Powerful Market Rally Spurs Talk of a Breakout

A harsh chill descended on Wall Street proper today, but it was warm and sunny in the ethereal realm of trading. A lack of blockbuster volume was the lone blight on an advance in which just about everything worked and major averages climbed impressively higher.

Major Indices INDEX CHANGE % VALUE YR TO DATE Dow 212.73 +2.3% 9552.68 +4% S&P 500 32.92 +2.7% 1272.14 +3.5% Nasdaq 58.41 +2.6% 2342.01 +6.8% Russell 2000 5.52 +1.4% 397.82 -5.7% TSC Internet 19.78 +4.2% 490.38 +20.6% TSC E-Commerce 3.29 +3.5% 97.89 +15% TREASURY BOND CHANGE VALUE YIELD 30-Year 14/32 98 15/32 5.354%

Traders pinned hopes on a belief that Federal Reserve Chairman Alan Greenspan will not say anything to disturb the U.S. economy or the stock market (is there a difference?) during his Humphrey-Hawkins testimony tomorrow and Wednesday.

Bond traders took a similar view; the price of the 30-year Treasury bond rose 14/32 to 98 15/32, sending its yield down to 5.35% and providing a solid backdrop for the advancing stocks.

The Dow Jones Industrial Average soared as high as 9558.28 before closing up 212.73, or 2.3%, to 9552.68. The close is the Dow's third-highest ever and marks its first above 9400 since Jan. 12, suggesting to technical analysts the index has broken out of its five-week trading range. The next major hurdle for the index (besides sustaining today's advance) is its all-time high of 9643.32, reached Jan. 8 .

"They've got the wind at their backs. You're a stone's throw away [from a new high] with the Dow Jones divisor the way it is," said Jim Volk, co-head of institutional trading at D.A. Davidson in Portland, Ore. "Today proves there's still a lot of money on the sidelines. But in the same breath, they run for the exits the minute things get spooked. I think this is sustainable to a new high, but I don't think it's going to 10,000 in a straight line."

All but two of the Dow's 30 components ended with gains (Exxon (XON Quote) and Coca-Cola (KO Quote) being the laggards), with advancers paced by tech components IBM (IBM Quote) and Hewlett-Packard (HWP Quote).

American Express (AXP Quote) was also a big gainer, leading a robust performance in financial stocks. Chase Manhattan (CMB Quote) was another financial standout, rising 6.5% to a new all-time high of 81. The Philadelphia Stock Exchange/KBW Bank Index rose 3.1% while the American Stock Exchange Broker/Dealer Index jumped 5.7%.

Eastman Kodak (EK Quote) rose 3.4% on news Germany's Heidelberger Druckmaschinen is in talks to buy the film giant's office imaging business. United Technologies (UTX Quote) was the other Dow member involved in a merger, acquiring Sundstrand (SNS Quote) for $4.3 billion. Sundstrand surged 17.7% on the news while United Technologies, once as low as 120 1/2, climbed as high as 127 before finishing up 0.9% at a new 52-week high of 126 9/16.

The merger activity, plus speculation Greenspan "wants to keep things on an even keel" encouraged traders, Volk said. "We're back in this low inflation, moderate growth scenario that caused the market to set new highs the last time around. Cyclical stocks are proving people are not concerned about the economy." The Morgan Stanley Cyclical Index gained 2.1%.

The S&P 500 rose 33, or 2.7%, to 1272.22, putting it within spitting distance of its all-time high of 1279.64. Small cap stocks also enjoyed an upturn; the Russell 2000 rose 5.52, or 1.4%, to 397.82.'You need a couple of great days to keep it going,' said Everen's Greg Nie. 'Volume needs to be higher and sustainability could be an issue later in the week. Applaud the effort, but am I on board and taking an aggressive stance? Not yet.'

For all the talk about losing their leadership standing, technology stocks were at the epicenter of the advance.

The Nasdaq Composite Index struggled early but surged thereafter, closing at its apex, up 58.41, or 2.6%, to 2342.01. The smothered-in-tech index was paced by familiar bellwethers such as Dell (DELL Quote), Cisco (CSCO Quote), Sun Microsystems (SUNW Quote) and Intel (INTC Quote). The Nasdaq 100 climbed 3.4%.

