Stocks Continue to Rally on Jump in Internet Sector

Market internals are clearly positive.
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All three major indices continued to rally in the afternoon, paced by technology stocks, although the

Dow Jones Industrial Average

has lately given up some of its gains.

The Dow rose 62 points, or 1% to 11,069.

United Technologies

(UTX) - Get Report

was leading the way for the industrials, up 3 15/16 to 151 3/4.

The

S&P 500

was up 16 to 1357. Lately

America Online

(AOL)

was 10 7/8 points higher to 139 3/16, spurred by this morning's upgrade by

Morgan Stanley Dean Witter's

Mary Meeker. AOL is also the day's most active, with 20 million shares exchanging hands.

The

Nasdaq Composite Index

was raging forth, up 40, or 2%, to 2566. Most active on the Nasdaq was

Dell

(DELL) - Get Report

, with 15 shares having changed hands. Dell was lately up 11/16 to 42 11/16.

Advancers were easily beating decliners by 1,684 to 1,199 on the

New York Stock Exchange

. On the Nasdaq, the winners were also outgaining losers by a count of 2,138 to 1,664.

Smaller indices were performing well. The

Russell 2000

was lately up 5 to 447, while

TheStreet.com Internet Sector

index was up 19 points to 654.

The Treasury market isn't affecting the performance in the stock market today. The

Treasury Department

sold $15 billion in notes today as the first leg of its quarterly refunding. Lately the 30-year bond was down 12/32 to 91 1/32, yielding 5.82%.

1:08 p.m.: Midday Musings: Rotation Takes a Holiday as Traders Storm Into Techst

12:07 p.m.: Stocks Head Back Toward Session Highs

Gains have been hard to protect lately in this inhaling, exhaling market. But at midday, after hunkering down in solid positive territory, stocks were trying to pull up stakes and continue their morning climb.

Technology was leading the rally. The

Nasdaq Composite Index

was lately up 35 to 2561.

Cisco

(CSCO) - Get Report

was leading the index's bellwethers, up 1 15/16 to 111 1/4.

Small-cap issues continued their three-month-long comeback, with the smallish-cap

Russell 2000

surging 1% and the

S&P SmallCap 600

up 1%. Internet stocks were looking strong on the heels of

Morgan Stanley Dean Witter

analyst

Mary Meeker's

bullishness (see below).

TheStreet.com Internet Sector

index was up 13 to 648.

The

Dow Jones Industrial Average

and the

S&P 500

were up 59 to 11,067 and 14 to 1355, respectively.

Strong

productivity

numbers from the

Labor Department

hadn't helped the long bond any by midday. Non-farm productivity rose 4.0% and a labor costs jumped 0.3% vs. expectations of a 3% rise in productivity and 0.5% cost increase. But the benchmark 30-year Treasury was lately down 7/32 to 92 4/32, its yield rising to 5.81%, while the

Treasury Department

auctioned $15 billion in five-year notes as part of its two-day $27 billion refunding.

Market internals were looking very nice.

New York Stock Exchange

advancers were leading decliners 1,714 to 1,070 on 376 million shares. On the

Nasdaq Stock Market

, 2,002 advancers were beating 1,504 decliners on 411 million shares.

Most active on the NYSE was

America Online

(AOL)

, up 9 1/16 to 137 3/8 on 15 million shares after Morgan Stanley upgraded the stock to strong buy from outperform..

Dell

(DELL) - Get Report

was the Nasdaq's most active issue, with 11 million shares changing hands. It was up 13/16 to 43 1/8.

Tech Focus

The

Philadelphia Box Maker Index

was leading the major tech indices, up 2 to 239, while the

Morgan Stanley High-Tech

was up 21 to 1034. The

Philadelphia Stock Exchange Semiconductor Index

was up 1 to 389.

Yahoo!

(YHOO)

was making up some recently lost ground after it launched

Yahoo! Radio, 10 Internet radio stations with continuous music programming, in partnership with

broadcast.com

(BCST)

, which Yahoo! is acquiring, and

Spinner.com

. Yahoo! was lately up 11, or 7%, to 167.

TheStreet.com Inc.

, publisher of this Web site, opened at 61 in its first day of trading today. The stock was lately trading at 61 1/8, up 43 1/4.

--

Thomas Lepri

10:57 a.m.: Stocks Fall From Session Highs

As Net stocks faltered in recent weeks before yesterday's revival, Internet investors (and CEOs) cried: "Mary, Mary we need your lovin'!"

Today, those prayers were answered when

Morgan Stanley Dean Witter's

influential Internet analyst Mary Meeker, (a.k.a.. "Queen of the Net", a.k.a. "Big Net Momma", a.k.a. "Run DMMeeker") upped her recommendation on

America Online

(AOL)

to strong buy from outperform.

