Stocks Up as Hewlett-Packard Announces Breakup

Meanwhile, bonds are continuing to recover after Monday's selloff.
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It's official.

As expected

Hewlett-Packard

(HWP)

announced that it will break itself up into two publicly traded companies -- one a measurement business and the other a computing and imaging business.

The announcement put a shine on an already positive day. With this morning's announcement that

Alcatel

(ALA)

will buy network-equipment maker

Xylan

(

(XYLN)

for $2 billion, and the bond market cooperating, stocks are higher across the board.

The

Dow Jones Industrial Average

was up 29 to 9354, while the

S&P 500

was up 5 to 1241. The

Nasdaq Composite Index

was up 14 to 2309 and the

Russell 2000

was 3 to 397.

The Street.com Internet Sector

was up 18 to 543.

On the

New York Stock Exchange

, 1,481 advancers were leading 1,170 decliners on 389 million shares.

Nasdaq Stock Market

winners were beating losers 1,725 to 1,608 on 366 million shares.

On the NYSE, 38 issues were at new 52-week lows while 21 were at new highs. On the Nasdaq, 32 issues were at new lows while new highs totaled 43.

The 30-year Treasury bond was up 22/32 to 94 19/32, dropping the yield to 5.63%.

Tech Focus

With HP not open, no doubt people are tearing their hair out trying to figure out a way to play this one.

It seems that one way might be options on the Dow -- that thing that those people in the commercials understand better than any stock they follow. HP accounts for about 3.1% of the Dow, and each point that it moves is worth 4.35 Dow points. The March 94 calls, up just 1/4 to 1 7/8, might seem cheap.

But while there may be such a thing as a free lunch on Wall Street, this isn't one of them, according to

Salomon Smith Barney

options strategist Kevin Murphy. "I don't see a play in the Dow Jones, because

HP is such a small part of it," he said. "You just have too much of a tracking error to try and play it in any other vehicle. Our customers just want more of a pure play."

There are other problems, too, said Murphy. First, Dow options are pretty illiquid -- moving into them often means moving them. And then it seems likely that anyone already trading the Dow futures has already accounted for a positive HP. And the options trade off the futures more than they trade off the index itself. "What you're going to see is a big jump in the Dow and then the options don't move up," he said.

11:01 a.m.: Stocks Remain Higher; Braverman Joins Monty

Something akin to stability in the bond market, along with the good vibes from

Alcatel's

(ALA)

announcement that it will take out network-equipment maker

Xylan

(XYLN)

and a report in

The Wall Street Journal

that

Hewlett-Packard

(HWP)

will split itself into at least two publicly traded companies, has put a shine on stocks this morning.

Hewlett-Packard remains closed pending news.

"Right now, my screen is looking very green," said Doug Myers, vice president of equity trading at

Interstate/Johnson Lane

. "You still have cross currents -- we have only a handful of new highs and a 100 and some new lows every morning, and that has been going on for weeks. The bear is not dead. But on the other hand, there is just nothing that looks like it's going to dislodge the American economic engine."

All in all, Myers is hopeful that the market is nearing the time when it will finally break out of its range. "We've been moving sideways for a while here, but we seem to be forming the base for our next rally," he said.

The

Dow Jones Industrial Average

was up 21 to 9346, while the

S&P 500

was up 3 to 1239. The

Nasdaq Composite Index

was up 9 to 2304 and the

Russell 2000

was up 3 to 397.

The Street.com Internet Sector

was up 16 to 541.

On the

New York Stock Exchange

, 1,458 advancers were leading 1,025 decliners on 197 million shares.

Nasdaq Stock Market

winners were beating losers 1,636 to 1,405 on 258 million shares.

On the NYSE, 28 issues were at new 52-week lows while 16 were at new highs. On the Nasdaq, 25 issues were at new lows while new highs totaled 33.

The 30-year Treasury bond was up 9/32 to 94 6/32, dropping the yield to 5.66%.

In other news, Alan Braverman has joined

NationsBanc Montgomery Securities

as its Internet analyst, according to a Montgomery internal memorandum.

Braverman's hiring is another example of the

bull market for Internet analysts. It also shows San Francisco-based Montgomery's strong desire to beef up its ranks after the departure of dozens of workers, including many who joined a firm started by Montgomery founder Thom Weisel. In fact, Braverman, who will be a senior managing director, succeeds David Readerman, who joined

Thomas Weisel Partners

.

Braverman had been the Internet analyst at

Deutsche Bank Securities

.

Braverman couldn't be reached for comment. Montgomery and Deutsche Bank declined to comment.

9:51 a.m.: Stocks Up Modestly at Open

Stocks were mostly higher early on as the 30-year Treasury bond firmed modestly this morning after yesterday's swoon.

The

Dow Jones Industrial Average

was up 4 to 9329. The

S&P 500

was up 1 to 1237.

The

Nasdaq Composite Index

was up 7 to 2302. The

Russell 2000

was up 2 to 396.

TheStreet.com Internet Sector

was up 10 to 535.

TheStreet.com E-Commerce Index

was up 2 to 99.

The 30-year Treasury bond was up 1/32 to 93 30/32, yielding 5.68%.

Most Up at Open -- NYSE

IBM (IBM) - Get Report, up 2 1/8 to 170 1/2

.

Most Up at Open -- Nasdaq

Visx (VISX) , up 11 to 71 1/2

: The company yesterday said it expects to beat analysts' estimates for the first quarter thanks to demand and license fees for its

Star S2 Excimer Laser System

.

BancBoston Robertson Stephens

upgraded Visx to buy from long-term attractive.

Most Down at Open -- NYSE

Telebras (TBH) , down 2 1/16 to 61 7/16

.

Most Down at Open -- Nasdaq

Micron Electronics (MUEI) , down 2 11/16 to 11 3/4

: Yesterday the company warned it sees second-quarter earnings and sales falling below first-quarter figures because of slower PC sales. The 15-analyst

First Call

outlook called for earnings of 14 cents a share vs. the year-ago loss of 23 cents. In the first quarter, the company made 12 cents.

--

Brian Louis