Gauging Wall Street is not supposed to be simple. Today's action proved it isn't.

Even before the market opened today, players and pontificators warned afternoon profit-taking would hit the expected rally once the focus shifted to tomorrow's

employment report. Like clockwork, the rally emerged following the announcement of a seven-year, $16 billion (and you thought

Kerry Collins

got a huge contract?) partnership between

IBM

(IBM) - Get Report

and

Dell

(DELL) - Get Report

. Then, as advertised, so too did the profit-taking.

But in the final stanza of trading, investors did something that was not expected -- engaging in what can only be described as profit-forsaking. The

Dow Jones Industrial Average

recovered from its midafternoon funk, established a new intraday high of 9480.71 and closed with an impressive gain. The blue-chip proxy once again

outpaced broader market averages, but they also ended on a positive note.

"The market acted great heading into the jobs number tomorrow," said Robert Harrington, co-head of block trading at

PaineWebber

. "You still saw some people moving out of PC stocks, but you're certainly seeing some strength in big consumer stocks and retailers, and oil stocks have been acting better. Plus, the way the banks have acted and the utility sector held up today, that's telling you rates haven't been acting well, but maybe we're near the high end of the range even if the

Fed

did tighten once."

After rising as high as 9448.66 around 12:35 p.m., the most public face of equities settled back a bit in the afternoon, dropping to just 80 points above break-even. The Dow then regained its footing to close up 191.52, or 2.1%, to 9467.40.

In addition to Big Blue, which gained 2.4%, the index was led by

Sears

(S) - Get Report

,

General Motors

(GM) - Get Report

and

American Express

(AXP) - Get Report

. Sears named a new CFO and said same-store sales rose 0.8% in February. GM upped its first-quarter production estimates, and American Express got a buy recommendation from

Salomon Smith Barney

.

Recently shellacked bellwether technology stocks initially leapt with joy at the IBM-Dell announcement. Then either everyone realized the deal was really good only for IBM, or names got to levels that bade anxious holders to sell. But at day's end, the optimism resurfaced.

The

Nasdaq Composite Index

raced as high as 2311.18 in the first hour of trading, then slowly and inexorably faded until it dipped below break-even around 2:30 p.m. In the final 90 minutes of the session, however, the tech-riddled index recovered its balance (if not its dignity), closing up 27.69, or 1.2%, to 2292.89.

The index was paced by

Microsoft

(MSFT) - Get Report

and

Cisco

(CSCO) - Get Report

while

Intel

(INTC) - Get Report

proved to be a hindrance. The

Nasdaq 100

rose 1.8% while the

Philadelphia Stock Exchange Semiconductor Index

gained 0.6%.

Internet names never really got on track and finished mixed.

TheStreet.com Internet Sector

index rose 2.26, or 0.4%, to 523.39 while

TheStreet.com E-Commerce Index

slid 1.49, or 1.6%, to 94.50.

The

S&P 500

closed up 18.94, or 1.5%, to 1246.64, just below its afternoon apex of 1247.91. The

Russell 2000

closed up 2.07, or 0.5%, to 394.02 after rising as high as 394.24.

Acknowledging a "really strong" employment figure could "put a cloud on things, short-term," Harrington does not believe today's move will prove to be a head fake. "People are worried about interest rates, and with interest rate-sensitive groups acting better, maybe the bond will follow," he said. "We've had strong job numbers and inflation hasn't really reared its head. The fundamentals seem OK right now. As you get through the preannouncement stage, you may see people a little more constructive."

The trader was most impressed today by the action in financial-services stocks such as

Merrill Lynch

(MER)

, which rose 8.5%, while the

American Stock Exchange Broker/Dealer Index

gained 4.2%. Additionally, the

Dow Jones Utility Average

rose 4.14, or 1.4%, to 2907.11, while the bond market was in a stupor, he noted.

The benchmark 30-year Treasury bond ended off 2/32 at 93 18/32, its yield at 5.70%.

