Powerful Rally Making Some Believers on Wall Street

There's talk of a solid bottom after today's Net-led surge, but skeptics remain as well.
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SAN FRANCISCO -- Much as was the case

Monday, today the stock market packed all its troubles in its old kit bag and smiled, smiled, smiled. At least, those long were smiling as anticipation of strong third-quarter earnings helped overshadow any concerns about the

Federal Reserve's

tightening bias and the bond market's afternoon swoon.

The

Dow Jones Industrial Average

rose 187.75, or 1.8%, to 10,588.34, its highest close since Sept. 21. The index was led by

Hewlett-Packard

(HWP)

,

American Express

(AXP) - Get Report

and

J.P. Morgan

(JPM) - Get Report

.

Additionally,

Chevron

(CHV)

gained 3.6% and

General Electric

(GE) - Get Report

rose 2.2% to an all-time high of 123 5/8.

Recently punk

Coca-Cola

(KO) - Get Report

gained 8.1% in concert with rival

PepsiCo

(PEP) - Get Report

, up 5.6% after posting third-quarter earnings a penny better than expectations.

Financials and technology were leaders of the broader market as well, helping the

S&P 500

gain 24.03, or 1.9%, to 1325.38. The Philadelphia Stock Exchange/KBW Bank Index rose 2.3% while the

Morgan Stanley High-Tech 35

gained 1.5% to an all-time high of 1296.30.

But the rally was not limited to those industries. In fact, groups on rise far outshone those on the decline, most notably precious metals. The

Philadelphia Stock Exchange Gold & Silver Index

slid 2.5%.

The

Nasdaq Composite Index

rallied 57.42, or 2.1%, to 2857.09 as

MCI WorldCom

(WCOM)

rebounded from its recent merger-inspired losses, rose 4.2%. In

New York Stock Exchange

trading, WorldCom's proposed merger partner,

Sprint

(FON)

, gained 8.7%. The

Nasdaq 100

rose 2.4%.

Meanwhile,

TheStreet.com Internet Sector

index leapt 40.72, or 6.1%, to 708.74 -- it's had only six higher closes -- as Net favorites benefited from a variety of factors, including anticipation of strong profits from

Yahoo!

(YHOO)

. After the close, the online giant posted third-quarter earnings of 14 cents a share vs. the 26-analyst

First Call/Thomson Financial

estimate of 9 cents. First Call's

"HISPER" estimate was 12 cents. Yahoo!, up 1.3% during the session, was up much more in early after-hours trading.

'Now you can put it in stone,' said GSG Securities' Gary Kaltbaum. 'The bottom has been put in.'

Net retailers such as

Amazon.com

(AMZN) - Get Report

, up 5%, also got a boost from news

Wal-Mart

(WMT) - Get Report

will delay the launch of its "full-featured" Web site until early next year.

Merrill Lynch said Wal-Mart's announcement is "positive" for leading online retailers, including Amazon.com,

eToys

(ETYS)

, which rose 15.1%;

barnesandnoble.com

(BNBN)

, up 5.4%; and

uBid

(UBID)

, up 13.5%.

Additionally,

eBay

(EBAY) - Get Report

rose 7.4% after receiving a new buy recommendation from

Lehman Brothers

.

The

Russell 2000

gained 3.75, or 0.9%, to 429.76.

Among IPOs,

Silicon Image

(SIMG)

bolted 122% from its $12 offering price. And

Breakaway Solutions

(BWAY) - Get Report

leapt 202% from its $14 IPO price.

On the flip side,

Sunrise Assisted Living

(SNRZ)

tumbled 52.6% after warning of lower-than-expected profits. Dow component

Alcoa

(AA) - Get Report

shed 3.3% after posting earnings that merely matched expectations.

IBM

(IBM) - Get Report

also sat out the rally, falling 2.3%.

In NYSE trading 895.9 million shares were exchanged while advancers led declining stocks 1,753 to 1,257. In

Nasdaq Stock Market

action 1.16 billion shares traded while gainers led 2,084 to 1,862. Still, new 52-week lows bested new highs 143 to 48 on the Big Board while new high led 120 to 110 in over-the-counter trading.

He Said, He Said

Despite an unconvincing performance by breadth indicators, some market players spoke of the market having shaken off its recent hesitancy.

"I was actually convinced the market bottomed yesterday, then the Fed hit," said Gary Kaltbaum, chief technical analyst at

GSG Securities

in Orlando, Fla. "Now you can put it in stone. The bottom has been put in."

The technician declined to predict an upside target, noting a lot of "congestion" between Dow 10,500 and the old highs. But he expects earnings to be "powerful" and noted interest rates are still relatively low.

Kaltbaum's optimism, a marked change from his skepticism

last week, stemmed from the fact recently lagging groups such as financials, pharmaceuticals, retailers and transports rallied today, following the market's comeback yesterday afternoon.

