Computer shares lead market gains

Journal Record, The (Oklahoma City), Sep 28, 1999

NEW YORK (Bloomberg) -- U.S. stocks rose Monday, led by computer- related companies including Intel, as investors snapped up shares they consider cheap after last week's declines.

Newmont Mining led gold mining stocks higher after bullion posted its biggest gain in 13 years.

The Dow Jones Industrial Average rose 24.06, or 0.2 percent, to 10,303.39. The Nasdaq Composite Index rose 21.34, or 0.8 percent, to 2,761.75, after slumping 4.5 percent last week when Microsoft President Steven A. Ballmer called technology shares overvalued.

"There was panic in the market last week after comments from Microsoft's president," said Joseph Stocke, who helps manage $4.5 billion in stocks for Meridian Investment in Valley Forge, Pa. "The selling was overdone."

Intel, the biggest computer-chip maker, rose 2 23/64 to 78 3/16 and was the most active stock. Intel lost 11 percent last week. The company introduced two new microprocessors Monday, a 533 megahertz and a 600 megahertz. Microsoft gained 1/2 to 91 7/16

Computer-related shares got a boost from Abby Joseph Cohen, the chief investment strategist at Goldman Sachs and a noted stock- market optimist. At a conference in Washington this weekend, she said U.S. stocks in general are "modestly undervalued."

She recommended "main-line" technology stocks, citing their "enormous earnings growth, very high returns on equity and high profit margins," which suggest many are likely to "perform very well."

Cohen is "a big influence on Wall Street, that's for sure," said Miles Berryman, who manages $350 million in U.S. equities at Coutts & Co. in London. "She's been right before."

The Standard & Poor's 500 Index climbed 5.95, or 0.5 percent, to 1,283.31. Eight stocks rose for every seven that fell on the New York Stock Exchange.

S&P 500 futures slumped 11 points after 3:20 p.m. New York time. "We had a rally met by serious selling all day, and day traders sold off when the gains in the market couldn't be sustained" toward the end of the day, said John Peluso, head of listed stock trading at Lehman Brothers.

Stocks surrendered most of their early gains, which some investors said indicated they had more room to fall. The Dow average had gained as much as 123 points in midmorning trading.

"We're still not out of the doldrums," said Bill Allyn, head of principal trading at Jefferies & Co. in Short Hills, N.J. He said the Dow average could fall to 9,500 before it begins to climb again.

Gold producers gained after European central banks said they will limit bullion sales, causing gold prices to post the largest gain in more than a decade. Gold for December delivery rose $14, or 5.2 percent, to $283.80 an ounce on the New York Mercantile Exchange's Comex division.

Newmont Mining jumped 4 7/8 to 27 13/16 and Homestake Mining gained 1 5/8 to 9 13/16, leading a 25 percent gain in the Amex Gold Bugs Index, the biggest in its five-year history.

"Recently it looked as though gold had established a bottom," said Stocke. "Now it's ready to move up on any kind of positive news."

Gold dropped more than a third between the beginning of 1996 and August as a spate of sales by countries such as Belgium, the Netherlands, Australia and Argentina heightened concern central banks worldwide wanted to unload their holdings, which amount to more than a fifth of all above-ground stocks.

Not all computer companies gained. International Business Machines fell 2 to 123, trimming 10 points from the Dow average.