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Big Session, Little Session: Rally Comes on Miserable Volume

Major indices, led by tech stocks, powered higher even as the NYSE sported its second-lowest volume of the year.

Like a monkey hopped up on goofballs, the market continues to scamper up the "wall of worry" erected in recent weeks on the foundation of higher interest rates and faltering Internet stocks. Even a reversal of early gains by the bond market failed to dissuade equity investors today.

With bellwether technology stocks reasserting their claim to the throne (of leadership) and merger activity lending a helping hand, major stock proxies marched smartly higher, albeit on continuing lackluster volume.

The

Dow Jones Industrial Average

renewed its climb on a second attempt to surmount the once-unthinkable 11,000 peak, climbing as high as 10,917.30 before closing up 109.54, or 1%, to 10,909.38.

IBM

(IBM) - Get International Business Machines Corporation Report

paced Dow gainers, edging out

AlliedSignal

(ALD)

. Allied surged 7.6% on its announced merger with

Honeywell

(HON) - Get Honeywell International Inc. Report

, which leapt a further 6.7% after gaining 7.5% Friday in anticipation of the deal.

Other names pacing the Dow included

Hewlett-Packard

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TheStreet Recommends

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and

American Express

(AXP) - Get American Express Company Report

, the latter benefiting from a

Prudential Securities

upgrade.

Cyclicals

Kodak

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,

DuPont

(DD) - Get DuPont de Nemours Inc. Report

,

3M

(MMM) - Get 3M Company Report

and

Goodyear

(GT) - Get The Goodyear Tire & Rubber Company Report

also proved big winners. The

Morgan Stanley Cyclical Index

rose 0.8%.

The

Nasdaq Composite Index

jumped 45.87, or 1.9%, to 2524.21. Over-the-counter tech bellwethers were led by

Dell

(DELL) - Get Dell Technologies Inc. Class C Report

,

Sun Microsystems

(SUNW) - Get Sunworks Inc. Report

,

Tellabs

(TLAB)

and

3Com

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.

The

Nasdaq 100

gained 2.1% while the

Morgan Stanley High-Tech 35

rose 1.8% and the

Philadelphia Stock Exchange Semiconductor Index

gained 1%.

Internet favorites such as

Excite @Home

(ATHM) - Get Autohome Inc. American Depositary Shares each representing four class A. Report

struggled early but recovered in fine shape to help lift

TheStreet.com Internet Sector

index 32.41, or 5.9%, to 585.87. Once as low as 87, @Home rebounded to close up 9.8% at 103 3/4.

Among other DOT components,

Amazon.com

(AMZN) - Get Amazon.com Inc. Report

rose 8.3% while

CMGI

(CMGI)

leapt 13.5% after subsidiary

NaviSite

announced alliances with heavyweights

Microsoft

(MSFT) - Get Microsoft Corporation Report

and Dell.

Broader market averages lagged the Dow, the Comp and the DOT but finished with solid gains nonetheless. The

S&P 500

rose 6.77, or 0.5%, to 1334.52 while the

Russell 2000

gained 4.32, or 1%, to 446.65.

In addition to tech leaders, the S&P was aided by financials such as

Bank of America

(BAC) - Get Bank of America Corporation Report

and

Lehman Brothers

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, as well as a host of oil service stocks. The

Philadelphia Stock Exchange/KBW Bank Index

rose 1.5%, the

American Stock Exchange Broker/Dealer Index

climbed 3.4% and the

Philadelphia Stock Exchange Oil Service Index

rose 2.4%.

In

New York Stock Exchange

trading, 664.3 million shares were traded -- the second-lowest level of the year, trailing only

Feb. 16's -- while advancers led declining stocks 1,716 to 1,235. In

Nasdaq Stock Market

activity, a relatively robust 879.3 million shares were exchanged while gainers led 2,165 to 1,756. New 52-week highs led new lows 93 to 53 in Big Board activity and by 117 to 36 in over-the-counter trading.

The lack of substantial volume had some players reluctant to pass judgment on the session, but "it is a good day," Bill Allyn, head of block trading at

Jefferies

, said without hesitation. "All indices are up across the board

and the action in the market is great. We've just come out of a very volatile and scary period -- I think it will take some time before this thing can go up with some conviction. As the market does more of this more investors will gain confidence."

