, the rally this morning looks too legit to quit as the advance is underpinned by some constructive news.
Then again, the bond market is down sharply, developments in Kosovo remain a concern and the
Federal Open Market Committee
meets tomorrow. So there are no guarantees the advance won't peter out or (at a minimum) fail to secure
10,000. Moreover, who knows where MC Hammer is these days? And, frankly, who cares?
But for now, the tide is high and major market proxies are rolling on. The
Dow Jones Industrial Average
lately was up 152, or 1.6%, to 9975, having peaked at 9989.57, while the
was higher by 21, or 1.6%, to 1304.
First and foremost on the good-news docket are reports of merger talks between
. With "major" oil producers looking more and more like colonels, the BP Amoco-Arco development has inspired considerable "who's next?" discussion, bolstering other producers such as Dow member
American Stock Exchange Oil & Gas Index
was up 4.1%.
Oil service stocks were also on the rise after
Morgan Stanley Dean Witter
upped recommendations on
Philadelphia Stock Exchange Oil Service Index
was up 4.8%.
In addition to energy, the Dow and S&P were aided by drug makers, up after some struggles last week and reports
have engaged in preliminary merger talks. Also, the
Food and Drug Administration
can still market Rezulin. The
American Stock Exchange Pharmaceutical Index
was up 2.4%.
Technology is also playing its part in the morning's upturn, partially on news that
Platinum Technology International
in a stock swap valued at more than $3.5 billion.
lack of glaringly negative comments during a meeting with analysts this morning is also helping the sector.
Nasdaq Composite Index
was up 49, or 2%, to 2468, with traditional stalwarts such as
leading the charge.
Internet favorites were also higher.
TheStreet.com Internet Sector
index was up 22, or 3.5%, to 651, but
TheStreet.com E-Commerce Index
had gained less than 1, or 0.7%, to 112.
Among Net plays, E-Commerce Index components
were lower in the wake of news that
will open its own online auction site. But Amazon.com was up 7.5% and other Net bellwethers, such as
, were solidly higher.
Small-caps were also participating, reflecting solidly positive breadth indicators; the
was up 5, or 1.2%, to 399.
"The market opened up very well from the get-go and has completely ignored what's going on overseas" in Kosovo, said Ken Ducey, director of trading at
. "Merger mania is adding fuel into the marketplace. As long as you see this, there's going to be a lot of interest to the upside. It looks like it's going to approach 10,000 later this week." If not today.
Ducey observed that "each time
the Dow has approached 10,000 we have some seen some resistance and this time is not any different. But we've got a short workweek and people know to get anything done they've got to do it early in the week."
The stock market is closed Friday in observance of Good Friday.
New York Stock Exchange
trading, advancers were leading declining stocks 1,777 to 1,037 on 398 million shares. In
Nasdaq Stock Market
activity, gainers were leading 2,057 to 1,534 on 462 million shares.
Surprised but Still Cautious
"This morning is a little surprising to me in that the broad market is stronger," said Bruce Bittles, market strategist at
in Nashville, Tenn. "My guess is we've got a lot of end-of-the-quarter business on the long side of the market, plus the Arco deal. Outside of that, my guess is we'll turn around for a while."
Bittles is not bearish but believes the fact the advance/decline line made a new low last week is a telling sign. "I don't see how that can be considered particularly bullish," he said. "We're not looking for a downturn of significance, but we think 10,000 is going to be resistance."
That seemed to be the case this morning, as the Dow stalled less than 11 points from the milestone. Bittles foresees the venerable index trading between 9200 and 9900 for the time being, noting mutual-fund inflows have been "inconsistent" this year compared with 1995 to 1998. Back then, he said, "they just put money into funds. What it might mean is the public is finally becoming fully invested in terms of mutual funds."
Notwithstanding struggles earlier this year,
Liquidity Trim Tabs
reported fund inflows totaled $3.5 billion for the five trading days ended Thursday. Also, the percentage of money going into equity funds in the past four weeks was over 50% for the first time since July 1998, the report said.
