It didn't take much to get stocks soaring Thursday -- only a US$16 billion partnership between two of the biggest names in the tech world.
Wall Street latched onto news of a pact between Dell Computer and International Business Machines as just the medicine it was looking for to cure a chronic case of rate-hike blues. While the market could very well experience a relapse on Friday when the latest employment data is announced, investors seem more than content to forget their worries for at least a while and push top-drawer share prices higher.
The Dow Jones Industrial Average rose 141.26 points to 9417.14 in mid-afternoon trading, and the Wired Index was 3.89 higher at 577.14. The Nasdaq Composite Index gained 15.67 to 2280.87, and the S&P 500 was up 11.75 at 1239.45.
Adding to the market's upbeat mood was word from the US Commerce Department that new orders for factory goods increased 1.7 percent in January to an almost $350 billion annual rate -- a record high. While this should have fueled traders' anxiety that the Fed will put the brakes on all this growth with an uptick in interest rates, the January rise was in fact a tad less than had been expected, which eased fears of higher inflation in the bond market.
As bonds found their footing, stocks were able to return to their usual headline-driven volatility.
"Investors were looking for any good news," said Jim Penhune, an analyst with the Yankee Group. Dell and IBM certainly fit the bill. "This will help IBM in the consumer space, where they've been weak," Penhune observed, "and it will help Dell with services."
Traders agreed. Dell (DELL) advanced $2 to $82.94, and IBM (IBM) was $7.69 higher at $174.44. Under terms of the seven-year accord, Dell will purchase billions of dollars worth of networking, storage, microelectronics, and display equipment from IBM. There will also be cross-licensing of patents and, perhaps most intriguingly, cooperation on development of future products.
For both companies, the alliance fills in gaps in their respective operations, and should serve to make each a more formidable player in the computer industry. Not surprisingly, Compaq Computer (CPQ) slipped 50 cents to $33.38, and Hewlett-Packard (HWP) was down 88 cents at $67.94.
If any rival PC maker is endangered by Dell and IBM getting cozy, it's Gateway (GTW), which has struggled to stay ahead of the curve as the rest of the industry figured out the direct-sales business model. "Gateway has been feeling the heat for a while now," Penhune said, adding that the Dell-IBM partnership won't make things any easier for the firm. Gateway's stock slid 38 cents to $68.75.
On the chip side, Micron Technology (MU) climbed $2.25 to $54.88 as its shares were upgraded by Gruntal & Co. to "strong buy" from "buy." Intel (INTC) rose 6 cents to $114.75, and Advanced Micro Devices (AMD) was unchanged at $18.13.
And from the Great White North comes the moose call of a merger between AT&T Canada and local phone company MetroNet Communications. America's AT&T (T), which owns a third of its Canadian cousin, gained $1 to $84.38.