Like a growing number of others, Allyn submitted the major averages established a near-term bottom late last week and sees institutions deploying funds into stocks, "albeit cautiously."

Going forward "I think the leadership will be returned to big-cap growth stocks" and, to a lesser extent, cyclicals, the trader said. "Some of the Internet stocks have had their better days -- the easy money has been made. I don't think

the group is dead, but not as actively played as it had been. These stocks seem to rally from lower lows and fail."

Drugs Sag, Airlines Heal

The S&P was restrained largely by drug makers, notably

Pfizer

(PFE) - Get Pfizer Inc. Report

and

Schering-Plough

(SGP)

. The

American Stock Exchange Pharmaceutical Index

closed down 1.6%. .

Airlines, meanwhile, produced a remarkable recovery after declining early on in the wake of a profit warning

late Friday by

UAL

(UAL) - Get United Airlines Holdings Inc. Report

.

UAL tumbled as low as 62 1/4, but closed up 0.9% to 66 3/8. Other carriers such as

AMR

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and

Delta Air Lines

(DAL) - Get Delta Air Lines Inc. Report

produced similar turnarounds. The

American Stock Exchange Airline Index

, once as low as 164.83, closed up 1.8% at 172.24.

Simlarly, the

Dow Jones Transportation Average

rose 19.23, or 0.6%, to 3481.96 after trading as low as 3410.45.

Among other indices, the

Dow Jones Utility Average

gained 2.55, or 0.8%, to a record 333.27 while the

American Stock Exchange Composite Index

dipped 2.83, or 0.4%, to 778.15.

Elsewhere in North American equities, the

Toronto Stock Exchange 300

rose 70.61, or 1%, to 7010.75 and the

Mexican Stock Exchange IPC Index

gained 50.68, or 0.9%, to 5421.94.

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.

)

As noted above, Dow component AlliedSignal surged 4 7/16, or 7.6%, to 62 13/16 after confirming

Friday's rumor that it's buying Honeywell in a $14 billion stock swap. Honeywell rallied 7, or 6.7%, to an all-time high of 112. The combined company will be known as Honeywell and will be based in Morristown, N.J., AlliedSignal's present headquarters. Under terms of the deal, Honeywell shareholders will receive 1.88 AlliedSignal shares for each share of Minneapolis-based Honeywell.

Schroders

upped AlliedSignal to outperform significantly from outperform.

Mergers, acquisitions and joint ventures

British Steel

(BST) - Get BlackRock Science and Technology Trust of Beneficial Interest Report

dropped 1 15/16, or 7.5%, to 23 13/16 after saying it's buying Dutch steel and aluminum firm

Hoogovens

in a deal valued at $6.5 billion.

Columbia Energy Group

(CG) - Get Carlyle Group Inc (The) - Ordinary Shares Report

climbed 7 7/16, or 13.3%, to an all-time high of 63 3/16 after

NiSource

(NI) - Get NiSource Inc Report

, an energy services supplier, launched a hostile bid to acquire the company for $5.7 billion in cash, or $68 a share. NiSource gave up 5/8 to 27 9/16;

Deutsche Banc Alex. Brown

cut it to market perform from buy.

Cais Internet

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swelled 2 5/16, or 21.9%, to 12 3/4 after signing a seven-year agreement to provide high-speed Internet access in 38 properties and 14,500 units for

Town & Country Trust

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. Town & Country added 1/16 to 16 7/8.

First Security

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rocketed 5 7/8, or 31.7%, to an annual-high of 24 3/8 after

yesterday agreeing to buy

Zions Bancorp

(ZION) - Get Zions Bancorporation N.A. Report

in a $5.9 billion stock deal. Zions skidded 6 13/16, or 10.4%, to 58 19/32.

IBM picked up 4 1/2 to 120 1/2 after setting a seven-year, $8 billion technology pact with

Acer Group

.

Jevic Transportation

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shot up 2 15/16, or 27.3%, to an annual high of 13 13/16 after

Yellow

(YELL) - Get Yellow Corporation Report

made a $14-a-share bid for the company. Yellow lost 1/16 to 17 5/8.

Juno Online Services

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jumped 11/16, or 7.8%, to 9 5/8 on word of a distribution pact with Hewlett-Packard. Terms of the deal were undisclosed. H-P rose 3 1/2 to 94.