The announcement helped ignite a flurry in Net stocks while tech names in general led an early morning uprising. However, the runaway enthusiasm of the initial upswing faded along with the bond market's early gains.

With AOL up 6% to lead the way,

TheStreet.com Internet Sector

index was up 8 to 643 after rising as high as 650.78 early on. The DOT also got a lift from

USWeb

(USWB)

, up 11% after

Prudential Securities

initiated coverage with a strong buy.

The

Nasdaq Composite Index

was up 19 to 2546 but off its initial high of 2557.67. Traditional Nasdaq tech bellwethers were uniformly higher but mostly sporting only fractional gains -- the

Nasdaq 100

was up 1%.

Cisco

(CSCO) - Get Report

was the best performer of the big tech stocks, up 1% ahead of its earnings report, expected after the close. The 31-analyst estimate calls for third-quarter earnings of 37 cents a share vs. 30 cents a year ago.

The

Dow Jones Industrial Average

was up 4 to 11,011 after racing as high as 11,062.23 early on and then dipping briefly into negative territory. The

S&P 500

was up 7 to 1347 while the

Russell 2000

was higher by 2 to 444.

In

New York Stock Exchange

trading, gainers were leading declining stocks 1,511 to 1,099 on 239 million shares. In

Nasdaq Stock Market

activity, gainers were leading 1,809 to 1,353 on 265 million shares.

Outside of Net stocks, retailers were one of the few groups moving with much oomph in either direction thus far today. The sector was on the rise after

Wal-Mart

(WMT) - Get Report

reported first-quarter earnings of 25 cents a share vs. the 20-anlayst estimate of 22 cents and year-ago results of 19 cents. Wal-Mart was up 2% while the

S&P Retail Index

was higher by 2%.

Hallow Victory for Berry

Score one for

John Berry

. Last week, as his counterparts at

The Wall Street Journal

and elsewhere focused on other aspects of the speech,

The Washington Post

reporter honed in on

Federal Reserve

Chairman

Alan Greenspan's

acknowledgement of technology-driven productivity gains.

Today, Berry's more benign take on the speech was vindicated as the

Labor Department

reported a 4% rise in non-farm productivity and a 0.3% increase in labor costs vs. expectations for a 3% rise in productivity and 0.5% rise in costs.

But the bond market largely ignored the favorable productivity data. After a brief rise, bond prices reversed course as traders focused their furrowed brows on the

Treasury Department's

two-day $27 billion refunding beginning today, economic data due later in the week, and the

FOMC's

meeting a week from today.

The price of the 30-year Treasury bond was lately down 4/32 to 92 6/32, its yield rising to 5.80%.

--

Aaron L. Task

10:01 a.m.: Nasdaq Leads March Higher at Open

An upbeat session led by Internet shares and other tech stocks got under way with index gains across the board.

The

Nasdaq Composite Index

was setting the pace among major indices, lately up 26 to 1350. As they did yesterday,

Yahoo!

(YHOO)

and

Amazon.com

(AMZN) - Get Report

were the early leaders among the Comp's largest issues.

TheStreet.com Internet Sector

index was up 11 to 646, sparked higher by

Morgan Stanley Dean Witter's

upgrade of

America Online

(AOL)

to strong buy from outperform.

The

Dow Jones Industrial Average

was up a more modest 46 to 11,053 and the

S&P 500

was up 10 to 1350. The small-cap

Russell 2000

continued its recent strength, up 2 to 444.

The bellwether 30-year Treasury bond was up 1/32 to 92 12/32, its yield edging down to 5.79%.

Most Up at Open -- NYSE

America Online, up 10 5/16 to 138 5/8

: In addition to the Morgan Stanley Dean Witter upgrade, AOL said it entered partnerships with four companies to develop its

AOL TV

product. The companies are the

DirecTV

and

Hughes Network Systems

units of

General Motors'

(GM) - Get Report

Hughes Electronics

(GMH)

arm;

Philips Electronics

(PHG) - Get Report

; and

Network Computer

.

Most Up at Open -- Nasdaq

Immunex (IMNX) , up 24 to 131

: The company late

yesterday said it plans to seek federal approval to market its

Enbrel

drug to early-stage rheumatoid arthritis patients.

Most Down at Open -- NYSE

Tricon Global Restaurants (YUM) - Get Report, down 1 5/8 to 60 3/8

.

Most Down at Open -- Nasdaq

CNet (CNET) - Get Report, down 9 11/16 to 126 1/2

: CNet soared yesterday on news of its participation in the

NBC Internet

venture, which also includes

Xoom.com

(XMCM)

and

General Electric's

(GE) - Get Report

NBC

unit.

--

John J. Edwards III