping solidify the rally, shares of CNET (CNET) soared 13-1/4, or more than 11 percent, to 133 after the Web information and programming provider reported results that beat expectations and declared a 2-for-1 stock split.
Xerox (XRX) hung back, with shares falling 1-9/16 to 58-9/16. The imaging giant confessed to flat revenue and profits that met expectations but provided investors with little buying incentive.
Telecoms mostly in favor
Elsewhere in the market, telecommunications stocks also saw a surge amid solid profits in the sector and news of the largest merger deal in the industry -- a marriage between Deutsche Telekom and Telecom Italia that will amount to $82 billion.
Shares of Lucent Technologies (LU) gained 2-5/8 to 61-3/4 after the telecom manufacturer said its profit doubled in the first quarter as revenue grew 33 percent.
And fellow equipment-maker Tellabs (TLAB) rallied 13-5/16, or almost 13 percent, to 115-7/8 after late Wednesday the company set a 2-for-1 stock split and a goal of tripling its annual revenue by 2003.
The Baltic wireless giants got a more mixed response to their own earnings reports. Finnish Nokia (NOK) saw American depositary receipts surge 2-9/16 to 81-3/16 on its first-quarter profits of 44 cents per share, which beat estimates by nearly 13 percent. Swedish Ericsson (ERICY), however, slipped 1/2 to 25-9/16 after its profits came in at only 6 cents per share, disappointing forecasts of 9 cents.
Finance firms, oil revives
A late morning turnaround in the financial sector was followed by a U-turn in oil shares as well, leaving hardly a niche in the market left out of the rally.
The Dow banks reasserted their upward momentum after an opening bout of weakness, while investors pushed shares of American Express (AXP) up 2-5/16 to 137-3/16 after the company reported earnings that exceeded predictions by a penny a share.
The drillers suffered by comparison, with Chevron (CHV) inching up 2-1/8 to 98-1/2 after the company blamed "severely depressed" oil prices for sliding profits. Even though the numbers came in above Wall Street's gloomiest forecasts, investors still found little reason to cheer.
Shares of Exxon, which reported similarly gloomy results Wednesday, edged 1/2 higher to 61-1/2.
(Click here for a look at today's CNNfn's market movers.)
(Click here for a look at today's CNNfn technology stocks report)
-- by staff writer Malina Poshtova Zang with Robert Scott Martin
|
|
|
|
|
|