Even more impressive were New York Stock Exchange-traded tech giants such as Gateway (GTW Quote), Advanced Micro Devices (AMD Quote), and Compaq (CPQ Quote). The Morgan Stanley High Tech 35 climbed 4.5% and the Philadelphia Stock Exchange Semiconductor Index rose 5.3%.

Internet names also stuck to the script. TheStreet.com Internet Sector index climbed 19.78, or 4.2%, to 490.38, led by Infoseek (SEEK Quote) as well as Net heavyweights America Online (AOL Quote) and Yahoo! (YHOO Quote).

TheStreet.com E-Commerce Index climbed 3.29, or 3.5%, to 97.89, paced by E*Trade (EGRP Quote), which gained 21.1%.

The Dow Jones Transportation Average climbed to 97.06, or 3.1%, to 3231.57, led by FDX (FDX Quote), which gained 4.6% on news expenses incurred during talks with its pilots union were less than expected. Additionally, Delta Air Lines (DAL Quote) gained 5.3% after being upgraded by Donaldson Lufkin & Jenrette. Airlines were strong overall amid speculation of more industry consolidation; the American Stock Exchange Airline Index gained 3.2%.

In NYSE trading, a relatively modest 718.5 million shares traded while advancers bested declining stocks by a healthy 1,965 to 1,030. In Nasdaq Stock Market activity, 849.3 million shares were exchanged while gainers led 2,153 to 1,850. Giving pause to the celebrants, new 52-week lows led new highs 66 to 45 on the Big Board and by 88 to 38 in over-the-counter trading.

Judge Not, Lest Ye Be Judged

"It was welcome and much needed in terms of intermediate-term timing but I would reserve judgment as to whether it's the real thing," said Greg Nie, chief technical analyst at Everen Securities in Chicago. "It's a good day, not a great day."

Higher volume and a 2-to-1 or 3-to-1 victory by advancers is necessary before the trend can be considered outright bullish, Nie said. Moreover, "you need a couple of great days to keep it going," he said. "There some plausibility some investors are holding back in deference to Greenspan which leaves room to have a couple of great days. But volume needs to be higher and sustainability could be an issue later in the week. Applaud the effort, but am I on board and taking an aggressive stance? Not yet."

Nie agreed the close above 9400 was a key technical victory for the Dow industrials but said 1280 is the level to watch on the S&P 500, not 1250 as proffered by other technicians.

"It's still a question of how, not where," he added. "It's a question of momentum. I'm more interested in breadth and volume as to whether the risk level is diminishing and bulls have the upper hand."

Among other indices, the Dow Jones Utility Average rose 3.17, or 1.1%, to 298.75 and the American Stock Exchange Composite Index gained 7.46, or 1.1%, to 700.03.

Elsewhere in North American equities, the Toronto Stock Exchange 300 leapt 95.01, or 1.5%, to 6504.55 and the Mexican Stock Exchange IPC Index jumped 43.06, or 1%, to 4243.18.

Monday's Company Report

By Heather Moore
Staff Reporter

(Earnings estimates from First Call; new highs and lows on a closing basis unless otherwise specified. Earnings reported on a diluted basis unless otherwise specified.)

Gateway hopped 6 7/16, or 8.8%, to 79 5/16 after Piper Jaffray's Ashok Kumar upgraded the stock to strong buy from buy and raised its price target to 95 to 100 from 56 a share. The analyst also upped his first-quarter earnings estimate to 90 cents a share from 59 cents and his 1999 forecast to $3.87 from $2.82. In a report, Kumar said the aggressive expansion of Gateway's Country Stores, which focus on consumers and small to medium-sized businesses, will help the PC maker offset a seasonal slowdown. Late Friday, Gateway said it selected Advanced Micro Devices as its second supplier of chips. AMD lifted 1 11/16, or 9.6%, to 19 5/16 while Intel (INTC Quote), Gateway's top supplier, took in 4 3/4 to 132 13/16.

Mergers, acquisitions and joint ventures

Beyond.com (BYND Quote) grew 1 3/4, or 7.1%, to 26 9/16 after announcing it's acquiring Buydirect.com, an online software retailer, for about $134 million. Beyond.com expects to complete the transaction by the end of March.