In

New York Stock Exchange

trading, 771 million shares traded while advancers bested declining stocks 1,713 to 1,183. In

Nasdaq Stock Market

activity, 894.2 million shares were exchanged while gainers led 2,009 to 1,867. New 52-week lows led new highs 78 to 28 on the Big Board and by 89 to 36 in over-the-counter trading.

Now for Something Completely Different

With the unanimity on Wall Street about today's action, it was refreshing to speak with Tom McManus, equity portfolio strategist at

NationsBanc Montgomery Securities

.

First, McManus denied the rally had anything to do with IBM's deal with Dell. "Overall macro trends are positive here," he said. "The huge spike up in interest rates is, at least, slowing."

With many fearing a spike in bond yields tomorrow if the employment data prove robust, McManus is not only sanguine about such a development, but downright hopeful.

"I think that would be wonderful," he said. "Whatever would spook the bond market to give me a higher yield would be all to the good. It's only bad if I thought bond yields were going up because inflation was rising. I think bond yields are re-establishing a fair value over inflation that had disappeared."

But Tom, you might ask (as we did), won't it be bad for stocks if bond yields rise, regardless of the reason?

"It's not really a zero-sum game because I don't think inflation has risen," he'd reply (as he did to us). "I don't think stocks are any less attractive. Bonds may be slightly more attractive, but I think stocks are undervalued relative to inflation and bonds flat."

With inflation in check, McManus sees the potential for multiple expansion. Moreover, "the earnings outlook has been improving," he said. "For a couple of months in a row we're hearing from the manufacturing sector that things are picking up. The consumer has been resilient. All we need is a little stimulus in Europe and we can see a resumption of some balanced growth, which is positive for earnings. I'm still bullish."

Among other indices, the

Dow Jones Transportation Average

rose 6.49, or 0.2%, to 3255.18; and the

American Stock Exchange Composite Index

gained 4.07, or 0.6%, to 698.52.

Elsewhere in North American equities, the

Toronto Stock Exchange 300

jumped 88.37, or 1.4%, to 6268.71 and the

Mexican Stock Exchange IPC Index

soared 90.64, or 2.2%, to 4218.02.

Thursday'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.

)

IBM surged 4 1/4 to 171, off its session high of 177, and Dell picked up 15/16 to 81 7/8, off its intraday high of 84 3/4, after, as noted above, confirming a $16 billion, seven-year technology agreement. The deal calls for Dell to buy storage, microelectronics, networking and display technology from IBM for integration into Dell computer systems. Eventually, the deal may include IBM's copper, silicon-on-insulator and other technologies. The deal also calls for broad patent cross-licensing between the two companies and collaboration on the development of future product technology. Despite insisting it sees no negative impact from the deal,

Seagate

(SEG)

fell 1 5/8, or 5.5%, to 28.

Retailers generally rallied on reports of hearty February same-store sales.

  • Dayton Hudson (DH) rose 2 1/2 to 65 7/8 on sales up 8.3%.
  • Dollar General (DG) - Get Report rose 2 1/2, or 8.2%, to 32 15/16 on sales up 4%.
  • Goody's Family Clothing (GDYS) lost 3/8 to 10 5/8 despite sales up 0.4%.
  • J.C. Penney (JCP) - Get Report rose 2, or 5.5%, to 38 5/16 despite sales down 0.4%.
  • Limited (LTD) rose 9/16 to 37 13/16 on sales up 13%.
  • Neiman Marcus (NMG) rose 1 1/8 to 26 1/16 on sales up 3.3%.
  • Saks (SKS) lost 2, or 5.6%, to 34 on flat sales.
  • Sears rose 3 1/8, or 7.7%, to 43 3/4 on sales up 0.8%.
  • ShopKo (SKO) rose 3/8 to 31 1/4 on sales up 6%.
  • Staples (SPLS) rose 1/2 to 28 1/2 on sales up 10%. The company also posted fourth-quarter earnings of 22 cents a share, beating the 20-analyst view by 2 cents and moving ahead of the year-ago 16 cents.
  • Ann Taylor (ANN) rose 2 3/4, or 7.1%, to 41 3/4 on sales up 21.4%.
  • Wal-Mart (WMT) - Get Report rose 2 to 89 3/8 on sales up 10.3%.

