Record Rallies Triggered by Employment Report

The Dow shot back above 10,000 and other stock indexes also surged to new peaks Monday after a report showed the U.S. economy is growing steadily with little inflation.

The technology-oriented Nasdaq composite index rose to a record for the first time in two months, and the Dow Jones industrial average closed above 10,000 for the second time in a week, besting its previous mark. The broader blue-chip Standard & Poor’s 500 index also reached a new high.

“It doesn’t get much better than this,” said Michael Manns, a growth-stock manager for American Express Asset Management in Minneapolis.

The rally was triggered by Friday’s employment report, which showed the economy added jobs in March while wages rose less than expected, pointing to rising profits and stable or lower interest rates. The U.S. market was closed for Good Friday when the report came out.

The Nasdaq jumped 66.69 points, or 2.7%, to 2,560.06, its highest close since Feb. 1, as Internet shares led the way. The Dow rose 174.82 points, or 1.8%, to a record close of 10,007.33. The S&P; 500 jumped 27.40 points, or 2.1%, to 1,321.12.

Advancing stocks led decliners on the New York Stock Exchange by a 17-13 ratio. Volume on the Big Board was light.

Winners included Dow components IBM, up $6.94 to close at $183.94, General Electric, up $3 to $114.63, and Hewlett-Packard, up $3.56 to $71.44. Tech leader Microsoft rose $2.25 to $94.94.

“The U.S. economy remains robust, and the corporate earnings outlook is improving,” Merrill Lynch & Co. chief economist Bruce Steinberg said in a report. He raised his forecast for growth in earnings and the economy for this year and 2000.

Smaller stocks continue to lag larger issues. The Russell 2,000 index of small stocks rose 0.9% to 402.29--still 18% below its April 21 record of 491.41.

U.S. bond yields were largely unchanged as the equity rally and a growing list of planned corporate debt sales gave investors scant incentive to buy Treasuries. The benchmark 30-year bond yield stayed 5.59%.

Among Monday’s highlights:

* Yahoo soared $39.38 to $219.13 as individual investors snapped up shares of the No. 1 Internet directory. Analysts cited optimism that Yahoo’s purchase of Broadcast.com, announced last week, will boost revenue. Yahoo reports earnings Wednesday, and some investors also may be betting that it will beat the 8 cents a share expected by Wall Street analysts.

* CBS rose $1.75 to $41.88 after the San Jose Mercury News reported that the network has held talks during the last year about a potential combination with America Online. The talks included a possible purchase of CBS by AOL, the newspaper reported, citing an unnamed person familiar with the discussions. AOL jumped $16.94 to $166.94.

* Dell Computer, the most active U.S. stock, gained $2.88 to $44.06 as investors anticipate good news from the No. 3 personal computer maker when it briefs analysts Thursday.

“We expect the company to be upbeat about the industry and its own prospects in particular,” analyst Michael Kwatinetz at Credit Suisse First Boston said in a note to clients.

* Online brokerage stocks soared after Bill Burnham, an analyst with Credit Suisse First Boston, said online trades rose 30% to 35% during the first quarter. The Internet brokers continued to gain share of all stock trades, he said.

The biggest online broker, Charles Schwab, gained $9.13 to $103.38. Ameritrade Holding, the No. 6 online broker, soared $29.06 to $91.63 and E-Trade Group, the third-largest firm, vaulted $11.75 to $72.63.

* Nike jumped $2.19 to $58.38 after an analyst at Donaldson, Lufkin & Jenrette Securities named the No. 1 athletic shoemaker a top pick of the firm.

* Rental Service surged $5 to $22.25 after United Rentals made an unsolicited $1.4-billion takeover offer for it. The largest U.S. equipment-rental company wants to buy Rental Service for $22.75 a share, or about $553 million, and assume $810 million in debt. United Rentals fell 94 cents to $27.81.

* Online bookseller Amazon.com rose $15.50 to $186.50 and retailer Wal-Mart gained $2.13 to $95.38 after the two companies settled a legal dispute.

CKE Restaurants fell $1.88 to $17.88 after the owner of quick-service restaurants was downgraded by an analyst at BancBoston Robertson Stephens.

* Companies that expect to report disappointing earnings for the quarter just ended have been breaking the news early to investors.

Aspen Technology dropped $3.31 to $9.94 and Aspect Development plunged $14.50 to $7.94 after both software makers warned of “significant” profit shortfalls.

Axent Technologies, which sells computer-security software, plummeted $11.94 to $8.06 after it said it will have a first-quarter loss because companies are delaying orders to focus on the year 2000 computer problem. The company was expected to earn 18 cents a share.

Pediatrix tumbled $9.50 to $17.13 after the physician management company also warned of weak quarterly earnings.

Market Roundup, C10