Comverse Technology (CMVT Quote) rose 4 1/4, or 6.1%, to 74 1/4 after its Comverse Network Systems business announced a contract with the U.K.'s Orange (ORNGY Quote) for systems to support the deployment of the company's "Every Phone" service. Orange added 6 1/4, or 8.7%, to 78 1/8.

Dominion Resources (D Quote) sliced off 2 1/4, or 5.3%, to 40 after agreeing to buy Consolidated Natural Gas (CNG Quote) for $6.3 billion in stock. Consolidated Natural Gas lowered 1 1/16 to 55 3/16.

KN Energy (KNE Quote) picked up 1/8 to 21 5/8 after Sempra Energy (SRE Quote) agreed to acquire the company for $1.8 billion in cash and stock. The deal calls for Sempra to assume $4.2 billion in KN Energy debt. Sempra dropped 3/4 to 21 9/16.

NeoPharm Pharmaceuticals (NEO Quote) fell 1 5/8, or 9.3%, to 15 7/8 despite word that Pharmacia & Upjohn (PNU Quote) will develop and market two cancer products under a licensing agreement. NeoPharm will receive an initial payment of more than $15 million, as well as milestone payments exceeding $50 million during the clinical development. Pharmacia & Upjohn added 3/4 to 54.

Pinkerton (PKT Quote) soared 11 11/16, or 69.3%, to an all-time high of 28 9/16 after Sweden's Securitas agreed to acquire the company for $384 million in a deal that will create the world's largest full-service security company.

Riddell Sports (RDL Quote) kicked up 1/4 to 5 3/4 after announcing it will create RiddellSports.com, a joint venture with Data Broadcasting (DBCC Quote) and Dawntreader Fund I, to market the company's brands on the Web. Data Broadcasting lost 5/16 to 13 15/16.

Ritchie Bros. Auctioneers (RBA Quote) jumped 4 1/8, or 15.4%, to an all-time high of 31 after announcing it will acquire the auction business of privately held Forke Auctioneers. Terms of the deal weren't disclosed.

Southwest Gas (SWX Quote) climbed 1 3/4, or 6.6%, to an all-time high of 28 3/8 after saying it received an unsolicited $32-a-share acquisition offer from Southern Union (SUG Quote). Southern Union lifted 1 13/16, or 10.1%, to 19 3/4.

Telecom Italia (TI Quote) rose 3 3/8 to an all-time high of 109 13/16 after hiring four investment banks to fend off a nearly $60 billion hostile bid by Olivetti. The firms are J.P. Morgan (JPM Quote), Credit Suisse First Boston, Italy's IMI and Lazard Brothers of Britain. TSC contributor Luca Ciarrocca filed a report on the deal today.

Earnings/revenue reports and previews

Comcast (CMCSK Quote) vaulted 5 1/4, or 7.4%, to an all-time high of 76 1/16 even after posting a fourth-quarter loss of 47 cents a share, excluding gains, wider than both the eight-analyst forecast for a loss of 15 cents and the year-ago loss of 21 cents. Perhaps investors were paying attention to the cable company's operating cash flow, which shot up 15% during the quarter.

Marshall Industries (MI Quote) sank 3 13/16, or 19.7%, to an annual low of 15 1/2 after warning it sees third-quarter earnings of 14 cents to 17 cents a share due to weaker-than-expected demand and continuing industry-wide pressures on pricing and margins. The four-analyst outlook called for 30 cents.

Mirage Resorts (MIR Quote) surged 1 15/16, or 10.3%, to 20 11/16 even after recording fourth-quarter earnings of 20 cents a share, 2 cents below the 23-analyst view and behind the year-ago 26 cents. Investors seemed to be focusing more on upgrades of the company to buy from market perform from BT Alex. Brown and to buy from hold from NationsBanc Montgomery Securities.

Oacis Healthcare (OCIS Quote) missed fourth-quarter earnings estimates by 3 cents a share with a profit of 4 cents. But the heath care information systems company also agreed to merge with closely held Science Applications in a deal valued at $53 million, sending OCIS up 1 1/8, or 36%, to 4 1/4.

Sun Microsystems took in 7 15/16, or 8.2%, to 104 5/16 after saying at the BancBoston Robertson Stephens technology conference in San Francisco that revenue growth in its fiscal second half of 1999 will outpace 16% growth in the first half.