Mergers, acquisitions and joint ventures

AmeriCredit

(ACF)

hopped 5/8, or 5.6%, to 11 7/8 after entering an alliance with

Chase

(CMB)

to provide nonprime automobile financing to Chase-customer automobile dealers. Financial terms of the deal were undisclosed. Chase added 2 11/16 to an all-time high of 83 3/8.

Bluefly

(BFLY)

sank 3 1/8, or 19.9%, to 12 9/16 after entering a marketing agreement with

Excite

(XCIT)

calling for Bluefly's online store to be integrated throughout

Excite.com

,

WebCrawler.com

and the Excite co-branded channels of

Netscape's

(NSCP)

Netcenter

sites through a combination of commerce, advertising and promotional programs. Excite lifted 2 1/4 to 109; Netscape lifted 1/16 to 76 3/8.

France's

LVMH Moet Hennessy Louis Vuitton

(LVMHY)

climbed 1 15/16 to 43 1/4 after last night announcing it ended efforts to put a representative on

Gucci's

(GUC)

board. The company also said it canceled a special shareholders meeting slated for March 23. LVMH launched a hostile bid for Italy's Gucci earlier this year, but the company's stake in Gucci was lowered to 26% after Gucci instituted an employee stock option plan. Gucci added 1/16 to 67 1/8.

MetroNet Communications

(METNF)

, Canada's largest facilities-based competitive local exchange carrier, swelled 3, or 7%, to an all-time high of 46 1/4 after agreeing to merge with

AT&T's

(T) - Get Report

Canadian unit in a deal valued at $4.6 billion. AT&T rung up 1 1/16 to 84 7/16.

3Com

(COMS)

increased 7/16 to 25 after

The New York Times

said Germany's

Siemens

in preliminary talks with the company about paying $1.2 billion for its unit that sells networking equipment to phone companies. The newspaper also reported that Siemens plans to buy

Castle Networks

for about $300 million in cash and

Argon Networks

for roughly $240 million in cash.

Verio

(VRIO)

shot up 3 5/8, or 11.2%, to an all-time high of 36 1/2 after

America Online

(AOL)

selected the company as its exclusive Web host provider for its

CompuServe

,

AOL.com

and

Digital City

services. Under the marketing agreement, AOL will receive guaranteed payments of a minimum of $42.5 million from Verio. AOL slid 13/16 to 86 1/4.

VLSI

(VLSI)

jumped 15/16, or 5.4%, to 18 5/16 after saying it will hold a special board meeting March 23 to consider an unsolicited $777 million takeover bid from

Philips Electronics

(PHG) - Get Report

. Philips lowered 7/8 to 67 5/8.

Earnings/revenue reports and previews

Clorox

(CLX) - Get Report

climbed 6 3/4, or 5.5%, to 129 after

Merrill Lynch

said the company is comfortable with fourth-quarter earnings estimates of $1.02 a share.

Costco

(COST) - Get Report

expanded 3 1/6 to an all-time high of 86 3/4 after reporting second-quarter earnings of 66 cents a share, topping both the 19-analyst view of 64 cents and the year-ago 56 cents.

General Nutrition

(GNCI)

popped up 13/16, or 7.4%, to 11 7/8 even after last night recording fourth-quarter earnings of 31 cents a share, 1 cent below the nine-analyst forecast and behind the year-ago 42 cents.

Genzyme General

(GENZ)

advanced 2 7/8, or 6.4%, to 48 3/16 after posting fourth-quarter earnings of 39 cents a share, on target with the 14-analyst view and above the year-ago 33 cents. The company also announced plans to create a separately traded division for its existing surgical products business.

Hayes Lemmerz

(HAZ)

sliced off 2 7/16, or 10%, to an annual low of 22 after posting fourth-quarter earnings of 31 cents a share, nowhere near the six-analyst outlook for 56 cents and repeating the year-ago figure.

Horizon Pharmacies

(HZP)

tanked 2 9/16, or 31.1%, to 5 11/16 after saying that although it resolved complications with its daily prescription pricing technology it may still incur a loss of $1 million to $2.5 million.

