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Yahoo! pumps up Nasdaq
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July 12, 2000: 4:48 p.m. ET
Positive earnings spark tech rally; financial stocks send Dow higher
By Staff Writer Catherine Tymkiw
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NEW YORK (CNNfn) - The Nasdaq composite index surged more than 140 points Wednesday, wiping out all its losses for the year and closing at its highest level in more than 3-1/2 months.
The gains, fueled by a big surge in Yahoo!, put the Nasdaq 23 percent above its low of 3,164 on May 23, in what some analysts say could be a resurgence of the summer rally.
"We have the Internet stocks very strong on the heels of Yahoo!'s report," said Bill Meehan, chief market analyst at Cantor Fitzgerald. "We kind of got started early on the summer rally just before Memorial Day and then we sputtered out. I expect that we'll see a pretty decent move over the next several weeks."
 The Nasdaq gained 143.16 points, more than 3 percent, to 4,099.58. That is up 0.7 percent from the 4,069 level where the Nasdaq started the year but still down 19 percent from the 5,048 mark set March 10, during the most speculative days of the tech craze.
Investors rewarded Yahoo! and the entire technology sector after the Internet portal reported strong earnings, signaling further revenue growth for technology stocks.
Meanwhile, financial services stocks took off after Switzerland's UBS AG, Europe's third-largest bank, announced an agreement to buy Paine Webber Group, signaling the possibility of additional mergers in the financial sector.
 The Dow Jones industrial average gained 56.57 to 10,783.76. The S&P 500 advanced 12.04 to 1,492.92.
"When we got the good news and saw that Yahoo!'s revenues were terrific, it gave us a breath of fresh air in the Internet space," said Art Hogan, chief market analyst at Jefferies & Co. "PaineWebber is a deal in a space where there's been a great deal of rumors about consolidation."
Market breadth was firmly positive while volumes gained strength. On the New York Stock Exchange, advancers topped decliners 1,729 to 1,166, as more than 998 million shares changed hands. On the Nasdaq, winners outpaced losers 2,479 to 1,539, on volume of more than 1.6 billion shares.
In currency markets, the dollar rose against the euro and the yen.
Yahoo! for techs
Analysts said the positive reaction to Yahoo!'s earnings signaled that stocks may continue to garner positive results, unlike the first quarter, when more stocks fell after posting good results.
"The season started upbeat and that was terrific," said Jefferies' Hogan. "That helps the overall consensus that the second quarter (reports) will be rosier."
Lifting the entire technology sector, Yahoo! (YHOO: Research, Estimates) surged 19-7/16 to 124-15/16. The Web portal and Internet bellwether reported second-quarter earnings after the closing bell Tuesday that beat analysts' expectations as its revenue more than doubled and traffic on its network of sites continued to grow strongly.
"It's good to see there is going to be a blue-chip survivor in this sector and it could be Yahoo! The stock has rallied nicely," said Barry Hyman, chief market analyst at Ehrenkrantz King Nussbaum. "The Yahoo! story is significant because it does bring the concept that even though there's a dot.com disaster out there and most dot.coms are disappearing, advertising dollars have not yet affected these big companies."
Investors showed confidence in Internet stocks. America Online (AOL: Research, Estimates) rose 1-9/16 to 57-9/16, Amazon.com (AMZN: Research, Estimates) gained 1-7/8 to 35 and eBay (EBAY: Research, Estimates) jumped 8-3/4 to 52-11/16.
Other tech issues gained buyers' attention. Sun Microsystems (SUNW: Research, Estimates) gained 3-1/8 to 93-5/16 and Oracle (ORCL: Research, Estimates) advanced 2-3/8 to 74-11/16.
 Analysts said investors will be closely watching the financial sector to see if other mergers might be forthcoming after the PaineWebber deal.
PaineWebber (PWJ: Research, Estimates) soared 16-15/16 to 66-7/8 after Switzerland's UBS AG agreed to buy the U.S. brokerage for about $10.8 billion in cash and stock, in order to get greater access to well-heeled American investors.
"It's big because it's at a very substantial premium and it means something toward the world of further consolidation in brokerage," said Hyman. "I think people are going to be scouring to see what could be next."
Other brokerage houses also gained. Lehman Brothers (LEH: Research, Estimates) jumped 5-3/16 to 111-5/8 and Bear Stearns (BSC: Research, Estimates) rose 1-11/16 to 46-1/4.
"We got a double dose of good news," said Cantor Fitzgerald's Meehan. "The Yahoo! revenues and earnings were better than expected, helping to pump some life into the dreary internet group and we continue to get a trickling of second-quarter earnings."
Investors keen on earnings
Analysts said investors are scrutinizing earnings more closely this quarter as they become increasingly confident that the Federal Reserve will not make any drastic changes to its interest rate policy at its August meeting.
Among those scheduled to issue earnings results Wednesday is the electronics equipment maker Motorola (MOT: Research, Estimates).
Motorola, which reported earnings after the market close that met Wall Street expectations of 23 cents a share, up from 12 cents a year earlier, saw its shares gain 1-7/8 to 35-7/16 ahead of the announcement.
Linda Jay, NYSE floor trader for RPM Specialists, told CNNfn's Market Call that the strength of Motorola's earnings could determine whether the market rallies further. (460K WAV) (460K AIFF)
 In company deals, Quantum Effect Devices (QEDI: Research, Estimates) jumped 18-1/8 to 78-5/8 after the chip maker announced it will merge with rival PMC-Sierra (PMCS: Research, Estimates) in a $2.3 billion stock swap. Each Quantum share will be exchanged for 0.385 PMC-Sierra shares. PMC-Sierra shares rose 11-15/16 to 208-1/2. 
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