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Dow takes its time with rally
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March 15, 1999: 1:45 p.m. ET
Milestone remains elusive amid investor caution, despite broad market strength
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NEW YORK (CNNfn) - The race for Dow 10,000 continued in afternoon trading Monday, as an outpour of merger activity, along with renewed strength in the tech sector fueled a broad rally on Wall Street.
But investors showed signs of uncertainty near the day's highs, preventing the run toward the milestone from being a straight line.
Shortly before 1:30 p.m. the Dow Jones industrial average rose 61.89 points to 9,938.24, shrinking the distance to the five-figure milestone. Advancing stocks outpaced declines 1,426 to 1,381 as 433 million shares changed hands on the New York Stock Exchange.
Reflecting the market's caution and speculation among some investors that Dow 10,000 could turn into a sell signal, Greg Kuhn, stock market analyst at Kuhn Asset Management said, the market faces a greater downside risk, especially over the longer term.
"To me, 10,000 is really inconsequential, because looking at the bigger picture, I think going over the next six months the bigger risk will be to the downside," Kuhn said.
He was countered by Robert Froehlich, market analyst at Scudder Kemper Investments, who still thinks Wall Street can advance beyond 10,000.
"This movement to 10,000 isn't just about a 1,000 point move. The significance of this move is that we came back from the dead and 7,640 on Labor Day and now we are about to cross 10,000," Froehlich said. "... I still think this market can march forward."
The Nasdaq Composite rallied 32.34, or 1.4 percent, to 2,413.87 and the S&P 500 index was 8.75 points higher at 1,303.34. (Click here for a look at today's CNNfn market movers)
The bond market was mostly lower, weighed down by weakness in the dollar, which dropped to its lowest level against the Japanese yen in a month. The benchmark 30-year Treasury bond was down 4/32 of a point in price for a yield of 5.53 percent.
The dollar fell against the yen as investors shifted money back into Japan ahead of the country's fiscal year end at the end of March. The dollar also moved lower against the euro, pressured by some strong German economic data.
Financials take the lead
Much of the stock market's Monday performance was driven by a heavy dose of alliances and mergers in industries as varied as finance, chemicals and natural gas.
News that BankBoston (BKB) and Fleet Financial Group (FLT) are joining forces in a $16 billion deal sent BankBoston shares up 9/16 to 47-1/2 but the stock of Fleet fell 2-3/8 to 42-3/8. The news got mixed reception among Wall Street experts: NationsBanc Montgomery Securities upgraded both BankBoston and Fleet to "buy" from "hold," but PaineWebber downgraded BankBoston to "neutral" from "buy."
The merger helped lift other banking and financial stocks, with BankAmerica (BAC) rising 7/16 to 72-11/16 and Dow member J.P. Morgan (JPM) advancing 2-13/16 to 124-13/16.
Meanwhile, in another niche of the financial services industry, brokerage Donaldson, Lufkin & Jenrette (DLJ) shot up 3-7/16 to 67-7/16 after the company's online arm was ranked No. 1 in a survey by Barron's this weekend. Morgan Stanley Dean Witter 's (MWD) Discover online brokerage came in second, and the company's stock rose 1 to 102-1/8. Salomon Smith Barney raised its 12-month stock price target for Morgan Stanley to $115 a share from $100, citing low valuation.
Merger machine churns again
Elsewhere in the day's news, shares of Dow component DuPont (DD) slipped 1-9/16 to 56-3/16 on news the chemical giant is paying $7.7 billion for seeds producer Pioneer Hi-Bred International (PHB). Pioneer's stock gained 3-9/16, or more than 10 percent, to 37-7/8.
In the natural-gas business, shares of El Paso Energy (EPG) fell 2-1/2 to 32-3/16 following news the company is buying Sonat (SNT) in a $6 billion stock and debt deal. Trading in Sonat's stock was delayed.
Meanwhile, in the high-tech sector, shares of Netscape (NSCP) climbed 5-1/8 to 90 after the Justice Department Friday cleared the way for the browser-maker/Web portal to merge with online service giant America Online (AOL). AOL's stock gained 4-3/16 to 100-5/16.
And shares of CMGI (CMGI), which is itself a major player in the ongoing merger of Lycos (LCOS) and USA Networks (USAI), shot up 18-1/4 to 182-1/4 on news the company will replace Netscape in the Nasdaq 100 index.
Transports head to higher ground
Transportation stocks perked up as well, after UAL (UAL), the parent of the nation's largest carrier, United Airlines, said it will beat earnings expectations for both the first quarter and the entire year, due partly to last month's pilot unrest at rival AMR 's (AMR) American Airlines.
UAL's shares rallied 5-1/16 to 72-1/8, the biggest net gainer on the NYSE.
Shares of AMR rose 3 to 61 and Delta Air Lines (DAL), the third-largest airline, shot up 2-5/8 to 66-5/8.
The Dow transports index soared 79.79 points, or 2.4 percent, to 3,347.30.
Techs join the rally
Technology stocks, which last week lagged the broader market and contributed to the Dow's interrupted climb toward 10,000, found new buyers Monday and helped the rest of Wall Street work its way toward new higher ground.
Among the sector's leaders, Dow component IBM (IBM) rose 13/16 to 178-13/16, and fellow Dow 30 member Hewlett Packard (HWP) advanced 2 to 71.
HP is part of a broad alliance that includes giants Microsoft (MSFT), Intel (INTC) and Canada's Nortel (NT) and is expected to be announced this afternoon. The group will work to create telecommunications networking equipment products in direct competition with Cisco Systems (CSCO) and other established players in the field.
Microsoft's stock rose 3-1/4 to 163-7/16, Intel eased 1/2 to 117-3/4 and Nortel's American depositary receipts rose 1-9/16 to 60-3/8. 
-- by staff writer Malina Poshtova Zang
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