ICN Pharmaceuticals

(ICN)

grew 2 3/4, or 12%, to 25 3/4 after posting fourth-quarter earnings of 15 cents a share, in line with the four-analyst estimate but below the year-ago 49 cents.

International Game Technology

(IGT) - Get Report

skidded 3 5/8, or 19.8%, to an annual low of 14 11/16 after warning that, because of a slower rate of replacement sales and uncertain timing of new casino openings, it might miss 1999 earnings estimates. The 11-analyst forecast called for earnings of $1.54 a share vs. the year-ago $1.33.

Credit Suisse First Boston

slashed the stock to hold from buy.

Texas Instruments

(TXN) - Get Report

excelled 5/8 to 92 1/2 after its CFO said at an analyst conference that he expects moderate revenue growth this year in the company's semiconductor business.

TMP Worldwide

(TMPW)

flew up 3 7/8, or 7.2%, to 57 3/4 after saying just before the closing bell that its interactive division, led by Monster.com, posted an operating profit of $1.2 million in fiscal 1998.

Offerings and stock actions

Antenna TV

(ANTV)

dropped 1 1/2, or 10%, to 13 5/8 after

Lehman Brothers

priced the Greece-based company's 7.7 million-share IPO above range last night.

Level 3 Communications

(LVLT)

rose 2 15/16, or 5.3%, to 57 15/16 after last night raising an existing stock offering to 25 million shares from 20 million shares.

RF Micro Devices

(RFMD)

grew 4 3/4, or 5.9%, to an all-time high of 85 15/16 after last night announcing a 2-for-1 stock split.

Analyst actions

American Express hopped up 5 3/16 to 113 after Salomon Smith Barney initiated coverage with a buy.

CheckFree

(CKFR)

shed 4 5/16, or 12.2%, to 31 1/2 after Lehman Brothers lowered the stock to neutral from outperform. Yesterday,

Intuit

(INTU) - Get Report

, which added 3 to 91 1/8, filed suit against the company for allegedly violating a contract agreement.

i2 Technologies

(ITWO)

soared 3 7/8, or 16.6%, to 27 1/4 after

Prudential Securities

upped it to accumulate from hold.

Level One Communications

(LEVL) - Get Report

closed at 27 1/8 before being halted following the closing bell. The company, which was lowered by

Adams Harkness

to accumulate from strong buy during the day, will be acquired by Intel for $2.2 billion in stock, it was announced around 4:15 p.m. EST.

Micron Technology

(MU) - Get Report

climbed 3/8 to 53 after

Gruntal

upped the stock to strong buy from buy, saying recent weakness in the sector is providing a good buying opportunity.

Paychex

(PAYX) - Get Report

shot up 4 5/16, or 11.2%, to 42 7/8 after Salomon Smith Barney lifted it to buy from outperform.

Miscellany

Gilead Sciences

(GILD) - Get Report

vaulted 6 5/16, or 15.1%, to an all-time high of 48 1/4 on positive results from trials of its anti-HIV drug,

Preveon

.

Encouraged by lower weekly inventory data reported by the

American Petroleum Institute

and hopes that

OPEC

will cut production at a March 23 meeting, oil-service stocks took in another rally today:

Schlumberger

(SLB) - Get Report

jumped 4 5/8, or 8.9%, to 56 3/8, and

Halliburton

(HAL) - Get Report

jumped 1 41/64, or 5.4%, to 32 1/16.

Synaptic Pharmaceutical

(SNAP) - Get Report

slid 3 7/16, or 22.5%, to 11 7/8 after

Eli Lilly

(LLY) - Get Report

temporarily delayed the beginning of Phase III clinical trials of the company's migraine treatment. Lilly picked up 1 5/8 to 94 1/2.

Southwest Airlines

(LUV) - Get Report

lowered 11/16 to 30 5/16 after announcing plans -- about which

TheStreet.com

reported yesterday -- to begin flying to North Carolina's Raleigh/Durham airport. The move threatens

Midway Airlines

(MDWY)

, which dropped 3/4, or 5.9%, to 12 1/16.