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Techs fall, Dow leaps
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May 3, 1999: 1:47 p.m. ET
Ice breaks under Internet sector, splashing cold water on the Nasdaq
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NEW YORK (CNNfn) - Wall Street once again found itself caught between sharply opposed forces Monday as the Dow industrials pushed back into record territory but a sell-off in the Internet sector drove the Nasdaq deeper into the red.
Shortly before 1:30 p.m. ET the Dow Jones industrial average climbed 127.14 points to 10,916.18. On the New York Stock Exchange, market breadth remained positive with gainers leading losers 1,831 to 1,036, while volume touched 456 million shares.
The Nasdaq Composite doubled back again, falling 20.28 points to 2,522.57, The S&P 500 index gained 5.22 to 1,340.40. (Click here for a look at today's list of CNNfn's market movers.)
Analysts said the morning release of the National Association of Purchasing Management's index for April lent the market an immediate bounce, cooling fears of uncontrolled U.S. economic growth ahead. The index, a key indicator of manufacturing activity, came in at 52.8, significantly under consensus forecasts of 55.
The bond market essayed a cautious recovery in the NAPM's wake, but the absence of fresh reasons to buy soon left bonds adrift again. The bellwether 30-year Treasury bond eased 2/32 of a point in price, pushing the yield up to 5.66 percent.
The dollar languished in narrow trading ranges, barely moving against the euro but gaining narrow strength against the yen. Markets in Tokyo and London were closed Monday for holidays.
Rate relief
In the stock market, financial issues regained their balance as the NAPM news encouraged investors to dip back into the interest-rate sensitive banking sector, soothing fears that the economy's robust growth eventually will generate inflation and rising rates.
Among the Dow components, shares of American Express (AXP) gained 11/16 to 131-3/8 after an unsteady start, while J.P. Morgan (JPM) rose 1-5/8 to 136-3/8. Citigroup (C) stayed in the red, slipping 1 to 73-7/8.
Manufacturing stocks, likewise sensitive to broad economic trends, also took the high ground as investors pumped money out of the technology sector and into cyclical stocks.
On the Dow, Minnesota Mining & Manufacturing, or 3M (MMM), led the way, with shares surging 5-9/16 to 94-9/16. International Paper (IP) leapt 2-7/8 to 56-3/16, Goodyear Tire (GT) climbed 2-11/16 to 59-7/8, and Boeing (BA) rose 1-5/16 to 41-15/16.
Oil stocks kept pace, surging in response to firming crude prices and investors' reaction to Atlantic Richfield's (Arco) first-quarter profits, which came in weaker but still nearly double estimates. Arco (ARC) shares edged up 11/16 to 84-5/8, while on the Dow Exxon (XON) jumped 2-5/16 to 85-3/8 and Chevron (CHV) climbed 1-7/8 to 101-5/8.
Internet in retreat
Although the big banks quickly recovered their footing, the morning's rate jitters aggravated worries that the growth-oriented technology sector may be too richly valued, keeping tech stocks subdued. On the Dow, shares of computer maker IBM (IBM) eased 11/16 to 208-1/2, but Hewlett Packard (HWP) edged up 11/16 to 79-9/16.
Shares of Microsoft (MSFT) slipped 1-15/16 to 79-3/8, while Cisco (CSCO) shed 1-11/16 to 112-3/8.
The rekindled valuation concerns were particularly cruel to the Internet sector, which is especially susceptible to such worries because Net stocks can command high prices for minimal profitability. Amazon.com (AMZN) shares fell 19-3/16 to 152-7/8, Yahoo! (YHOO) lost 9-7/16 to 165-1/4 and CMGI (CMGI) tumbled 14-1/16 to 240-1/2.
One online standout, community provider theglobe.com (TGLO), saw its shares climb 2-3/16 to 62-1/4, narrowly defying the downward trend after it reported a widening quarterly loss but still managed to beat Wall Street's gloomiest forecasts.
Burgeoning tie-ins
Otherwise, investors found attraction in telecommunications and cable stocks after cable power MediaOne (UMG) accepted a $58 million takeover offer from long-distance giant AT&T (T), spurning a smaller bid from cable rival Comcast (CMCSK). Comcast was given until Thursday to respond with a higher offer of its own.
Shares of AT&T, a Dow component, rose 11/16 to 51-3/16. MediaOne slipped 2-1/16 to 79-9/16 and Comcast rose 2 to 67-11/16.
An increased takeover bid, meanwhile, helped lift shares of VLSI Technology (VLSI) after the computer chip maker received a higher offer from Philips Electronics (PHG). VLSI shares rose 1-29/32, or more than 10 percent, to 20-25/32, while American depositary receipts (ADRs) of Philips climbed 2-7/8 to 88. 
-- by staff writer Malina Poshtova Zang with Robert Scott Martin
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