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Dow explodes, passes 11,000

The Dow tops 11,000 at the market's close, backed by healthy economic data and riding on MediaOne Group's decision to accept AT&T's buyout bid.

The Dow today topped 11,000 at the market's close, backed by healthy economic data and riding on MediaOne Group's decision to accept AT&T's buyout bid.

The Dow Jones Industrial Average gained 225 points to finish at a record 11,014. Earlier today, economic data from a trade group's report on manufacturing suggested that the economy continues to expand, moving away from inflation concerns, according to Bloomberg News. Still, the tech-heavy Nasdaq Composite Index closed in the red, dragged down by technology and Internet stocks. The Nasdaq fell 7.27 to 2,535.

Ma Bell shares rose 0.62 to 51.12, while shares of MediaOne, which jumped after the market open, closed in negative territory, down 1.93 at 79.68.

As reported, MediaOne's board of directors accepted AT&T's $62 billion bid, giving Comcast until Thursday to make a counteroffer or walk away. Earlier today, MediaOne's board said in a statement that it will accept AT&T's $85 cash-and-stock merger offer announced April 22, which the company said constitutes a "superior proposal."

In the cable sector, shares of Comcast reacted positively to the news, closing 3.06 points higher, up 4.87 percent to 65.93, while Cox Communications fell 1.5 to 77.75. Other telecom stocks, which traded mixed for the majority of the day, finished stronger. Bell Atlantic jumped 2.5 to 60.12, Sprint rose 1.87 to 104.43, and US West closed ahead 1.56 at 53.87.

In other merger news, Deutsche Telekom and Telecom Italia today declined to comment on reports that they are looking to bring a U.S. carrier into their proposed German-Italian merger, according to Reuters. Earlier today, the companies were reportedly in talks with a U.S. group, possibly BellSouth or SBC Communications, but are still undecided as to whether the mystery partner would take a stake in the merger, according to the Wall Street Journal, which cited an unnamed source close to the situation.

Shares of Telekom jumped 1.43, or 3.7 percent, to close at 40.18. Telecom Italia, which bounced back in the afternoon, rose 0.81 to 107. BellSouth rose 1.25 to 45.75, and shares of SBC fell 0.93 to 54.81.

Amazon.com saw its shares plunge 12.2 percent after Barron's said in its "Up & Down Wall Street" column that the largest Internet retailer's shares are worth 25 at most, according to Bloomberg. Shares of Amazon lost 21.12 to 150.93.

Most Internet stocks followed the cybershop's decline, closing much lower. America Online shed 9.75 to 133, Yahoo tumbled 12.12 to 162.56, Excite fell 8.25 to 137.75, and Infoseek fell 3.25 to 47.81.

In the computing sector, PC hardware stocks, which were mostly mixed at the open, traded much stronger in the afternoon, led by Apple Computer. Shares of Apple jumped 7.7 percent, closing ahead 3.56 at 49.56. Compaq Computer rose after the company said in a statement that it plans to cut prices up to 12 percent on two of its most popular monitor models: the 15-inch V500 and the 17-inch V75. Compaq rose 0.75 to 23.06, Gateway rose 0.93 to 67.12, Dell gained 0.87 to 42.06, and Hewlett-Packard jumped 1.06 to 79.93.

Shares of IBM finished the day up after opening much weaker. The computer giant said it's set to unveil tomorrow its new generation of mainframe computers and ship them at least a month ahead of schedule, according to Reuters. IBM climbed 3.06 to 212.25.

Bloomberg and Reuters contributed to this report.