"You can see the action," he said. "I think the advance/decline starts getting better. I think the bearish case is out of the way. The market had every chance to go bearish but held. I'm not worried about Friday's employment report, I don¿t think the market cares. The most important thing is the action in stocks."

Not so fast, said Bryan Piskorowski, market analyst at

Prudential Securities

, who noted the bond market closed well off its session highs.

The price of the 30-year Treasury bond, as high as 101 3/32 early this morning, closed up 1/32 to 99 9/32, its yield steady at 6.18%.

"The problem is

Fed Chairman

Alan Greenspan

is really a puppeteer. He's pulling all the strings and left us hanging," Piskorowski said. The Fed's decision yesterday to leave rates unchanged but adopt a tightening bias "relegated us to a 'buy the number' mentality, and we'll be playing hopscotch" with data reported between now and the Fed's Nov. 16 meeting.

"Greenspan is doing the same thing as

Microsoft's

(MSFT) - Get Report

been doing, trying to manage expectations and trying to downplay any kind of exuberant-type activity," the analyst said. "I don't think that's going to go away in the near term."

Asked about the apparent exuberance for IPOs today, the analyst conceded "new era-type stocks still see some excitement and momentum." But, recalling the history of

Theglobe.com

(TGLO)

-- which today closed up 5/8 to 14 1/2 after trading as high as 42 3/4 in April -- the analyst said the performance of IPOs vs. their subsequent performance is often a startling difference, "especially on the Net."

Positives for the broader market include forthcoming earnings, which Piskorowski forecast will be "decent." But he foresees money continuing "to fly into Nifty-50-type issues but people scared away from mid- and small-cap stocks" despite improving earnings prospects.

He attributed today's rise to "follow-through" from yesterday's rally into the close, but foresees the market stuck in a trading range until after year-end.

Among other indices, the

Dow Jones Transportation Average

gained 30.30, or 1%, to 3010.03; the

Dow Jones Utility Average

rose 0.03 to 303.43; and the

American Stock Exchange Composite Index

climbed 2.78, or 0.4%, to 787.43.

Elsewhere in North American equities, the

Toronto Stock Exchange 300

rose 35.03, or 0.5%, to 7025.50 and the

Mexican Stock Exchange IPC Index

gained 126.59, or 2.5%, to 5116.25.

Wednesday's Company Report

By Eileen Kinsella
Staff Reporter

(

Earnings estimates from First Call/Thomson Financial; earnings reported on a diluted basis unless otherwise specified. New highs and lows on a closing basis unless otherwise specified.

)

Technology IPOs were tearing up the charts today. Shares of Breakaway Solutions, an e-commerce services provider, bounded up 28 1/4, or 201.7%, to 42 1/4, after debuting at $14. Meanwhile Silicon Image jumped 14 11/16, or 122.4%, to 26 3/4 after being priced at $12, and

Smart Disk

(SMDK)

looked sharp, closing up 12 13/16, or 98.6%, to 25 13/16, after it was priced at $13.

AT&T

(T) - Get Report

gained 1 5/8 to 46 5/8 following news that Leo Hindery, head of Internet initiatives, is departing the company to pursue other interests. The long-distance behemoth said plans to launch new broadband services, including cable telephony pilots in eight cities by year's end, are still on target. AT&T said CFO Daniel Somers would fill Hindery's post until a permanent replacement is found.

Separately, AT&T and

Dobson Communications

, through a joint venture, are buying

American Cellular

for $2.32 billion.

In addition, AT&T and IBM said they were teaming up to create e-business solutions for small and midsize businesses. Shares of IBM sank 2 13/16 to 119 3/16.

Mergers, acquisitions and joint ventures

Ameritech

(AIT) - Get Report

climbed 1 5/16 to 68, while

SBC Communications

(SBC)

inched up 7/8 to 51 13/16 after the

Federal Communications Commission

approved SBC's $61 billion acquisition, permitting the creation of the largest U.S. local phone company.

Asarco

(AR) - Get Report

added 1 1/4 to 28 after it accepted a bolstered $1.12 billion buyout offer from

Phelps Dodge

(PD) - Get Report

, which slipped 9/16 to 53. Phelps Dodge reached a pact last week to acquire

Cyprus Amax Minerals

(CYM)

.

barnesandnoble.com jumped 1 3/16, or 5.4%, to 23 1/4 and

ShopNow.com

(SPNW)

slipped 1/16 to 12 1/4, after the two companies reached an agreement where ShopNow users will be able to select from various titles and purchase books at a discount from the bookseller's Web site.

CVS

(CVS) - Get Report

, jumped 6 3/4, or 18.2%, to 43 13/16 after it set a pact with

Merck's

(MRK) - Get Report

pharmacy benefits division,

Merck-Medco

, for an alliance between their Internet sites. Shares of Merck climbed 2 to 72 1/8.

