Stocks Post Solid Gains in Continuation of Friday's Climb

The Internet sector was a shining star of today's activity.
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It sort of seemed like old times for the Internet sector, as Net stocks soared to hefty gains the way they did not so long ago, while the blue-chip

Dow Jones Industrial Average

closed above 10,900 for the first time since mid-May.

eBay

(EBAY) - Get Report

was a shining star in Netland, advancing 14 3/4, or 8.8%, to 183 1/4.

Meanwhile, leading

TheStreet.com Internet Sector

index was

CMGI

(CMGI)

, which was up 12 3/4, or 13.5%, to 107 1/4.

Meanwhile, the

Dow Jones Industrial Average

rose to solid gains, powered the most by

IBM

(IBM) - Get Report

.

AlliedSignal

(ALD)

, which agreed to buy

Honeywell

(HON) - Get Report

in a $14 billion stock swap, was the second-biggest boost to the Dow.

Momentum carrying over from Friday's advance and merger and acquisition news were a couple of the reasons cited for the advance today.

The

Nasdaq Composite Index

enjoyed solid gains, albeit not as large as

Friday's. Computer makers were notable on the upside. The

Philadelphia Stock Exchange Computer Box Maker Index

jumped 3.9%.

Financials enjoyed sizable gains, with brokerage stocks leading the way. The

American Stock Exchange Broker/Dealer Index

surged 3.4%.

Volume was weak on the

New York Stock Exchange

. On the NYSE, advancers beat decliners 1,715 to 1,236 on 654.9 million shares. On the

Nasdaq Stock Market

, winners beat losers 2,168 to 1,758 on 868.3 million shares.

On the NYSE, 93 issues set new 52-week highs while 53 touched new lows. On the Nasdaq, 117 issues set new highs while new lows totaled 36.

On the Big Board,

America Online

(AOL)

was most active, with 22.1 million shares changing hands. It was down 3 to 115.

On the Nasdaq,

Dell

(DELL) - Get Report

was most active, with 23.7 million shares changing hands. It was up 1 7/8 to 35 3/4.

Market data above are preliminary. Updated numbers and analysis will follow in the Market Roundup

3:06 p.m.: Stocks Trade Near Session Highs

Major market averages were at or near their session highs going into the final hour of trading, with the tech-heavy

Nasdaq Composite Index

pacing the way on the upside as the gauge continues to repair the damage it has suffered lately.

Today's rally, which has embraced many sectors and has only left out a handful of sectors, comes on the heels of

Friday's gains, a session in which the tech sector also paced the market. However, today's gains come on less-than-robust volume.

Internet stocks were enjoying outsized gains with

priceline.com

(PCLN)

,

eBay

(EBAY) - Get Report

and

CMGI

(CMGI)

among Net names notable in the green.

Leading

TheStreet.com Internet Sector

index were CMGI and

Yahoo!

(YHOO)

. The index jumped 3.6% Friday.

The

Nasdaq 100

was up 2%. Computer markers were soaring. The

Philadelphia Stock Exchange Computer Box Maker Index

was up 4%.

Financials gained handsomely, particularly brokerage stocks, which suffered a sizable beating last week. The

Philadelphia Stock Exchange/KBW Bank Index

was up 2%. The

American Stock Exchange Broker/Dealer Index

was up 4%.

The

American Stock Exchange Pharmaceutical Index

was down 2%, after jumping sharply Friday.

Airline stocks were having a souring effect on the

Dow Jones Transportation Average

. Airline issues slumped in part on the heels of

UAL's

(UAL) - Get Report

profit warning

Friday after the close.

On the

New York Stock Exchange

, advancers were beating decliners 1,557 to 1,307 on 502 million shares. On the

Nasdaq Stock Market

, winners were beating losers 2,044 to 1,735 on 677 million shares.

On the NYSE, 85 issues had set new 52-week highs while 45 had touched new lows. On the Nasdaq, 109 issues had set new highs while new lows totaled 29.

On the Big Board,

America Online

(AOL)

was most active, with 18 million shares changing hands. It was down 1/8 to 117 7/8.

On the Nasdaq,

Dell

(DELL) - Get Report

was most active, with 20 million shares changing hands. It was up 1 7/8 to 35 11/16.

2:03 p.m.: Internet Sector Leads Charge Higher

Internet stocks were soaring and padding the gains they enjoyed on Friday as computer makers and financials were also enjoying solid gains.

TheStreet.com Internet Sector

index was surging, paced by

CMGI

(CMGI)

and

Yahoo!

(YHOO)

.

Stocks were buoyed in part by momentum carrying over from Friday's gains and on merger and acquisition news.

AlliedSignal

(ALD)

was the biggest boost to the

Dow Jones Industrial Average

, jumping 5 3/16, or 9%, to 63 9/16 on news it is buying

Honeywell

(HON) - Get Report

in a $14 billion stock swap. Honeywell was soaring 8 7/8, or 8%, to 113 7/8, on the news.

