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Blue chips bail out Wall St.
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February 18, 1999: 5:18 p.m. ET
Bargain hunting lifts the Dow, helps broader market but techs still struggle
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NEW YORK (CNNfn) - Bargain hunters helped the Dow industrials stage a rally Thursday and pulled broader markets higher as well, although concerns about valuations and performance in the technology sector continued to linger in investors' minds, even after several days of drubbing among the high-tech stocks.
The Dow Jones industrial average climbed 103.16 points, or 1.12 percent, to 9,298.63. Advances beat declines 1,758 to 1,221 on New York Stock Exchange trading volume of 745 million shares.
The technology-rich Nasdaq Composite finished up a narrow 11.64 points at 2,260.55 after a morning spent fighting to keep above its opening level, while the broad S&P 500 index gained 13.25 points, or 1.08 percent, to 1,237.28.
Despite a stock market recovery that followed days of selling and wide gyrations, Elaine Garzarelli, president of Garzarelli Capital, said she still is concerned about valuations and sees the market trading "sideways at best" over the near term and possibly retreating another 7 to 9 percent from its current levels. (420K WAV) or (420K AIFF)
Bonds continued their retreat, sliding as investors searching for direction sold into the stock market's strength. The benchmark 30-year Treasury bond fell 24/32 of a point in price, driving the yield up to 5.36 percent.
The dollar remained strong against the Japanese yen but found it difficult to extend its morning gains, while thin euro trading ahead of results from a European Central Bank meeting kept the dollar's rise against the European currency under tight wraps.
Technology struggles
The technology sector fought to regain its confidence after being burned in recent sessions by overvaluation worries spurred by signs of slowing revenue growth for some of the industry's major names.
In the wake of Wednesday's 2.8-percent sell-off, the Nasdaq has dipped 10.1 percent from its all-time high hit Feb. 1, indicating a full-scale correction.
Peter Canelo, investment strategist at Morgan Stanley Dean Witter, said the technology sector could fall even further.
"You broke a very important shelf of support on the Nasdaq, and you're beginning to see an inability of the market to rally," he said. "In the past week we've rallied strongly a number of times, and each time the market has been unable to hold a rally. And that suggests to me that we have to go lower."
The two computer makers held responsible for the week's tech retreat, Dell and Hewlett-Packard, headed in opposite directions Thursday. Dell (DELL) climbed 1-7/16 to 83, while Dow component Hewlett-Packard (HWP) deepened its slide, slipping 3/16 to 67-15/16.
The other major PC manufacturers were likewise mixed, as Compaq Computer (CPQ) dropped 1/2 to 40-1/2 but Gateway (GTW) gained 1-15/16 to 69-1/8.
Dow member IBM (IBM) closed up 3-7/8 at 174-3/8 after announcing early Thursday that it will sell computers that do not use Microsoft software, the current PC operating standard. Instead, the IBM machines will incorporate the relatively unknown Linux operating system.
For its part, Microsoft (MSFT) lagged behind the pack of recovering technology leaders, sliding 4-1/4 to 145-3/4.
Microsoft "has been trading like the company (had already) lost the antitrust case against the government," said Barry Hyman, senior equity analyst at Ehrenkrantz King Nussbaum. "The stock has been extremely weak compared to its sector, and especially since the company has already reported earnings."
Intel (INTC) defied the jitters, surging 3-1/2 to 128-1/8 after previewing its new line of Pentium III computer processors, while networking giant Cisco (CSCO) climbed 1-1/16 to 96-3/16.
Although the Internet sector has backed down from its once-trademark volatility in recent weeks, Broadcast.com (BCST) echoed the Net's halcyon days by soaring 9-15/16 to 68-1/8 -- a 17-percent climb -- on news that Donaldson, Lufkin & Jenrette had recommended the stock as a "buy" and set a price target of $100.
On the mergers and acquisitions front, insurance firm Transamerica (TA) was the New York Stock Exchange's biggest net gainer, leaping 15-1/4, or more than 26 percent, to 72-7/8 after agreeing to merge with Dutch insurer Aegon (AEG) for $10.8 billion, the second-largest insurance merger ever. American depositary receipts of Aegon climbed 5-1/8 to 99-7/8.
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(Click here for a look at today's CNNfn technology stocks report.)
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