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Strong ending on Wall St.
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May 5, 1999: 5:08 p.m. ET
Stocks recover from early slump as profit taking ends, inflation fears ease
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NEW YORK (CNNfn) - What started as a sell-off on Wall Street ended in a rally Wednesday. Investors renewed their appetite for stocks as fears about interest rates seemed to abate amid a steadier performance by the bond market.
The Dow Jones industrial average retraced its steps from a more than 110-point loss in the morning, to finish the day 69.30 points higher at 10,955.41. By the end of the trading session, gainers reclaimed the lead from losers, edging ahead 1,549 to 1,432 as 899 million shares traded on the New York Stock Exchange.
The Nasdaq Composite also recovered from a morning dive, rallying 49.25 points, or almost 2 percent, to 2,534.37. The S&P 500 index climbed 15.31, or 1.2 percent, to 1,347.31.
Reflecting on the market's shifting performance, Charles Pradilla, chief investment strategist at SG Cowen & Co., said the recent rotation into cyclical and out of growth stocks has created a lot of volatility on Wall Street. (332K WAV) or (332K AIFF)
Wall Street's recovery came partially as a result of the afternoon release of the Federal Reserve's beige book -- an economic survey compiled by the regional Federal Reserve banks and published eight times a year. The beige book seemed to soothe worried stock market investors' fears that the central bank may be considering an interest-rate increase.
The beige book had little effect on the bond market, however, as it thrashed about, vacillating as investors searched for direction after Tuesday's steep sell-off. Caught between the encouraging terms of the Treasury's upcoming refunding auction and stronger-than-expected factory orders data, the benchmark 30-year Treasury bond ended 3/32 of a point higher in price for a yield of 5.70 percent.
The dollar remained helpless against a resurgent euro and gave up its morning strength against the yen.
Finance recovers
In the stock market, shares of banks and other interest-rate sensitive companies recovered from an early sell-off as the bond market stabilized even as yields remained at their highest levels in months.
Dow investment banker J.P. Morgan (JPM) anchored the sector's resistance, with shares rallying 5-1/2 to 139. The other Dow financial firms joined in late in the day. Citigroup (C) rose 1/2 to 72-3/4, while American Express (AXP) added 2-1/4 to 129-3/8.
Deal of the day
Investors found more bullish inspiration in news that telephony giant AT&T (T) and cable provider Comcast (CMCSK) had agreed to divide mutual takeover target MediaOne (UMG) between them, avoiding a potentially costly bidding war.
Shares of AT&T, a Dow component, surged 5-1/4, or more than 10 percent, to 56-13/16. Comcast gained 9-3/16, or more than 14 percent, to 73-5/16, while MediaOne lost 5/8 to 77.
Under the terms of the agreement, Comcast will not bid for MediaOne in exchange for a $1.5 billion kill fee and 2 million cable subscribers from MediaOne, AT&T and recent AT&T acquisition Lenfest Communications. The arrangement allows AT&T's $58 billion buyout of MediaOne to go ahead.
Networking stocks punished
Elsewhere in the market, shares of networking-equipment companies suffered amid concerns about earnings in the sector as well as potential antitrust problems for Network Solutions (NSOL).
Shares of Network Solutions fell 1-5/16 to 68-3/16 following the revelation that the company, which until recently had an exclusive contract to distribute Internet domain names, is the subject of a Justice Department antitrust probe.
Meanwhile, Canadian Newbridge Networks (NN) tumbled 8-1/16, or almost 22 percent, to 28-3/4 after the company warned late Tuesday that its fourth-quarter earnings would fall significantly short of expectations.
Similar problems plagued the stock of Autodesk (ADSK), which plunged 4-15/16, or more than 17 percent, to 23-9/16 after the software maker warned its first-quarter results will come in below expectations.
And Nextel Communications (NXTL) slid 1-3/16 to 35-7/8 amid reports MCI WorldCom (WCOM) has dropped negotiations to acquire the company. MCI's stock gained 6-11/16 to 89-5/8.
Among other technology players, shares of networking superstar Cisco (CSCO) bounced 2-11/16 higher to 110-31/32 and Microsoft (MSFT) rose 1-1/16 to 79-1/8. Dow computer maker IBM (IBM) inched up 5/16 to 212-5/16, while rival Dell (DELL) rose 1/2 to 41-5/16 and Gateway (GTW) gained 5/8 to 66-5/8.
(Click here for a look at today's list of 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
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