Technology stocks, which paced the market on Friday, was doing it again. The

Nasdaq Composite Index

led major market gauges. Elsewhere, the

Nasdaq 100

was up 2%, while the The

Philadelphia Stock Exchange Computer Box Maker Index

was up 3%.

Tech bellwethers

Cisco

(CSCO) - Get Report

,

Intel

(INTC) - Get Report

,

Microsoft

(MSFT) - Get Report

and

Dell

(DELL) - Get Report

all gained. Dell was most active on the

Nasdaq Stock Market

, with 17 million shares changing hands. It was up 1 15/16 to 35 3/4.

Drug stocks were pulling back after rising sharply Friday. The

American Stock Exchange Pharmaceutical Index

was down 1%.

Financials were strong. The

Philadelphia Stock Exchange/KBW Bank Index

was up 2%, the third session in a row that it has gained. Brokerage stocks were padding the gains they enjoyed Friday after taking a beating last week. The

American Stock Exchange Broker/Dealer Index

was up 4%. Online broker

E*Trade

(EGRP)

was a strong upside influence for the gauge. It was up 3 15/16, or 10%, to 41 9/16.

Meanwhile, volume and market internals were less than inspiring.

On the

New York Stock Exchange

, advancers were beating decliners 1,519 to 1,303 on 414 million shares. On the

Nasdaq Stock Market

, winners were beating losers 1,965 to 1,708 on 569 million shares.

On the NYSE, 79 issues had set new 52-week highs while 39 had touched new lows. On the Nasdaq, 101 issues had set new highs while new lows totaled 26.

On the NYSE,

America Online

(AOL)

was most active, with 16 million shares changing hands. It was up 3/4 to 118 3/4.

Sector Focus: Airlines

United Airlines

parent

UAL

(UAL) - Get Report

was the biggest drag on the

Dow Jones Transportation Average

. On Friday after the close, UAL said weak domestic performance will hurt earnings for its second quarter and year. UAL was down 1 7/8 to 63 15/16. Airline stocks were the weakest performers in the transportation gauge.

Meanwhile, the

American Stock Exchange Airline Index

was down 1%.

AMR

(AMR)

, parent of

American Airlines

, was off 1 5/16 to 67 3/16.

Delta Air Lines

(DAL) - Get Report

was down 15/16 to 58 1/4, while

US Airways

(U) - Get Report

was down 1 to 49 1/2.

Southwest Airlines

(LUV) - Get Report

, however, was bucking the downside trend and was up 3/16 to 32 11/16.

Northwest Airlines

(NWAC)

was down 1 9/16 to 31 1/16. The airline said this afternoon that its May load factor fell to 74.9% from 76%. On Saturday, the airline's flight attendants voted overwhelmingly to strike, their union said.

12:50 p.m.: Midday Musings: Strength in Leaders Outweighs Weakness Elsewheret

11:56 a.m.: Nasdaq Leads March Higher

The

Nasdaq Composite Index

continued to pace the market's major averages as the tech sector continued to repair its recent damage, while

AlliedSignal

(ALD)

was the biggest boost to the blue-chip

Dow Jones Industrial Average

.

AlliedSignal said it's buying

Honeywell

(HON) - Get Report

in a $14 billion stock swap. AlliedSignal was up 4 7/16, or 8%, to 62 13/16, while Honeywell was up 7 13/16, or 7%, to 112 13/16. AlliedSignal was upgraded by

Salomon Smith Barney

and

Schroders

in the wake of the takeover news.

M&A news overall was cited as one of the reasons for the market's rise this morning. Among other deals,

First Security

(FSCO)

and

Zions Bancorp

(ZION) - Get Report

are merging in a deal valued at $5.9 billion. First Security was soaring 6, or 32%, to 24 9/16, while Zions was down 6 5/16, or 10%, to 59 1/16.

Late this morning, it was announced that

Southern Union

(SUG)

has agreed to acquire

Pensylvania Enterprises

(PNT)

for $500 million, including the assumption of debt.

Money continued to flow into the tech sector in part on the view that the stocks in the arena have bottomed, according to some market participants.

On the

New York Stock Exchange

, decliners were beating advancers 1,361 to 1,259 on 265 million shares. On the

Nasdaq Stock Market

, winners were beating losers 1,828 to 1,483 on 365 million shares.

On the NYSE, 67 issues had set new 52-week highs while 28 had touched new lows. On the Nasdaq, 99 issues had set new highs while new lows totaled 18.

On the NYSE,

America Online

(AOL)

was most active, with 11 million shares changing hands. It was down 1 1/8 to 116 7/8.

On the Nasdaq,

Dell

(DELL) - Get Report

was most active, with 12 million shares changing hands. It was up 1 3/8 to 35 3/16.