Duke Energy

(DUK) - Get Report

climbed 1/4 to 55 5/8, after one of its units agreed to pay $91.5 million in cash for Chilean power company

Gener's

assets in Peru's

Egenor

. Gener will also receive acquisition rights to Duke's interests in two other Latin American power companies.

Microsoft

(MSFT) - Get Report

, climbed 1 13/16 to 93 11/16 and

British Telecommunications

(BTY)

, rose 4 to 158 1/2, after the companies unveiled plans to launch wireless Internet service, starting with a three-month test run involving 1,000 mobile-phone users. The test will enable employees from five major corporations, including the

BBC

,

Credit Suisse First Boston

and

Nortel Networks

(NT)

, to use their phones to check their email and other content on the Internet that can be adapted to fit a small mobile-phone screen. If all goes as planned, the companies will offer the service in early 2000.

Although German insurer

Allianz'

buyout talks with

Pimco Advisors Holdings

(PA)

have reached an advanced stage, the negotiations could still fail,

Reuters

reported, citing a source familiar with details of the talks. Pimco climbed 2 3/16, or 6.7%, to 34 15/16.

Earnings/revenue reports and previews

Alcoa fell 2 1/8 to 62 after it reported third-quarter earnings of 69 cents a share, in line with the 16-analyst estimate of 69 cents and up from the year-ago 61 cents.

Consolidated Edison

(ED) - Get Report

edged up 1/16 to 41 13/16 despite saying it felt analysts' third-quarter estimates were high, due to a number of factors including system damage caused by Hurricane Floyd. The company deemed fourth-quarter earnings estimates low. The six-analyst estimate calls for earnings of $1.52 in the third quarter, and 58 cents in the fourth quarter.

Kenneth Cole

(KCP)

slipped 1/16 to 38 3/16, despite saying it was comfortable with the six-analyst earnings estimate of $1.53 a share for 1999.

PepsiCo

(PEP) - Get Report

added 1 3/4, or 5.6%, to 33 3/16 after it posted third-quarter pro forma earnings of 34 cents a share, a penny ahead of the 16-analyst estimate but down from the year-ago 37 cents.

Structural Dynamics Research

(SDRC)

lost 3 9/16, or 23%, to 11 15/16 after it warned third-quarter revenue will be about $109 million, less than the current analysts' consensus estimate of $116 million. The company said earnings, not including nonrecurring, acquisition-related charges, will come in around 12 cents a share, well below the six-analyst estimate of 30 cents.

Sunglass Hut

(RAYS)

gained 2, or 20.1%, to 12 1/16 after saying it was comfortable with third-quarter and fiscal year earnings estimates. The five-analyst estimate calls for a loss of 4 cents in the third quarter, while the six-analyst estimate calls for earnings of 57 cents a share for the year ending January.

Tenet Healthcare

(THC) - Get Report

lost 1/8 to 19 5/8 despite posting first-quarter earnings of 39 cents a share, beating the 16-analyst estimate of 38 cents and the year-ago 44 cents. The company also said that it has inked a deal to sell 10 hospitals.

Wendy's International

(WEN) - Get Report

lost 1/4 to 25 13/16 after saying it expects 1999 earnings between $1.27 and $1.31 a share. The 16-analyst estimate calls for earnings of $1.30 a share.

Whirlpool

(WHR) - Get Report

moved up 2 15/16 to 65 1/16 after saying its third quarter will be reported as the most profitable in the company's history. The company said its forecast is consistent with the 10-analyst forecast of $1.34 a share.

Winn-Dixie

(WIN) - Get Report

gained 2 1/16, or 7%, to 31 3/4 despite reporting first-quarter earnings of 15 cents a share, greatly missing the six-analyst estimate of 23 cents but up from the year-ago 10 cents.

Offerings and stock actions

About.com

(BOUT) - Get Report

shed 5 7/8, or 9.8%, to 53 7/8 after it said it had filed with the

Securites and Exchange Commission

for a 3.5 million-share offering.

Neiman Marcus Group

(NMG)

inched up 1/8 to 23 1/8 after it increased the number of shares it will buy back to 2 million. The board also announced a stockholder rights plan to guard against unwanted attempts to gain total voting power.

Safeway

(SWY)

added 1 15/16, or 5.7%, to 35 15/16 after it said it set a $1 billion share repurchasing program.

Analyst actions

Ciena

(CIEN) - Get Report

gained 1 to 35 13/16 after

Warburg Dillon Read

raised its rating on the shares to buy from hold.

Computer Sciences

(CSC)

jumped 4 13/16, or 6.9%, to 64 3/4 after

Donaldson Lufkin & Jenrette

upped its rating on the stock to buy from market perform. CS First Boston also raised the shares to a buy from a hold.

