Tech Stocks Lead Indexes Higher; Bond Yields Rise
Technology stocks paced a broad market rally Monday as the Nasdaq composite headed back toward 4,000.
The index rose 97.42 points, or 2.5%, to 3,958.08, while the Dow Jones industrial average rallied 77.87 points, or 0.7%, to 10,811.78.
Broader stock indicators also rose: The Standard & Poor’s 500-stock index gained 1.1%, and the Russell 2,000 index of small companies rallied 2.5%.
Investors continued to snap up many tech shares that had been hammered in the March and April market downturn. Earnings growth remains the major attraction, analysts say.
Ciena, a designer of telecommunications networks whose per-share earnings are expected to grow an annualized 33% over the next three to five years, jumped $16.44 to $140.06.
Online information center About.com, which reported a smaller-than-expected quarterly loss Friday, rose $15.31 to $49.63.
“Technology has taken back market leadership with a vengeance,” said Joseph V. Battipaglia, chief investment strategist with Gruntal & Co. in New York. “We washed out the market in April, and now investors are looking for stocks with strong earnings growth. That means tech stocks.”
In the Dow index, computer maker Hewlett-Packard rose $4 to $139, while embattled Microsoft gained $3.69 to $73.44.
The market’s breadth was strong, with winners topping losers by nearly 2 to 1 on the New York Stock Exchange and 5 to 3 on Nasdaq.
But slow trading volume has many analysts wondering just how much conviction there is in this rebound.
Outside the tech sector, merger activity stimulated trading.
Rexall Sundown rose $4.19 to $23.44 after Dutch specialty foods company Numico agreed to acquire it for $24 a share. Shared Medical Systems leaped $29.06 to $70.50 after Germany’s Siemens agreed to buy it for $73 a share.
In the bond market many investors continue to flee intermediate-term Treasury securities, fearing that the economy’s strength guarantees a half-point rate increase by the Federal Reserve on May 16.
The yield on the 2-year Treasury note rose to 6.72% from 6.70% on Friday and now is the highest since the mid-1990s. The yield on the 10-year T-note surged to 6.28% from 6.22%.
Among the day’s highlights:
* The Amex biotech index rallied 7% as the volatile sector maintained its momentum. Celera jumped $16.25 to $99, Genentech surged $9 to $129, Millennium Pharmaceuticals advanced $13.13 to $92.50, Maxygen climbed $19.06 to $60.88, Diversa rose $9 to $36 and Myriad Genetics zipped $17.63 to $82.
* Internet shares continuing to rebound included Inktomi, up $10.69 to $164.63; Redback Networks, up $7.63 to $87; and Marketwatch.com, up $5.56 to $20.63; and TheStreet.com, up $1.38 to $7.69.
* Financial services stocks bounced back from Friday’s slump. Citigroup gained $1.31 to $60.31, Merrill Lynch jumped $5.94 to $107.88 and Charles Schwab rose $1.13 to $45.63.
* Safeguard Scientifics climbed $7.63 to $49.75 after the venture capital firm said it got $50 million from Compaq Computer and $50 million from IBM to help fund Internet infrastructure investments.
* Playtex Products gained $1.25 to $12.06 as the maker of feminine-care products offered to buy back up to 10 million shares for as much as $180 million. The stock has fallen by a third in the last year.
* Pac-West Telecomm rose $4.22 to $25.59 after reporting first-quarter net income of 6 cents a share, contrasted with a loss of 3 cents a year earlier.
* Administaff climbed $6.25 to $46.50 after reporting a narrower-than-expected first-quarter loss of 18 cents a share.
* Among Southern California companies, Flamemaster catapulted $4.75 to $11.63; Homestore.com jumped $4.63 to $22.88 on its America Online alliance; MP3.com bounced back $1.41 to $8.41; and ValueClick surged $2.19 to $15 after the Web advertising company was rated “strong buy” in new coverage by Wit SoundView.
But Launch Media sagged $1.31 to $9.13; Mead Instruments sank $6 to $67.13; and Day Runner dropped $1.25 to $3.88 after a 1-for-5 reverse stock split took effect.
Overseas, Japan’s Nikkei stock average rose 2.4%.
Most other major markets worldwide were closed for May Day.
Market Roundup, C17-18