In other earnings news:

Upside Surprises
Company	Qtr	EPS	First Call View	Yr. Ago EPS	Number of Analysts	Price Change	Close
Astec Industries (ASTE Quote)	4Q	29c	21c	15c	3	+2 3/16	27 3/16
Liz Claiborne (LIZ Quote)	4Q	73c	72c	70c	12	+11/16	33 1/2
Dycom (DY Quote)	2Q	29c	25c	20c	4	+5 15/16	38 1/2
Grove Property (GVE Quote)	4Q	29c	28c	25c	4	+3/4	11 3/4
H&R Block (HRB Quote)	3Q	-3c	-17c	-14c	7	+3 3/8	44 1/2
Lowe's (LOW Quote)	4Q	30c	27c	21c	23	+1 3/8	58 7/16
Payless ShoeSource (PSS Quote)	4Q	42c	37c	46c	6	+1/4	56 7/8
Point of Sale (POSIF Quote)	4Q	12c	11c	9c	3	+1/2	6 15/16

In-Line Reports
Company	Qtr	EPS	First Call View	Yr. Ago EPS	Number of Analysts	Price Change	Close
Ecolab (ECL Quote)	4Q	29c	29c	26c	8	+3/4	40 9/16
InterCept (ICG Quote)	4Q	9c	9c	-8c	3	-5/16	9 5/8
Interpublic (IPG Quote)	4Q	76c	76c	32c	6	+1 11/16	78 1/8
JLG Industries (JLG Quote)	2Q	25c	25c	17c	7	+3/16	14 7/8

Offerings and stock actions

Best Buy (BBY Quote) rose 4 1/8 to 90 after announcing a 2-for-1 stock split.

Analyst actions

Atmel (ATML Quote) jumped 2, or 13.3%, to 17 after SoundView started coverage with a buy. And Descartes Systems (DSGX Quote) added 9/16, or 7.6%, to 7 15/16 after the firm began coverage with a strong buy.

General Instrument (GIC Quote) hopped 3 3/16, or 10.1%, to 34 11/16 after SoundView started coverage with a buy. Scientific-Atlanta (SFA Quote) added 1/12, or 5%, to 31 9/16 after the firm started coverage with a strong buy.

Rambus (RMBS Quote) popped up 9 7/16, or 13.3%, to 80 9/16 after BancBoston Robertson Stephens lifted the stock to buy from attractive with a price target of 90 a share. Warburg Dillon Read initiated coverage with a strong buy.

Miscellany

Abercrombie & Fitch (ANF Quote) flourished 8 11/16, or 12.2%, to an all-time high of 79 3/4 following blowout fourth-quarter earnings last week and on recent analyst comments about the company's potential to grow.

Bank One (ONE Quote) flew 2 15/16, or 5.7%, to 54 1/4 after saying it will slash 200 jobs, or 20% of its international commercial-banking workforce, primarily in London.

Biomatrix (BXM Quote) brought in 4 11/16, or 9.9%, to 52 3/16 after the Food and Drug Administration granted the company approval to ship Synvisc, which is used to treat osteoarthritis of the knee, from its new 55,000-square-foot manufacturing plant in Ridgefield, N.J.

E*Trade, the focus of today's Heard on the Street column in The Wall Street Journal, shot up 8 7/16, or 21.1%, to 48 9/16 after launching an online mutual fund. Elsewhere in online news, AOL grew 12 5/8, or 7.9%, to 173 on news its CompuServe unit is expected to unveil a major makeover of its online offerings.

Qualcomm (QCOM Quote) jumped 6 9/16, or 10.1%, to an all-time high of 71 3/8 after the Journal said it and Ericsson (ERICY Quote) are close to a deal that would end a long-running patent dispute and could aid in resolving a looming international trade conflict over the future of wireless communications. Ericsson rose 1 5/16 to 27 15/16.

Tenneco (TEN Quote) advanced 1 to 28 3/4 after Barron's reported that CEO Dana Mead hopes to sell the company's auto unit for around $4 billion and concentrate on making Tenneco a specialty-packaging titan.

3Com (COMS Quote) excelled 1 11/16, or 5.1%, to 34 13/16 after its Palm Computing unit unveiled the Palm V and the Palm IIIx.