DTE Energy

(DTE) - Get Report

added 3/8 to 33 1/2 after

ABN Amro

upgraded shares of the stock to buy from outperform.

DuPont Photomasks

(DPMI)

lost 5/8 to 48 5/16 after

CIBC World Markets

rolled out coverage of the stock with a strong buy rating.

eBay flew 10 3/8, or 7.4%, to 151 11/16 after

Lehman Brothers

initiated coverage of the stock with a buy.

Florida Rock

(FRK)

rose 1 5/8 to 35 1/8 after Warburg Dillon Read started coverage of the shares with a hold rating.

Genzyme

(GENZ)

jumped 7 5/16, or 22.2%, to 40 1/4 after

PaineWebber

upped its rating on the shares to buy from attractive.

Merrill Lynch

also raised its rating on the shares to an intermediate buy from accumulate, while First Boston cut the stock to a buy from a strong buy.

Halliburton

(HAL) - Get Report

edged up 15/16 to 35 7/16 after Warburg Dillon Read upped its rating on the shares to a strong buy, while Credit Suisse First Boston raised the shares to a buy from hold.

Hercules

(HPC)

lost 1 3/4, or 6.3%, to 26 after

Morgan Stanley Dean Witter

lowered its rating on the shares to outperform from strong buy.

Jones Pharma

(JMED)

xinched up 5/16 to 33 1/16 while

Connetics

(CNCT)

was unchanged at 4 3/4 after Warburg Dillon Read initiated coverage of the stocks with buy ratings.

Lexmark

(LXK)

jumped 5, or 5.2%, to a record 101 7/8 after

Salomon Smith Barney

raised its fourth quarter and fiscal 1999 estimates to 80 cents a share from 70 cents and to $2.41 from $2.31, respectively. The firm also upped its fiscal 2000 estimate to $3.25 from $2.75 a share.

Martin Marietta

(MLM) - Get Report

gained 5/8 to 40 1/2 after Warburg Dillon Read initiated coverage of the stock with a strong buy rating.

Nextel

(NXTL)

climbed 2 3/4 to a record 79 7/8 despite CIBC World Markets' ratings downgrade to buy from strong buy.

Public Storage

(PSA) - Get Report

lost 1/16 to 24 11/16 after PaineWebber sliced its rating on the shares to attractive from buy.

Quintiles Transnational

(QTRN)

climbed 3/8 to 17 13/16 after Warburg Dillon Read cut its rating on the stock to hold from strong buy.

Safety-Kleen

(SK)

slipped 5/8, or 5.1%, to 11 5/8 after

Goldman Sachs

lowered its rating on the stock to market performer from market outperformer.

Sprint

(FON)

jumped 5 1/8, or 8.7%, to a record 64 despite

Deutsche Banc Alex. Brown's

ratings downgrade to market perform from market outperform.

Sunrise Assisted Living plummeted 12 7/8, or 52.6%, to 11 11/6 after PaineWebber lowered its rating on the shares to neutral from buy.

J.P. Morgan

also downgraded the shares to market perform from a buy, while DLJ and Merrill Lynch also cut the shares.

Veritas

(VRTS) - Get Report

climbed 5/8 to 85 9/16, while

Legato

(LGTO)

added 2 11/16, or 5.9%, to 48 1/16 after Merrill Lynch initiated coverage of the stocks with near-term accumulate ratings.

Vulcan Materials

(VMC) - Get Report

rose 1 1/2 to 37 3/8 after Warburg Dillon Read rolled out coverage of the shares with a buy rating.

Miscellany

Aetna

(AET)

added 2 52 1/2 after

The Wall Street Journal

reported that Chairman and CEO Richard Huber said industry leaders and corporate customers will meet to discuss an approach to handling HMO lawsuits,

America Online

(AOL)

climbed 6 1/2, or 5.7%, to 120 after it said it would create a custom AOL message service for

Lycos

(LCOS)

. Lycos shares lifted 7 1/4, or 12.8%, to 64 1/8.

Gemstar International Group

(GMST)

jumped 5 3/8, or 7.8%, to 74 3/4, after the company said it won an arbitration against

General Instrument

(GIC)

for "multiple tens of millions of dollars," according to

Reuters

. General Instrument shrugged off the announcement, inching up 1/4 to 51.

General Motors

(GM) - Get Report

inched up 3/8 to 65 3/4 after the

Journal

reported Vice Chairman Harry Pearce refuted analysts reports that the company has plans to break off its

Hughes Electronics

(GMH)

division in the near future.

Qualcomm

(QCOM) - Get Report

jumped 9 9/16 to a record 204 5/16 on word of regulatory approvals on four continents for its satellite phones.

Wal-Mart rose 1/8 to 51 3/8 after it announced plans to launch the Wal-Mart credit card, which will be administered through

GE Capital

, in September.