NEW YORK (CNNfn) - Moderate bullishness returned to blue chip stocks in the afternoon Wednesday, lifting the Dow industrials just enough to push the index above its current all-time high and into record territory.
The rest of the stock market remained near unchanged levels, fighting a case of investor reluctance to commit to stocks one way or the other.
Shortly before 1:30 p.m. ET the Dow Jones industrial average rose 64.10 points to 9,757.86, eclipsing its record close at 9,736.08 on March 5. Trading volume on the New York Stock Exchange stood at 477 million shares, with advances outpacing declines 1,547 to 1,266.
Peter Cardillo, stock analyst at Westfalia Investments, said he expects positive inflation fundamentals and renewed strength in the bond market to help the Dow resume its climb and reach 10,000 if not in a week, then by the end of the month.
Cardillo expects the Dow to climb even higher from there, possibly to 10,300-10,500, but the lack of a broad base for the rally could eventually result in a 12 to 15 percent correction in the few large-cap stocks leading the market. (328K WAV) or (328K AIFF)
The Nasdaq Composite inched up 4.87 to 2,397.81 and the S&P 500 index rose 3.90 to 1,283.74. (Click here for a look at today's CNNfn market movers)
The bond market was lower, consolidating after a strong run-up Tuesday and taking some pressure from a weakened dollar. The bellwether 30-year Treasury bond traded 18/32 of a point lower in price for a yield of 5.57 percent.
The dollar succumbed to profit taking after weeks of advances against the yen. Rising Japanese government bond yields and a speech by Federal Reserve Chairman Alan Greenspan that quashed any hopes for an imminent U.S. interest rates hike also weighed on the greenback. The dollar also fell against the euro.
Internet stocks at the helm
Bullish power returned to the Internet sector after Merrill Lynch started coverage of some of the Web's biggest names with "accumulate" or "buy" ratings.
Shares of book seller Amazon.com (AMZN) rose 5-9/16 to 135-1/2 after Merrill initiated coverage of the company with a "near-term accumulate" and "long-term buy" recommendation. Meanwhile, Amazon.com reached a deal with Dell Computer, under which both companies will provide links to each other on their respective Web sites.
Web portal Yahoo! (YHOO), which got the same rating, gained 5-7/16 to 172-3/4.
And America Online (AOL), the world's largest Internet service provider, advanced 2-1/8 to 92-1/4 after being rated near- and long-term "buy."
Investors looking at the rest of the Internet sector were busy deciphering the latest chapter in the takeover battle for Lycos (LCOS) after a Wall Street Journal report suggested CMGI (CMGI) could bid for the company against a standing merger offer from USA Networks (USAI).
Shares of Lycos rallied 13-7/16, or almost 14 percent, to 109-11/16 and CMGI rose 9/16 to 195. USA's stock slipped 9/16 to 37-1/8.
With a 20 percent stake in the company, CMGI already is Lycos' largest shareholder. CMGI Chief Executive and Lycos co-founder David Wetherell gave up his position on the Lycos board Tuesday to devote more time to opposing the USA Networks deal, which he called "inadequate" for Lycos shareholders.
BancBoston Robertson Stephens repeated its "buy" recommendation on Lycos, arguing that "continued confusion surrounding the USAI deal creates compelling risk/reward opportunity for investors." BancBoston's Internet analyst Keith Benjamin believes the Lycos/USA deal is likely to go through, either under the current or renegotiated terms.
Techs in a tight spot
The rest of the high-tech sector gave a mixed performance as concerns about earnings growth once again unnerved investors.
Shares of Intel (INTC), the world's premier PC chip maker, rose 2-11/16 to 118 after several analysts quashed a rumor that the company would issue an earnings warning.
Intel's shares fell Tuesday because of that rumor, after rallying Monday after the company settled an antitrust lawsuit brought against it by the Federal Trade Commission a day before the case was supposed to go to court. Still, a Wall Street Journal report Wednesday suggested the FTC is far from done looking into alleged anticompetitive practices by Intel.
Computer stocks were mostly lower even after the industry received a bullish first-quarter outlook Tuesday by International Data Corp.
Dow member IBM (IBM) eased 1 to 181-3/16, and fellow Dow member Hewlett Packard (HWP) rose 3/4 to 68-7/16. Dell (DELL) eased 3/8 to 43-11/16, Gateway (GTW) fell 2-15/16 to 68-3/8 and Compaq (CPQ) lost 1-3/16 to 31-9/16.
Meanwhile Microsoft (MSFT) dropped 1-1/4 to 160-9/16 after government sources denied Tuesday there had been any talks about an Intel-like settlement of the broad antitrust lawsuit against Microsoft.
Oil heats up
Among the day's gainers, big name oil stocks benefited from a surge in world oil prices after Arab oil producers from the Persian Gulf said they would support production cuts in an effort to curb lingering oversupply in world markets.
Among the Dow components, Chevron (CHV) rallied 3-3/8 to 83-5/16 and Exxon (XON) climbed 2-3/8 to 72-5/16.
In the oil services industry, shares of Schlumberger (SLB) were up 2-5/8 to 57-15/16.
Banks fail to follow
U.S. financial stocks showed very limited signs of excitement over news that Banque Nationale de Paris has launched a surprise $37 billion takeover bid for rivals Societe Generale and Paribas, the largest hostile offer in French corporate history. Societe Generale and Paribas are involved in talks to merge with each other.
Among the Dow components, shares of Citigroup (C) climbed 7/8 to 63-3/8 after Morgan Stanley Dean Witter raised its earnings estimates for the company to $3.65 a share from $3.60 a share in 1999.
American Express (AXP) slipped 1/8 to 118-1/8 and J.P. Morgan (JPM) advanced 1-15/16 to 118-5/16. 
-- by staff writer Malina Poshtova Zang
|
