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Big Blue boost for Wall St.
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May 13, 1999: 11:35 a.m. ET
Optimistic outlook at IBM kicks Dow into higher gear, lifting Nasdaq as well
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NEW YORK (CNNfn) - IBM was one of the prime movers on Wall Street Thursday, intoxicating investors with its bullish outlook on the future, while economics-oriented traders found benign inflation data reason enough to push stock prices higher.
Shortly before 11:30 a.m., the Dow Jones industrial average, of which IBM is the most heavily weighted component, had leapt back into record territory, up 95.94 points at 11,096.31. Advances trounced declines 1,674 to 984 as 274 million shares changed hands on the New York Stock Exchange.
The Nasdaq Composite climbed 22.47 to 2,629.01 and the S&P 500 index rose 8.09 to 1,372.09. (Click here for a look at today's list of CNNfn's market movers.)
The bond market rallied, celebrating the latest economic reports that clearly showed inflation is not yet a serious threat to economic growth. The bellwether 30-year Treasury bond surged 26/32 of a point in price, lowering the yield to 5.76 percent.
The dollar, also taking its cue from the latest inflation data and the bond market rally, gained solid ground against both the yen and the euro.
Bright future for Big Blue
In the stock market, investors showed a big interest in the shares of IBM (IBM) after the computer giant took advantage of Wednesday's analyst meeting to forecast solid growth and sustained revenue gains in the future.
The news appeared encouraging enough for Merrill Lynch to raise its stock price projection for the stock to $270 a share and reiterate the company's "buy" rating. CS First Boston also held firm on its recommendation to "buy," while investors followed through, pushing shares up 16 to 241-1/2.
Fellow Dow technology component Hewlett Packard (HWP) joined in the joy, advancing 3-1/8 to 86-3/8.
The lift spread into other leading technology issues, many of which are traded on the Nasdaq. Microsoft (MSFT) gained 5/8 to 81-1/8, Cisco Systems (CSCO) climbed 1-3/4 to 120-1/4 and Dell Computer (DELL) was up 15/16 at 44-7/8.
Software maker Oracle (ORCL) abstained from the rally, falling 1-13/16 to 23-1/2 amid general uncertainty going into its own analyst conference.
Slipping third-quarter sales and a slow business climate encouraged Morgan Stanley to lower Oracle's 1999 earnings forecast. Meanwhile, NB Montgomery analyst Bob Austrian blamed receding Y2K pressures for weakness in the database giant's enterprise software business, its primarily revenue stream.
Elsewhere in the market, shares of ConAgra (CAG) climbed 1-9/16 to 26-3/16 after the company, the second-largest U.S. food processor, said it would slash 7,000 jobs, or 9 percent of its workforce, as part of a major reorganization.
Trucker J.B. Hunt (JBHT) suffered after announcing that April revenue didn't live up to expectations, although the company stressed that it remains too early to tell how dramatically the disappointment will affect second-quarter earnings. Shares of the Dow transports component fell 2-31/32, or nearly 13 percent, to 19-15/16.
Finally, shares of little known Matrix Pharmaceutical (MATX) soared more than 160 percent, or 4-3/8, to 7-3/32 on news the Food and Drug Administration has granted fast-track approval status to a treatment the company makes for head and neck cancer.
-- by staff writer Malina Poshtova Zang
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