Nonetheless, Bittles recommends a relatively conservative allocation model of 45% stocks, 50% bonds and 5% cash. The "big bond allocation" reflects a belief that deflation remains a greater long-term threat than inflation and that bonds are "a great hedge in case the U.S. stock market gets into trouble," he said.
The bullishness on bonds also incorporates a view that the Fed is on hold for the foreseeable future. Tomorrow's FOMC meeting is a "nonevent," Bittles said. "If they indicate a change of bias, that doesn't mean anything in terms of action later on. The Fed is not going to risk a recession or a U.S. slowdown
because all other areas of the world depend on exports to the U.S. for growth."
Nonetheless, bond traders were hedging positions. The price of the 30-year Treasury bond lately was down 27/32 to 94 5/32, its yield rising to 5.66%. (For more on the fixed-income market, see today's early
readers were perhaps caught a bit off guard by this morning's solid forward progress. Among respondents to
Investor Sentiment Poll, only 40% were either very bullish or somewhat bullish while 28% claimed Swiss-like neutrality and 32% were either somewhat bearish or very bearish. The anecdotal poll is conducted each Sunday.
Monday's Midday Movers
As noted above, Atlantic Richfield was up 6 13/16, or 10.4%, to 72 3/16 after confirming it's in merger talks with BP Amoco. BP Amoco, the third-largest oil company in the world, is expected to buy Arco in a stock deal valued around $25 billion. BP Amoco was up 3 3/8 to 103 13/16.
first caught wind of a potential deal
Elsewhere in oil, Halliburton was up 2 1/4, or 5.9%, to 40 3/8 and Baker Hughes was up 15/16 to 24 3/4 after Morgan Stanley Dean Witter upgraded the stocks to strong buy from outperform.
In other merger news, Platinum Technology was rocketing up 14 15/16, or 152.2%, to 24 13/16 after Computer Associates agreed to buy its rival for $3.5 billion in one of the biggest deals to hit the software industry. Computer Associates was off 1 1/4 to 32 11/16.
In other news:
Amazon.com was up 10 3/8, or 7.5%, to 149 7/16 after announcing plans to launch an online auction service. Rumors that the book and music retailer would enter the auction biz first hit the Street
Friday. Separately, Amazon agreed to buy 50% of closely held
Auctioneer eBay was down 5 5/8 to 149 1/8, up from an earlier 146, on the Amazon news despite word it and
Warner Bros. Online
, a unit of
, set a three-year strategic alliance. Time Warner was up 1 5/16 to 70 1/8.
was down 2 15/16 to 71 1/2, and Onsale was down 1 1/16 to 34 3/16.
Corporate Renaissance Group
was up 1, or 15.7%, to 7 1/2 after saying late Friday it received a proposal from a management-led group to acquire all the company's outstanding shares for $8 a share.
was flying up 1 1/2, or 66.7%, to 3 3/4 after receiving approval from the
Food and Drug Administration
to manufacture and market
, a generic version of the antibiotic Minocin.
was up 4 11/16 to 106 3/4 after agreeing to supply $1 billion in equipment and services to former parent
under a four-year pact. AT&T was up 3/16 to 82 7/8. Also, Lucent will replace
Standard & Poor's
Among other changes to S&P indices announced last week,
Kansas City Southern
S&P MidCap 400
component, was up 2 5/8 to 56 5/16 on news it will replace AMP in the S&P 500 after the closing bell April 1. AMP is being acquired by S&P 500 component
S&P SmallCap 600
component, was up 2 3/16, or 8.4%, to 28 3/16 on news it will replace Kansas City Southern in the midcap index.
Silicon Valley Group
was up 15/16, or 9%, to 11 3/8 on news it will replace Mohawk Industries in the small-cap index. And
, a component of the small-cap index, was up 3 1/16, or 5.2%, to 62 3/4 on news it will replace
in the midcap index.