Tech and Internet stocks set a blistering pace Monday as investors smiled on surprisingly strong numbers for first-quarter computer shipments. The broader market fell over its feet trying to stay in step.
The Nasdaq Composite Index jumped 61.44 points to close at a record 2652.13, and the Wired Index was 11.18 higher at 683.09. Much of those gains stemmed from a pair of stat factories, International Data Corp. and Dataquest, reporting that the PC market is doing a whole heck of a lot better than people had thought, with demand for new machines rising as prices keep on falling.
The Dow Jones Industrial Average rose 28.92 to 10718.59 after being stuck in the minus column for much of the day. The blue-chip index was hobbled by Union Carbide warning of uncertain second-quarter prospects, and by doubts surrounding drugmaker Merck's future growth. The S&P 500 was up 3.19 at 1360.04.
"The world at large recognizes that the reason we don't have inflation is the productivity enhancing impact of information technology spending," said Ulric Weil, an analyst with Friedman, Billings, Ramsey. "The first inkling that this is not going to continue -- bad news. But for right now, it's a Goldilocks world of low inflation, low unemployment, and people having lots of money."
Investors are rewarding favorite tech outfits for putting all that porridge on the table. International Business Machines (IBM), which has been riding the up escalator since reporting white-hot earnings last week, advanced US$9.56 to $209.31 on word that the company is now mulling a higher dividend and a stock-buyback plan. Dell Computer (DELL) climbed $1.81 to $44.81, and even struggling Compaq Computer (CPQ) managed to ascend 69 cents to $23.81.
"Is it wishful thinking?" Weil asked. "Not against the macroeconomic environment. But for companies specifically, there's the issue of Y2K spending and PC profitability. That's another matter."
Even so, investors were little concerned about the same worries that caused the Nasdaq to plunge more than 5 percent a week ago returning for an encore performance. Wall Street probably suffers from the world's single worst case of attention-deficit disorder. But for right now, and for the foreseeable future, tech stocks once again can do no wrong.
Netwise, online brokers were among the hot picks as US Bancorp Piper Jaffray revealed that electronic stock trading rose 49 percent over the past three months to nearly 500,000 transactions a day. ETrade Group (EGRP) appears to have been the engine for a good deal of that growth, and its stock vaulted 15 percent to $120 on news that it now boasts 1 million accounts. Similarly, Ameritrade (AMTD) rose $14.13 to $141.13, and Charles Schwab (SCH) was 75 cents higher at $121.44.
Investors will be paying close attention this week as some of the biggest names on the Net post their latest results. America Online (AOL) gained $12.81 to $159.81 on hopes that the world's fattest online service will report profit of at least 9 cents a share on Tuesday, while Amazon.com (AMZN) slipped $2.31 to $207.81 amid anticipation of a widening quarterly loss of 29 cents on Wednesday.
EBay (EBAY) was slated to open its books after the market closes, and first-quarter income of 2 cents a share was expected. Separately, the online auctioneer was up $8.88 at $209 on word that it will add some cachet to its offerings by purchasing the venerable Butterfield & Butterfield auction house for $260 million. Should be interesting to see how well vintage port goes with Pez dispensers.
For its part, Priceline.com (PCLN) soared 37 percent to $120.75 as a trio of securities houses began coverage of the company with hugely optimistic ratings. Goldman Sachs let its upbeat assessment out of the bag early on Friday, and it's now been joined by favorable reviews from Morgan Stanley Dean Witter and Warburg Dillon Read. Priceline iced the cake by saying more than a million customers have sought out discount airline tickets and hotel rooms at the company's site over the past year.
Oh, and speaking of fun Internet stocks, let's not overlook that e-commerce dynamo 800-JR Cigar (JRJR), which leaped 18 percent to $9.13 as it began selling stogies online. (Do the day traders have too much time on their hands or what?)
AT&T (T) slipped 44 cents to $52.94 as it looked like a bidding war might erupt for cable firm MediaOne Group. Prior to AT&T's unsolicited offer last week, Comcast had its own marriage proposal pending. Now Comcast my be gearing up for a counteroffer. MediaOne (UMG) benefited from all the attention, advancing $1.44 to $78.81, while Comcast (CMCSA) was $1.56 lower at $64.25.
Cable & Wireless (CWP) gained $2.94 to $44.63 as rival telco Global Crossing agreed to acquire C&W's underwater-cable subsidiary for almost $900 million. Cable & Wireless said the deal "is in line with our increasing focus on the operation of communications networks, in particular data and the Internet." Global Crossing (GBLX), which is busy expanding its own worldwide network, was up $3.44 at $56.31.
In finance, Everen Capital (EVR) climbed 18 percent to $28.44 on news of its purchase by First Union for $1.1 billion. Everen CEO James Boris gave his new employer a big wet one by saying that "First Union is the finest partner we could have in the rapidly consolidating financial services industry." First Union (FTU) fell $1.44 to $53.56.
Lastly, cruise-ship operator Carnival (CCL) sank $3.44 to $43.75 after announcing that Mediterranean bookings are down because of the war in Yugoslavia, and warning that this could cut into full-year earnings.
First all those refugees, and now this. Milosevic sure has a lot to answer for.