Tech Focus

Tech sector gauges were higher. The

Nasdaq 100

was up 1%, while the

Morgan Stanley High-Tech 35

was up 2%. The

Philadelphia Stock Exchange Computer Box Maker Index

was up 3%.

The

Philadelphia Stock Exchange Semiconductor Index

was up 1%.

Rambus

(RMBS) - Get Report

was a notable mover on the Nasdaq after it was upgraded by

Morgan Stanley Dean Witter

to strong buy from outperform and raised its 12-month price target to $150 from $110. Rambus was up 7 3/8, or 10%, to 80 1/4.

Looking ahead, the

PaineWebber Growth & Technology Conference

is slated to get under way tomorrow. Among some of the tech companies appearing:

IBM

(IBM) - Get Report

, Dell,

Sun Microsystems

(SUNW) - Get Report

,

Texas Instruments

(TXN) - Get Report

,

Lucent

(LU)

and

Gateway

(GTW)

.

11:08 a.m.: AlliedSignal Deal Gives Dow a Boost

Stocks were higher at midmorning as

AlliedSignal

(ALD)

-- which said it's buying

Honeywell

(HON) - Get Report

-- was powering the

Dow Jones Industrial Average's

modest gains.

M&A activity dominated the news this morning.

Tech stocks gained overall. Some market participants said buyers were continuing to climb into the sector on the belief, in part, that after the recent selloff in the sector the stocks had bottomed.

Internet stocks were up solidly, continuing efforts to repair some of the significant damage the sector has suffered since April. The biggest gainer in

TheStreet.com Internet Sector

index so far has been

CMGI

(CMGI)

, which was up 5 5/16 to 99 9/16.

Jay Suskind, head of institutional equity trading at

Ryan Beck

, said that for the most part there's "nothing major going on" so far in the session, adding that the market is still waiting to see what the

Fed

does regarding interest rates.

The

Federal Open Market Committee

is slated to meet June 29 and 30.

He said "the camp out there is 50-50 that the Fed will do a quarter point." For himself, he's guessing the Fed tightens a quarter point. However, if upcoming

Consumer Price Index

data and

Producer Price Index

are benign, that could stop a hike. PPI, along with May

retail sales

data, will be released on Friday, while the CPI numbers will be released on June 16.

Right now, the Treasury market is largely expecting a rate hike. The July fed funds futures contract, used as a benchmark for what direction the Treasury market believes Fed policy will take, was lately at 4.97%, and is now factoring in an 88% chance of a rate hike.

On the

New York Stock Exchange

, decliners were beating advancers 1,277 to 1,198 on 183 million shares. On the

Nasdaq Stock Market

, winners were beating losers 1,720 to 1,419 on 254 million shares.

On the NYSE, 57 issues had set new 52-week highs while 20 had touched new lows. On the Nasdaq, 81 issues had set new highs while new lows totaled 14.

On the NYSE,

America Online

(AOL)

was most active, with 9 million shares changing hands. It was down 1 to 117.

On the Nasdaq,

@Home

(ATHM) - Get Report

was most active, with 8 million shares changing hands. It was down 2 1/2 to 92.

10:04 a.m.: Stocks Open Mostly Firmer

Stocks were adding on to Friday's gains early on, while the market digested a healthy dosage of M&A news.

Topping takeover news,

AlliedSignal

(ALD)

is buying

Honeywell

(HON) - Get Report

in a $14 billion stock swap.

On Friday, the market confronted a somewhat two-faced may employment report. On the soothing side, nonfarm payrolls expanded a measly 11,000, suggesting a slowing economy. On the less sanguine side, the unemployment rate dropped to 4.2% in May from 4.3% in April, and average hourly earnings, a gauge of inflation, rose 0.4%, both exceeding what economists expected. In addition, there was a handsome revision upward in the April jobs tally.

On the horizon are a couple of key economic reports: on Friday is the

retail sales

report for May and on June 16, the

Consumer Price Index

for May is scheduled for release. Speaking of the CPI, remember the April number? Sure, how can anyone forget. The surprise jump in CPI has been a primary catalyst for fueling the recent worries over inflation and chatter of a Fed tightening.

Most Up at Open -- NYSE

Vodafone (VOD) - Get Report, up 2 7/8 to 205 1/4

.

Most Up at Open -- Nasdaq

Rambus (RMBS) - Get Report, up 6 1/16 to 78 15/16

:

Morgan Stanley Dean Witter

upgraded Rambus to strong buy from outperform.

Most Down at Open -- NYSE

Carnival (CCL) - Get Report, down 1 7/8 to 42 5/8

.

Most Down at Open -- Nasdaq

Zions Bancorp (ZION) - Get Report, down 4 5/16 to 61 1/16

:

First Security

(FSCO)

and Zions Bancorp are merging in a deal valued at $5.9 billion.