Mahoning National Bancorp

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vaulted 11 1/4, or 36.3%, to 42 1/4 after

Sky Financial

(SKYF)

agreed to buy the company in a $307 million stock swap. Sky Financial fell 2 1/16, or 7.1%, to 27 1/4.

Motorola

(MOT)

slipped 2 to 85 7/8 while

Cisco

(CSCO) - Get Cisco Systems Inc. Report

added 1/2 to 115 3/8 after announcing plans to jointly buy

Bosch Telecom's

fixed wireless assets for an undisclosed amount. The companies said they would form a joint venture called

SpectraPoint Wireless

.

Tyco

(TYC)

took in 11/16 to 90 3/8 on word it's in discussions to acquire

Williams

of Britain, a security and fire protection group.

ViaGrafix

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expanded 1 1/8, or 17%, to 7 13/16 after

7th Street.com

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(no relation to this site) agreed to acquire the company for $53.5 million. 7th Street.com grew 1/4, or 5%, to 5 5/16.

Earnings/revenue reports and previews

Bob Evans Farms

(BOBE)

excelled 1/4 to 20 5/16 after posting fourth-quarter earnings of 34 cents a share, in line with the five-analyst view and 4 cents above the year-ago figure.

Novel Denim Holdings

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closed flat at 8 7/8 after reporting fourth-quarter earnings of 29 cents a share, missing the three-analyst forecast for 34 cents and falling behind the year-ago 43 cents.

Players

(PLAY) - Get Dave & Buster's Entertainment Inc. Report

picked up 1/16 to 6 5/8 after recording fourth-quarter earnings of 7 cents a share, on target with the six-analyst outlook but below the year-ago 9 cents.

As noted above, Friday's warning from

United Airlines

parent UAL weighed on the entire airline sector today. But most industry names managed to pull themselves up by the session's end. Despite forecasting second-quarter earnings are expected to come in around $2.40 to $2.80 a share and 1999 earnings will come in around $9 to $11 a share, UAL increased 9/16 to 66 3/8. A 10-analyst outlook called for earnings of $3.10 a share for the quarter, and an 11-analyst view called for net income of $9.96 for the full year.

Offerings and stock actions

Perfumania

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hopped 1 5/32, or 37.8%, to 4 7/32 after its Internet unit,

perfumania.com

, filed a registration statement for a 2.5 million-share IPO with an initial price range of $7 to $9 a share.

Cruttenden Roth

and

Pennsylvania Merchant Group

will serve as lead underwriters of the offering, perfumania.com said.

Veritas

(VRTS) - Get Virtus Investment Partners Inc. Report

advanced 3 5/8 to an all-time high of 97 1/8 after setting a 2-for-1 stock split.

Analyst actions

American Express climbed 2 3/4 to 128 after Prudential lifted it to strong buy from accumulate.

Amkor Technology

(AMKR) - Get Amkor Technology Inc. Report

slid 1, or 11.1%, to 8 after

Salomon Smith Barney

lowered it to neutral from buy.

Moog

(MOG.A) - Get Moog Inc. Class A Report

flew 2 1/16, or 7.4%, to 30 1/16 after

Morgan Stanley Dean Witter

raised it to strong buy from outperform.

Rambus

(RMBS) - Get Rambus Inc. Report

surged 5 1/16, or 7%, to 77 7/8 after Morgan Stanley Dean Witter pushed it up to strong buy from outperform based on expectations

Intel

(INTC) - Get Intel Corporation Report

is on track to use the company's technology in a new chipset next quarter.

TheStreet.com Inc.

undefined

, the publisher of this Web site, rose 3 3/16, or 10.8%, to 32 5/8 amid broad Internet strength after

Goldman Sachs

started coverage with a market outperform,

Hambrecht & Quist

started coverage at buy and

SG Cowen

initiated coverage with a buy and a 12-month price target of 45. Goldman was the lead underwriter for TheStreet.com's May IPO, and H&Q was another underwriter.

Miscellany

DuPont expanded 2 9/16 to 72 13/16 after saying it would restructure its polyester business and cut 800 DuPont jobs and 600 contractor positions, or about 14% of the unit's total employees.

Harnischfeger Industries

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, whose trading was halted, said it voluntary filed for Chapter 11 bankruptcy. The NYSE said it will review the stock's listing status.