A restful holiday weekend was all it took for investors to realize they may have been a tad hasty in bailing out of stock holdings last week. Wall Street was cautiously higher in mid-afternoon trading Tuesday as traders snatched back many of the shares they'd dumped a few days earlier.
Tech stocks were the main attraction as investors looked ahead to Dell Computer and Hewlett-Packard reporting their latest earnings after the closing bell.
The Dow Jones Industrial Average gained 16.48 points to 9291.37, and the Nasdaq Composite Index was up 5.06 at 2326.95 after tumbling almost 3.5 percent on Friday. The S&P 500 rose 8.57 to 1238.70. US financial markets were closed Monday for President's Day.
"These are the kind of gyrations we're going to have to get used to this year," said Arthur Hogan, chief market analyst with Jefferies & Co. "People realized that we were overdone last week. We threw the baby out with the bath water."
Dell (DELL) is a good case in point. The computer maker's stock dropped 12 percent on Friday after BancBoston Robertson Stephens and Salomon Smith Barney both warned that Dell is facing stiffer competition from rivals like Compaq Computer. Many investors took this as a red flag for Dell's future sales.
"Wrong reaction," Hogan said. "The message wasn't that Dell's business is slowing. The message was that Compaq is doing better."
Traders finally figured this out as well. Dell advanced 50 cents to US$90.38 prior to posting its fourth-quarter results. Analysts are expecting profit of 31 cents a share. For its part, Hewlett-Packard (HWP) was $3.25 lower at $73.19 amid anticipation that quarterly income will decline to 83 cents a share from 86 cents a year ago.
The market remained disenchanted with Lycos' pending marriage to USA Networks. Lycos (LCOS), soon-to-be parent of Wired News, shed another $4 to $95.50 as speculation mounted that the deal may collapse unless the portal's shareholders see a higher premium for their stakes. USA (USAI) was 69 cents higher at $38.69.
In other Net news, ETrade Group (EGRP) gained 69 cents to $46.69 after receiving the go-ahead from regulators to enter the asset management business. This will allow the online broker to offer its own line of mutual funds and money market funds. Charles Schwab (SCH), meanwhile, was up $2.44 at $65.13 as it said the number of daily trades at its Web site increased by 65 percent in January to 153,000.
Hard to argue with the combination of a fresh Internet play and a well-established brand name. Prodigy Communications (PRGY) climbed another 27 percent to $44.94 on its third day of trading. Among the old guard, Yahoo (YHOO) slipped $11.19 to $139.81, and Amazon.com (AMZN) was $3.13 lower at $101.38.
America Online (AOL), on the other hand, rose $1.56 to $160.06 after cutting a deal with MCI WorldCom (WCOM) to provide local content from AOL's Digital City guides to subscribers of the telco's new Internet-access service. MCI was up $2.94 at $82.38.
Wal-Mart Stores (WMT), the world's biggest retailer, advanced $3.13 to $87.50 after posting a 21 percent increase in quarterly income to 70 cents a diluted share, topping estimates of 67 cents. And Sharper Image (SHRP), purveyor of life-size Darth Vaders and other such necessities, jumped 9.7 percent to $15.56 after coming through with profit of $1 a share and saying it will expand its online offerings.
Lastly, AMR (AMR), parent of American Airlines, was down 6 cents at $55.06 as its disgruntled pilots miraculously overcame their assorted illnesses and returned to work. The pilots' union being fined $10 million by a federal judge also seems to have hastened their recovery.
