Big news in the technology sector brought stocks roaring back to life, driving the Dow Jones industrial average up more than 2 percent for the day.
Investors were energized by a $16 billion deal between Dell Computers and International Business Machines, and drove up the stocks off both companies as well as other technology giants.
The technology-laden Nasdaq composite index jumped 27.69, or 1.22 percent, to 2,292.89.
“I think there’s some euphoria in the market,” said Charlie Henderson, chief investment officer at Chicago Trust. “Investors are already expecting positive earnings surprises next month. I feel we should be expecting negative announcements, just the opposite of what the market expects.”
The most actively traded stocks were all in the technology sector. 3Com added 7/16 to 25 on volume of 23.25 million shares. Cisco, a big loser earlier in the week, jumped 31/8 to 981/4. Oracle, which also lost ground earlier in the week, regained 13/8 to 363/8 yesterday. Microsoft, the world’s biggest software maker, climbed 25/8 to 1521/4.
Retail stocks also gained, in response to a report showing February same-store sales jumped 7.6 percent, higher than expected.
Wal-Mart, which did even better with a 10-percent gain in same-store sales last month, rose 2 to 893/8. The company anounced a 2-for-1 stock split after the market closed. Ann Taylor rose 23/4 to 413/4 after reporting a sales increase of 21 percent.
The Dow jumped 191.52 to 9,467.40. The S&P 500 index advanced 18.94, or 1.54 percent, to 1,246.64.
The bond market was quiet before today’s jobs report, which should indicate how fast the economy is growing. The 30-year Treasury bond was little changed at 9321/32, leaving its yield at 5.70 percent, though it had risen to 5.72 percent, the highest since July 29, earlier in the day.
Bond yields are about 60 basis points higher than where they started the year.
“It is perplexing in the face of a rising bond yield to see stocks come in so strong,” said Henderson. “The market is at a very lofty level, and I don’t think it can last. I’ve been raising some cash in the past few weeks.”
Still, even Henderson admitted that yesterday’s rally was broad-based, normally a good sign for bullish investors. Almost three stocks rose for every two that fell on the New York Stock Exchange.Among the losers: Intel, down 15/16 to 1133/8, and Compaq, off 9/16 to 335/16.