Tech Stocks Rebound

U.S. stocks emerged victorious Tuesday as the very sectors that investors had shunned over the past week sprang back with vigor.

That meant substantial wins for the healthcare, retail, and technology company stocks and losses for economically-cyclical sectors.

The Dow Jones Industrial Average advanced 8.02 points, or 0.1 percent, to 10,448.55.

The Nasdaq Composite rose 64.03 points, or 2.7 percent, to 2,409.64. Monday, the index was sacked for a 5.6 percent setback, its worst outing since Aug. 31.

The day's action came as the first-quarter earnings reporting season reached a feverish pitch, with a slew of banks stepping forward to present their numbers.

After the close of Tuesday's trading Microsoft (MSFT) checked in with fiscal third-quarter results of 35 cents a share, 3 cents more than the consensus estimate of analysts according to First Call. The software heavyweight netted 25 cents in the same quarter of 1998. Revenues increased 15 percent. Microsoft said it remains cautious on 1999 growth prospects due to the Y2K crisis. Ahead of the news, the shares added 2 1/8 to 83 1/8.

Investors were relieved that the much-watched technology sector snapped back from Monday's defeat, its worst in nearly eight months. Internet-related shares were at the forefront as some investors couldn't resist the 33 percent markdown accorded the typical Web stock over the past week.

But most pros were reluctant to call the Nets' impressive showing the start of a new trend.

"The Internets are going to have to take out some highs that they established a couple of weeks ago before you can say the worst is over," said Charles Payne, president and chief analyst at Wall Street Strategies.

Goldman Sachs analyst Michael Parekh raised his opinion of three Web stocks to "recommended list" from "market outperform." Advertising solutions provider DoubleClick (DCLK) put on 13 to 117, search engine expert Inktomi (INKT) 18 to 107, and network management software developer Exodus Communications (EXDS) 6 1/4 to 67 5/8.

"I think it's interesting that Goldman upgraded these issues," said Payne. "It's a pretty good sign that not all of Wall Street is going to write the Internet stocks off."

Another Goldman analyst, market strategist Abby Joseph Cohen, said the Standard & Poor's 500 index was roughly at fair value. Cohen released a report saying that the selling in interest-rate sensitive, "mainline" technology, and growth stocks was without warrant.

Benchmark technology issues rode higher, though the gains weren't major. Sun Microsystems added 4 1/4 to 54 3/8, Dell Computer 2 3/4 to 38 3/16, and Intel 1 1/16 to 56 9/16.

Drug stocks regained their footing after Monday's sharp markdowns. Most of the rises, however, were capped at 4 percent.

Among banks reporting earnings, Chase Manhattan (CMB) said first-quarter per-share net amounted to $1.32 vs. the First Call forecast of $1.25. Return on assets, crucial measure of a bank's profitability, rose to 1.24 percent from the 1.08 percent of a year ago. But the stock sank 2 to 83 after Merrill Lynch downgraded its near-term rating to "accumulate" from "buy." The broker maintained its long-term "buy" opinion.

Wells Fargo (WFC) tacked on 1 1/8 to 42 1/4. The San Francisco-based bank bested the First Call poll of analysts' estimates by 3 cents with its first-quarter results of 53 cents a share. A year ago, Wells earned 41 cents a share. Return on assets moved up to 1.80 percent from the 1.51 percent of a year ago.

Mellon Bank (MEL) subtracted 1/16 to 70 15/16 after reporting first-quarter operating net of 87 cents a share. That was a penny richer than the First Call consensus view. Return on assets on an operating basis crested to 1.84 percent from the 1.76 percent of the previous period. In addition, the Pittsburgh-based concern mapped plans for a two-for-one stock split and hiked its dividend by 11 percent. Separately, Mellon scuttled market speculation that it might be discussing merger possibilities with another company.

Bank One (ONE) forfeited 7/16 to 58 13/16. The Columbus, Ohio-headquartered company matched the First Call view of 88 cents a share in first-quarter operating profits. Return on assets increased to 1.85 from the 1.59 of the same period a year ago.

In Tuesday's market indicators:

• The Standard & Poor's 500 Index rose 1.1 percent.
• On the Big Board floor, turnover slowed 19 percent to 976 million shares.
• Advancing issues lagged decliners by 36 shares in the Nasdaq Stock Market.
• The Russell 2000 Index of small-capitalization stocks climbed 0.7 percent.

  The 30-year Treasury rose 11/32, to yield 5.518 percent.

• Dow component Johnson & Johnson (JNJ) reported first-quarter net of 82 cents a share compared to the First Call projection of 80 cents. A year ago, J&J netted 73 cents a share. Revenues grew 15 percent. The shares rose 6 to 96 1/4.
• Philip Morris (MO) picked up 1 1/8 to 34 1/4. The tobacco, food, and beverage giant met the First Call view of most analysts when it recorded a first-quarter profit of 80 cents a share. Revenues rose 6 percent.
• United Technologies (UTX) earned $1.25 a share in the first period vs. $1.04 a year ago. A survey of analysts by First Call indicated a consensus projection of $1.21. But the shares sagged 3 1/4 to 141 3/4 after the manufacturer of aerospace and defense products said it would incur restructuring charges in future quarters.
• Texas Instruments (TXN) gave back 5 to 100. First-quarter operating earnings came in at 65 cents a share, 4 cents richer than the First Call consensus estimate of analysts. A year ago, TI posted 44 cents in profits.
• E*Trade Group (EGRP) posted a second-quarter pro forma loss of 12 cents a share compared to First Call expectations of a 17-cent loss. Revenues leaped 126 perent from the year-ago period and 44 percent from the first quarter. The online broker reported an average of 70,000 trades a day in the quarter, up 63 percent from the prior period. E*Trade added 233,000 new accounts, or 77 percent above that of the first quarter. The stock vaulted 16 to 89 13/16.