With Bonds Cooperating, Stocks Add to Gains

The Hewlett-Packard breakup plan has boosted the Dow, and other major measures are cruising as well.
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After waiting for a couple of hours for

Hewlett-Packard

(HWP)

to say something (and it finally did), and with the 30-year Treasury bond trading -- get this -- on the plus side, stocks were higher at midday.

Hewlett-Packard, which announced a realignment of the company late this morning, creating two independent companies, was surging 10.3%. The restructuring plan was first reported this morning in

The Wall Street Journal

.

The stock, which had been halted most of the morning, helped send the

Dow Jones Industrial Average

to its session highs. The blue-chip index was up 83, or 0.9%, to 9408.

Meanwhile, the 30-year bond was up 25/32 to 94 21/32, yielding 5.62%. (For more on the fixed-income market, see today's early

Bond Focus.)

The

Nasdaq Composite Index

was up 21, or 0.9%, to 2316.

Tech sector barometers were higher, shaking off some earlier weakness. The

Nasdaq 100

was up 0.7%, as was the

Morgan Stanley High-Tech 35

was up 0.7%. The

Philadelphia Stock Exchange Semiconductor Index

was up 1%, despite a pullback in

Intel

(INTC) - Get Report

on another downgrade.

The

S&P 500

was up 11, or 0.9%, to 1247.

Net stocks were mostly higher.

TheStreet.com Internet Sector

index was up 22, or 4.1%, to 547.

@Home

(ATHM) - Get Report

was the biggest gainer in the index, up 10%.

TheStreet.com E-Commerce Index

added 3, or 2.9%, to 100.

Meanwhile in tech news, out in Utah,

Hambrecht & Quist's plaNET.wall.street

conference enters its second day.

TheStreet.com

has been providing

coverage of the conference.

The small-cap

Russell 2000

gained 4, or 1%, to 398.

Meanwhile, thanks to a burst of bullishness on the airline sector via

Goldman Sachs

, the

Dow Jones Transportation Average

jumped 2.3%. The

American Stock Exchange Airline Index

leapt 4.7%.

After last week's mid-to-late-week selloff, the major market averages mostly managed to post some gains yesterday and have padded them today.

"I think we're oversold enough to rally," said John Roque, senior analyst at

Arnhold & S. Bleichroeder

, around midmorning. He added, however, the upside isn't likely to be that much. About 3%, he said.

Roque said it is a good thing for the market that bellwether

General Electric

(GE) - Get Report

is holding up. GE was up 9/16 to 101 1/2. He also said it is important for the market that the banks have done better and that the airlines are doing well.

Although there are some positives in the market right now, Roque said it's not enough to get bullish about. He's sticking with his call of a "corrective phase that encompasses more time than price," as he said in a report sent out before the open.

Going forward, if the S&P 500 closes below 1212, and/or GE closes under 96, the market's performance and tone "becomes dicier," Roque said.

Worrisome for the market for a while now has been the poor performance of the bond market.

Roque said there is some support at 120 on the June bond futures contract, but he still thinks it will test 118. That's not all. He also sees the long bond's yield rising to 5.80%. The contract was lately up 25/32 to 120 28/32.

Speaking of interest rates, as for yesterday, in the face of another bond-market rout, the stock market did a pretty good job of coming back, said Louis Todd, head of equities trading at

J.C. Bradford

.

One thing working in the market's favor is that the calendar of IPOs and secondary offerings has thinned out in the last week or two, with deals being postponed and withdrawn, Todd said.

Todd said he has noticed that some of the market's leadership might be shifting, with a movement away from technology and over to retail and consumer-type stocks.

Meanwhile, among other indices, the

Dow Jones Utility Average

was up 0.9% and the

American Stock Exchange Composite Index

was up 0.7%.

New York Stock Exchange

advancers were beating decliners 1,641 to 1,151 on 402 million shares. On the

Nasdaq Stock Market

, losers were leading winners 1,940 to 1,678 on 484 million shares.

On the NYSE, 50 issues had set new 52-week lows while 30 had touched new highs. On the Nasdaq, 51 issues had set new highs while new lows totaled 46.

Most active on the Big Board was

Compaq

(CPQ)

, with 19 million shares changing hands. It was down 19/32 to 32 15/16.

On the Nasdaq,

Xylan

(XYLN)

was most active, with 23.8 million shares changing hands. It was up 33.7%. Today French telecom company

Alcatel

(ALA)

said it is buying Xylan. Alcatel was up 3.8%.

Tuesday's Midday Movers

By Heather Moore
Staff Reporter

As noted above, H-P recently was up 6 5/8, or 10.3%, to 72 1/2 after a midmorning announcement that it will break up into two separate publicly traded companies, one a measurement business, the other a computing and imaging firm. The company said Edward Barnholt, current executive vice president and general manager of the Measurement Organization, was named chief executive of the new measurement company. H-P sees an IPO of about 15% of the measurement company's shares by the end of the year, saying it would be the largest tech IPO in Silicon Valley history.

