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HolidayBuyer's Guide
Tech Industry

MARKET CLOSE: Slumping bond market drags stocks lower

Rising interest rates abroad and sagging bond prices sent stocks into a funk Monday as the Dow Jones industrial average fell 120 points to 10,349.93. The Nasdaq composite shed half a point to close at 2,815.94.

Driving the bond market lower were remarks from the European Central Bank's Chief Economist, Otmar Issing, who said economic conditions are improving in Europe and there is an increased risk of inflation there.

"There are a number of factors that will affect long-term interest rates in the United States, and one of those is long-term foreign interest rates,'' said Hugh Johnson, chief investment officer at First Albany Corp. "If they rise, the odds are pretty good that the rates will rise in the U.S."

For the most part, Internet stocks weren't affected by the selling of Big Board issues.

Yahoo! Inc. (YHOO) rose 5/8 to 178 3/4 while Lycos Inc. (LCOS) moved up 1 1/4 to 57 1/2 and Amazon.com Inc. (AMZN) rose 4 1/8 to 82 3/4. America Online Inc. (AOL) lost 2 7/16 to 117 15/16 and Infoseek Corp. (SEEK) picked up 3/16 to 29 3/16.

Excite@Home (Nasdaq: ATHM) finished up 3/4 to 39 13/16 after announcing it would acquire Bluemountainarts.com from Blue Mountain Arts Publishing for $780 million in cash and stock. CMGi Inc. (CMGI) gained 4 1/8 to 107 1/4 after its majority-owned AltaVista unveiled a major overhaul, and announced an aggressive advertising campaign that the company says is one of the most expensive in technology history.

AT&T Corp. (NYSE: T) picked up 1 11/16 to 44 11/16 after it beat Wall Street estimates by a penny Monday with third quarter operating earnings of $1.75 billion, or 54 cents a share, on revenue of $16.3 billion. Earnings were down from a year ago, primarily because of the acquisitions of TCI and IBM's Global Network business.

Electronic Data Systems Corp., (Nasdaq: EDS) rose 2 7/16 to 52 5/8 after it and MCI WorldCom Inc., (Nasdaq: WCOM) said they completed deals worth $12.4 billion to exchange services between the two companies.

U.S. Interactive (Nasdaq: USIT) moved up 4 1/4 to 25 3/4 Monday after Hambrecht & Quist rated the stock "buy" and put it on stock on their focus list.

Digital Island Inc. (Nasdaq: ISLD), a provider of Internet services to business, tacked on 15 11/16 to 38 11/16 after it announced a merger with closely held Sandpiper Networks Inc.

Stamps.com (Nasdaq: STMP) closed up 1 3/8 to 39 1/2 as it announced it has agreed to buy closely held iShip.com Inc. for stock valued at about $300 million to create an online marketplace for mailing and shipping services.

Among widely held PC stocks, Dell Computer Corp. (DELL) lost 11/16 to 39 3/16; Compaq Computer Corp. (CPQ) closed unchanged at 18 11/16; Gateway Inc. (GTW) fell 1 7/16 to 62 5/8 and Apple Computer Inc. (AAPL) ended up 9/16 to 74 1/2.

Intel Corp. (INTC) fell 2 3/16 to 71 1/4 and International Business Machines Corp. (IBM) rose 1/16 to 94.

Microsoft Corp. (MSFT) closed off 1/4 to 92 7/16. Oracle Corp. (ORCL) lost 13/16 to 43 5/16 and Sun Microsystems Inc. (SUNW) closed up 2 15/16 to 92 15/16.