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U.S. stock markets soared Monday, despite the possibility of an increase in short-term interest rates after tomorrow's Federal Reserve Board monetary policy meeting.
The Dow Jones industrial average surged 199.15 points, or 1.8%, to a record high of 11,299.76. The Nasdaq Composite gained 71.37, or 2.7%, to end at 2,719.7 The Standard & Poor's 500 index rose 23.61 to 1360.22
Most analysts and economists expect that the 12 members of the Federal Open Market Committee--the interest-rate policy arm of the Fed--will increase the federal funds rate a quarter of a percentage point to 5.25% tomorrow. The Fed increases short-term interest rates to moderate the economy's growth rate and keep inflation at bay.
Internet issues advanced for the ninth time in 10 days. Amazon.com (AMZN) shares rose 4-15/16 to 118-3/8; eBay (EBAY), 1-7/16 to 124-7/16; and Yahoo (YHOO), 7-1/8 to 152-1/8. [email protected] (ATHM) shares rose 2 to 39-15/16 in response to positive comments from analysts at BancBoston Robertson Stephens.
"We believe that [email protected] is one of the only Internet companies with a compelling asset value," said BancBoston Robertson Stephens analysts Michael Graham and Keith Benjamin. The company's components, which include MatchLogic, Excite, and @Home, could be worth $40 billion, or $100 per share, they said.
Shares of Forté Software (FRTE) jumped 4-1/8 to 21-1/8 after Sun Microsystems (SUNW) agreed to acquire the software company for $540 million in stock. The acquisition is aimed at strengthening Sun's enterprise application development and integration tools. The deal values Forté at $22.27 per share, a 31% premium over Forté's closing price of 17 on Friday and almost four times as much as the company's share price last May. Sun's stock jumped 9/16 to 74-13/16.
Transaction Network Services (TNI) soared 9 to 43 after Internet service provider PSINet (PSIX) said it would buy the E-commerce company in a deal valued at $720 million. PSINet will acquire Transaction Network for $351 million in cash and up to 7.8 million PSINet shares. Transaction Network runs a network that handles more than 70% of the electronic point-of-sale transactions in the United States. PSINet's shares rose 5/16 to 45-7/8.
Computer hardware stocks were mostly higher. Hewlett-Packard (HWP) increased 1/8 to 105; IBM (IBM), 2-5/8 to 124-3/8; Dell (DELL), 2 to 45; and Gateway (GTW), 3-3/16 to 93-11/16. Compaq (CPQ), however, declined 3/8 to 24.
Networking stocks also were mostly higher, with Cisco Systems (CSCO) rising 1-5/8 to 65-3/4; 3Com (COMS), 1/4 to 23-13/16; Nortel (NT), 7/16 to 43-5/8; and Lucent (LU), 1-9/16 to 65-3/16.
Enterprise resource planning companies were mixed, with SAP (SAP) dropping 1/8 to 32-3/8, PeopleSoft (PSFT) adding 3/8 to 14-7/16, J.D. Edwards (JDEC) falling 1/16 to 16, and Oracle (ORCL) rising 9/16 to 37-9/16.
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