The new computing and imaging company will continue to operate under the Hewlett-Packard name. Lewis E. Platt will continue as chairman, president and chief executive of Hewlett-Packard until the separation is complete. A special board committee will then seek a new CEO for the computing and imaging company.

In other news:

@Home was up 10 5/8, or 9.9%, to 117 3/4 after its board declared a 2-for-1 stock split and

Credit Suisse First Boston

initiated coverage with a buy.

Dialogic

(DLGC)

was up 3 15/16, or 12.8%, to 34 11/16 after entering an agreement calling for

Microsoft

(MSFT) - Get Report

to license the company's

CT Media

server software. Dialogic will provide development services to Microsoft in exchange for $20 million. Also, Microsoft, lately up 1 15/16 to 153 5/8, made a $24.2 million equity investment in Dialogic. Microsoft rival

Sun Microsystems

(SUNW) - Get Report

was up 3 11/16 to 100 7/8 after

The Wall Street Journal

said the company plans to distribute chip designs free to outside developers.

Gulfstream

(GAC)

was up 2 5/8, or 5.7%, to 49 after saying it will buy back up to $200 million in stock.

Lernout & Hauspie

(LHSPF)

was up 3 3/16, or 11.6%, to 30 11/16 after last night saying its founders will buy up to $40 million in company stock.

Xylan was climbing 9 1/16, or 33.7%, to 35 31/32 after France's Alcatel agreed to buy it for $37 a share, or $2 billion, in cash. Alcatel was up 13/16 to 22 3/16.

Earnings/revenue movers

American Stores

(ASC) - Get Report

was up 1/16 to 32 15/16 after posting fourth-quarter earnings of 47 cents a share, beating the seven-analyst forecast of 44 cents and topping the year-ago 35 cents.

Coach USA

(CUI) - Get Report

was up 2 5/8, or 10.5%, to 27 5/8 after last night topping fourth-quarter earnings estimates by a penny a share with a profit of 56 cents.

Dayton Hudson

(DH)

was up 2 1/16 to 66 3/16 after reporting fourth-quarter earnings of 97 cents a share, above both the 15-analyst view of 90 cents and the year-ago 76 cents.

Federated Department Stores

(FD)

was up 1 5/16 to 40 11/16 after recording fourth-quarter earnings of $1.88 a share, 6 cents ahead of the 17-analyst estimate and up from the year-ago $1.66. The company said same-store sales during the quarter rose 4.1%.

Micron Electronics

(MUEI)

was down 2 1/4, or 15.8%, to 12 after last night warning it expects second-quarter earnings and sales to fall short of first-quarter figures because of slower PC sales. Today, Credit Suisse First Boston cut its second-quarter earnings outlook for the company to 8 cents a share from 12 cents.

Prudential Securities

lowered the stock to accumulate from strong buy and

NationsBanc Montgomery Securities

dropped it to hold from buy.

RCM Technologies

(RCMT) - Get Report

was up 1 1/8, or 6.3%, to 19 1/8 after last night topping first-quarter earnings forecasts by 2 cents a share with a profit of 30 cents.

Venator

(Z) - Get Report

was up 5/16, or 6.3%, to 5 1/4 after saying it sees fourth-quarter and full-year 1998 earnings meeting analysts' targets. The four-analyst estimate calls for quarter earnings of 23 cents a share and 1998 earnings of $1.58. The limping retailer also announced plans for an e-commerce and direct marketing subsidiary called

eVenator

.

TheStreet.com

took a look at some of Venator's other efforts and challenges in a

story today.

VISX

(VISX)

was flying up 17 9/16, or 29.1%, to 78 after last night saying it expects to record first-quarter earnings of 51 cents to 55 cents a share because of strong demand. The four-analyst view called for 36 cents vs. the year-ago 23 cents. Today,

BancBoston Robertson Stephens

upgraded the stock to buy from long-term attractive and

Warburg Dillon Read

upped its price target for the stock to 110 from 76 a share. Warburg also lifted its 1999 earnings estimate for VISX to $2.05 from $1.47 a share.

Whirlpool

(WHR) - Get Report

was up 4 1/16, or 9.9%, to 45 1/16 after last night saying its first-quarter and full-year earnings will be at "record" levels and that it approved the repurchase of $250 million in stock. The company also said it will restructure its Brazilian operation's balance sheet to lessen the impact of fluctuations in the Brazilian real. Today,

Brown Brothers Harriman

pushed up its rating on Whirlpool to near-term buy from neutral and set a 12-month price target of 50 a share.