Computer and Cable Shares Rally as Dow Loses Ground
U.S. stocks ended mostly higher Friday despite mild profit-taking following a three-day rally.
Meanwhile, Asian markets posted strong gains amid growing optimism that the region’s economic crisis is passing.
On Wall Street, AT&T;’s bold bid for cable operator MediaOne sent the phone giant’s stock tumbling and helped pull the Dow Jones industrial average lower. But technology shares rallied for a fourth day on renewed profit optimism.
The Dow ended down 37.51 points, or 0.4%, at 10,689.67. But for the week it was up 1.9% amid the heaviest New York Stock Exchange volume ever, at 4.78 billion shares.
The Standard & Poor’s 500 index eased 0.1% to 1,356.85 Friday and was up 2.9% for the week.
The tech-heavy Nasdaq composite climbed 29.08 points, or 1.1%, to 2,590.69 on Friday, bringing its gain for the week to 4.3% and leaving it just shy of its record high of 2,598.81 set April 12.
Winners edged losers by 15 to 14 on the NYSE on Friday and by 21 to 17 on Nasdaq, as the market’s advance continued to broaden.
Buyers snapped up major tech stocks for a fourth day, after a rout in that sector on Monday, when the Nasdaq index dove 5.6%.
IBM, continuing to zoom after its bullish first-quarter earnings report at mid-week, gained $5.25 to an all-time closing high of $199.75.
Among other tech giants, Cisco Systems rose $4.19 to $117.38, Microsoft added $1.06 to $86, Apple leaped $2.81 to $39.19 and Dell added $1.13 to $43.
Also, 3Com soared $3.50 to $25.81 on speculation that the computer networker may sell some of its less profitable businesses or be acquired by a large phone-equipment maker.
Cable TV stocks surged in the wake of AT&T;’s surprise $85-a-share offer for MediaOne. The target leaped $7.88 to $77.38. Also gaining: Adelphia Communications, up $2.50 to $63.75, and Cablevision Systems, up $5.88 to $78. Time Warner added $1.25 to $73.
But AT&T; slumped $3.38 to $53.38 amid concerns about earnings dilution if the deal goes through.
The MediaOne bid “is a big bite” for AT&T;, said Tom Hudson, manager of Lord Abbett Affiliated Fund. The acquisition could cut AT&T;’s earnings by an estimated 30 cents a share in the first year.
In Asian trading, Tokyo’s Nikkei-225 index jumped 1.5% to 16,923.25, its highest close since March, 1998, as buyers in Japan also flocked to tech stocks.
Among Friday’s highlights:
* Many Internet stocks ran up again, with Amazon.com jumping $20.06 to $210.38, a record high. Also gaining were Ebay, up $28.13 to $200.13, and Doubleclick, up $4.75 to $147.25. But America Online eased $1.69 to $147.
Also, Priceline.com rose $11.63 to $88 after Goldman Sachs analysts Michael Parekh and Rakesh Sood added it to the firm’s recommended list and said the stock could reach $120 in six to 12 months. The company, which runs a Web site where consumers bid on airline tickets and hotel rooms, has a “unique patented business method,” the analysts said.
* Drug titan Merck fell $2.13 to $75.75 after reporting that first-quarter profit met analysts’ expectations. Some investors were hoping for more, said David Rolfe, chief investment officer at Wedgewood Partners.
* Chock Full O’ Nuts rocketed $3.13 to $9.50 after rejecting a bid by Sara Lee to buy the coffee maker for $10.50 a share, a 65% premium over Chock Full O’ Nuts’ closing price Thursday.
* Among new issues, Statia Terminals, an oil storage company, had a poor debut. Brokerage Bear Stearns brought the stock public at $20, and it sank to $18.38 by the close on Nasdaq. Oil stocks in general were weak on Friday.
Market Roundup, C4
