Spurting crude oil prices sent energy shares to their biggest gain in five months Wednesday, helping blue-chip indexes grab hearty gains.
Technology issues, after languishing for most of the session on concerns over first-quarter profits, caught an afternoon tailwind from the blue-chip rally and finished with moderate rises.
The Dow Jones Industrial Average advanced 79.08 points, or 0.8 percent, to 9,772.84. More than one-half of the Dow's move was due to rises in its oil-related components - Chevron, Exxon and DuPont.
The Nasdaq Composite rose 0.5 percent.
Trading in technology stocks was capped by concerns about profits following rampant speculation that Intel might announce a disappointing revenue tally for the first quarter. Intel rose 1 9/16 to close Wednesday at 116 7/8.
In cyberspace, marquee names enjoyed a solid, if not spectacular, outing. The stocks received a nod from Merrill Lynch analyst Henry Blodget, who made positive comments about Amazon.com (AMZN), up 7 3/16 to 137 1/8; America Online (AOL), 2 1/2 higher to 92 5/8; and Yahoo! (YHOO), rising 6 5/16 to 173 5/8.
"We recommend that aggressive investors allocate a small percentage of capital to a basket of high-quality Internet stocks," he wrote in a report.
Blodget stuck a "buy/buy" rating on AOL, with a 12-month price objective of $110. He rated Yahoo! an "accumulate/buy" and believes the shares can reach $225 in 12 to 18 months. On Amazon, Blodget set a 12-month price objective of $150 and an "accumulate/buy" opinion.
Lycos (LCOS) put on 13 3/4 to 110. The Wall Street Journal reported that CMGI Chief Executive David Wetherell is mulling a number of options, one of which includes an outright purchase of the Internet portal. CMGI (CMGI) is a 20 percent owner of Lycos. Wetherell quit Lycos' board due to disagreement over the pending merger of Lycos and USA Networks. Wednesday, CMGI shares dipped 2 3/4 to 191 11/16.
VerticalNet (VERT) shot up 23 1/4 points, or 32 percent, to 96 1/4. The operator of online business-to-business commerce communities went public less than four weeks ago at $16.
"Internet stocks are the true lottery stocks," remarked a West Coast hedge fund manager. "If you buy enough of them, one might hit. And if it does, it's going to be a big payoff."
Oil and gas shares notched their fifth big win in the last six days. "Positive signs are emerging for the oil price outlook," said Adam Sieminski, analyst at BT Alex. Brown, in a research report. "It looks increasingly likely that OPEC will come to some agreement on production cuts for the March 23 meeting."
Among oil and gas drillers, Atwood Oceanics rose 3 1/16 to 24 5/16, Diamond Offshore was ahead 2 3/8 to 27 3/8, and Transocean Offshore increased 3 3/16 to 25 9/16.
In the oil and gas field services group, Schlumberger climbed 3 3/16 to 58 1/2, Halliburton 4 1/4 to 36 1/2, and Baker Hughes 2 3/8 to 22 1/2.
b>In Wednesday's market indicators:
- The Standard & Poor's 500 Index rose 0.5 percent.
- New York Stock Exchange winners held an 8-to-7 lead over losers.
- On the Big Board floor, 836 million shares hit the tape, a pace 5 percent less than that of Tuesday at this time.
- Advancing issues topped decliners by 10 to 9 in the Nasdaq Stock Market. Volume totaled 927 million shares.
- The Russell 2000 Index of small-capitalization stocks gained 0.5 percent.
- In the bond market, Treasurys pulled back as buyers failed to surface ahead of Thursday's release of the February retail sales report. The 30-year Treasury fell 14/32, to yield 5.561 percent.
Among the companies in the news:
- Computer Associates (CA) skidded 5 1/16 to 34 15/16. Morgan Stanley Dean Witter analyst Chuck Phillips downgraded his view of the enterprise software developer to "neutral" from "outperform." Phillips is concerned with flagging demand, mounting competition, and profit margins which may be topping. He sliced his five-year earnings growth rate to 12 percent from 15 percent.
- DuPont (DD) lifted 3 13/16 to 57 3/8. The diversified industrial concern will actively seek alliances with other partners in the pharmaceuticals industry. As well, DuPont will issue a "tracking" stock for its life sciences businesses to give the company the financial flexibility to more advantageously participate in industry consolidation trends.
- Powerhouse Technologies (PWRH) bulled ahead 3 1/16 to 17 7/8. Gaming equipment maker Anchor Gaming (SLOT) will acquire the lottery operator for $220 million in cash, plus $60 million in debt assumption. Anchor shares moved up 3 13/16 to 38 3/16.
- Software concern Oshap Technologies (OSHSF) bolted 2 7/8, or 27 percent, to 13 3/8 after agreeing to be purchased by computer software and services entity SunGard Data Systems (SDS) for about $210 million in stock.
- Household International (HI) added 4 to 45 13/16. The consumer finance specialist set a stock buyback of up to $2 billion, or over 10 percent of its share, and upped its quarterly dividend.
- Brylane (BYL) added 2 11/16 to 24 1/8. France's Pinault-Printemps-Redoute offered $24.50 a share for shares of the direct marketer that it doesn't already own. It currently owns 50 percent of Brylane.
- Healtheon (HLTH) leaped 18 1/2 to 48 1/2. Goldman Sachs analyst Stephen Savas started covering the online healthcare transactions processor with a "market outperform" rating.
- Northern Telecom (NT) was up 4 to 62 on word AT&T might use its network voice switching systems.