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Markets bounce back as techs recover

U.S. markets rebound at the close with both the Dow and the Nasdaq finishing higher, backed by climbing AT&T shares on the MediaOne deal and recovering technology stocks.

U.S. markets rebounded at the close with both the Dow and the Nasdaq finishing higher, backed by climbing AT&T shares on the MediaOne deal and recovering technology stocks.

The Dow Jones Industrial Average, which spent most of the day in the red, gained 69.3 points to close at 10,955. The tech-heavy Nasdaq Composite Index also ended the day higher, up 49.21 to 2,534.

As reported, Comcast said it wouldn't try to top AT&T's $54 billion cash-and-stock offer for MediaOne and also completed a side agreement with the phone giant. In addition, Comcast and AT&T announced a related agreement whereby the two companies will exchange selected regional cable systems to better cluster each company's networks, AT&T said.

Ma Bell shares rose 10.4 percent, up 5.37 points to end its bullish run at 56.93, and Comcast jumped 14.3 percent, climbing 9.18 to 73.31 at the close. MediaOne saw its shares finish .75 lower at 76.87.

Meanwhile, Microsoft shares traded stronger in the afternoon after the New York Times reported that AT&T is working on a partnership with the software giant that would involve Microsoft paying about $5 billion for a 2 percent to 3 percent stake in the telephone company, according to Reuters. As reported, the talks between Microsoft and AT&T also played a role in the AT&T, MediaOne, and Comcast merger negotiations.

Shares of Microsoft rose 1.06 to 79.12.

Communications and cable stocks rallied on news of the AT&T-MediaOne deal. Fellow cable operator Cox Communications rose .75 to 79. Among phone companies, MCI WorldCom was the biggest gainer, jumping 8 percent, ahead 6.68 points to close at 89.62. Bell Atlantic rose 1 to 58.37, and US West advanced 1.43 to 54.75.

In other news, MCI WorldCom has reportedly ended discussions to acquire wireless phone company Nextel Communications, as the two companies weren't able to agree on price, sources close to the matter said, according to Reuters. Shares of Nextel fell 1.18 to 35.87.

Shares of Newbridge Networks dropped 21 percent after the network-equipment maker said it expects to report fourth-quarter earnings well below analysts' estimates, according to Bloomberg News. The company said it projects earnings of 12 cents to 14 cents a share for the quarter, below the 21-cent average estimate of analysts polled by First Call. Newbridge lost 7.93 to 28.87 at the close.

Networking companies, including Lucent Technologies, Cisco Systems, and 3Com, which opened on a weaker note, recovered slightly from early losses. Lucent shares edged .06 higher to close at 57.93, Cisco rose 2.34 to 110.96, and 3Com shares were flat at 25.87.

In the computing sector, PC hardware stocks traded stronger in the afternoon to end the day in positive territory. Shares of IBM edged .12 higher to 212.12, Apple rose .5 to 47, Dell rose .5 to 41.31, and Gateway rose .62 to 66.62. Compaq shares were up .68 at 23.37, and Hewlett-Packard advanced .75 to 80.25.

Internet stocks closed ahead after spending the day flip-flopping. Shares of America Online finished 2.62 higher at 129.75, and Amazon.com gained 3.5 to 146.5. Yahoo rose 2.06 to 161.31, Excite soared 21.56 to 159.75, and Infoseek jumped 10.18 to 55.12.

Bloomberg and Reuters contributed to this report.

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