NEW YORK (CNNfn) - A strong bounce back in the technology sector managed to spill over into the rest of Wall Street in late trading Thursday, leading the Dow industrials to their first positive close in three days.
But concerns over second-quarter corporate earnings and the economic problems of Southeast Asia, along with weakness in the bond market, continued to overshadow stock prices.
The Dow Jones industrial average climbed 66.76 points to close at 8,870.56. Gainers outnumbered losers 1,628 to 1,245 as trading volume reached 574 million shares on the New York Stock Exchange.
The Nasdaq Composite rose 27.64 points, or 1.59 percent, to 1,769.95 and the S&P 500 index finished 12.10 points, or 1.12 percent, higher, at 1,094.83. (Look here for the performance of widely held stocks.)
Although stock prices managed to bounce back Wednesday, Michael Holland, chairman of Holland & Co., said he expects the bull market to face a bumpy ride ahead. (368K WAV) or (386K AIFF)
The bond market finished lower, hurt by a surprise interest rate increase by the Bank of England. U.S. trading was quiet, with many investors keeping to the sidelines ahead of Friday's May employment report and ignoring the day's own economic data. The benchmark 30-year Treasury bond fell 17/32 of a point in price, for a yield of 5.81 percent.
The dollar traded in narrow ranges against both the German mark and the Japanese yen, finishing lower against the mark, but slightly higher against the yen.
When rumors come true
Market speculators, who had predicted that DSC Communications (DIGI) would be the next takeover target in the telecommunications industry's drive to consolidate, found themselves rewarded Thursday after news came out that DSC will be bought by French Alcatel (ALA) in a $4.4 billion stock deal.
DSC shares, the most active stock on the Nasdaq, jumped 7-13/16, or more than 39 percent, to 27-1/2 on the news. The stock rose Wednesday on speculation that the telecom equipment maker could be next in line for a takeover after the $7.1 billion merger between Ciena (CIEN) and Tellabs (TLAB). Alcatel's American depositary receipts fell 4-3/8 to 39-1/16.
Other telecommunications issues were mixed, with Lucent (LU) up 2-5/8 to 72, but Northern Telecom (NT) off 1/2 to 62-1/16. Bay Networks (BAY), another rumored takeover target, gained 3-1/16 to 31 and was the most active stock on the Big Board.
Also rising on speculation of a possible merger bid, shares of Integrated Circuits (ICST) jumped 2-5/8, or more than 21 percent, to 15 on rumors Texas Instruments (TXN) may be interested in buying the company. Integrated Circuits said it was not engaged in merger talks with Texas Instruments.
But it was big-name technology stocks that once again ruled over the direction of the entire market, with Intel (INTC) springing back from a late sell-off, rising 2-1/4 to 68-3/16. Shares of the world's largest computer chip maker plummeted in late trading Wednesday, cutting short a technology sector recovery rally and hurting the rest of Wall Street after a Hambrecht & Quist analyst cut his earnings estimates for Intel, prompting speculation that a profit warning from the company might follow. Intel however, said its second-quarter outlook remains unchanged.
Other high-profile technology issues bounced back with a vengeance, with Dell (DELL) rising 4-1/4 to 84-1/2, and Dow component IBM (IBM) gaining 2-3/16 to 116-1/16. Microsoft (MSFT) rose 1-3/4 to 86-1/16.
In other news, shares of Northwest Airlines (NWAC) tumbled 2-13/16 to 39-13/16 after the company warned that second-quarter results will be sharply lower than earnings from a year earlier. The airline blamed labor problems and the weakness of the Asian economy.
Other airline shares were mixed, with AMR (AMR), the parent of American Airlines, inching up 7/8 to 155-3/16, Delta Air Lines (DAL) gaining 13/16 to 117-1/2, and UAL (UAL), the parent of United Airlines, down 3/16 to 77-5/8. The Dow transports index rose 11.94 to 3,302.52.
Finally, oil stocks benefited from news that three major producers are planning to cut output. Shares of Dow member Chevron (CHV) rose 1-3/16 to 80-1/8 and Dow component Exxon (XON) gained 1-5/16 to 70-5/16.
-- by staff writer Malina Poshtova Zang
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