Despite another overnight disaster by Asian markets, investors on Tuesday regained a sense of calm and turned Monday's meltdown into a great buying opportunity.
Technology stocks, which absorbed a tremendous beating, bounced back with vigor, pushing the NASDAQ up 27.49 points to 1563.58 by mid-afternoon. The Dow Jones Industrial Average was up 137.76 points to 7298.91.
Keying the rally in the Dow was IBM, which announced a $3.5 billion buy-back plan of its shares. IBM was up $6 to $96.
Intel Corp. also helped push the NASDAQ into the black, as its shares were trading up $5 to $79.75 per share in very heavy volume. Intel reported 12 percent to 24 percent price cuts in Pentium chip prices and a settlement of its legal problems with Digital Equipment Corp.; good news that was lost in the shuffle during Monday's market crisis.
Compaq Computer Corp. shares were up $5.06 at $65.56 in heavy trading. Other winners included Dell Computer Corp., up $4.63 per share at $86.50, and 3Com Corp., up $1.63 to $44.50.
WorldCom Inc. was unchanged at $31 per share, as investors re-evaluated the soundness of WorldCom's bid for MCI Communications Corp. in the wake of Monday's market woes. MCI was off 69 cents per share to $34.69.
From all indications, the markets were expected to resume their precipitous decline today, on the heels of bad overnight market news from Asia and weakness in the S&P futures index.
The Hong Kong Hang Seng Index and the Tokyo Nikkei 225 stock average both fell nearly twice as much as their Monday slides; the Hang Seng was down 13.7 percent and the Nikkei fell 4.3 percent at the close of trading in Asia on Tuesday. European markets were also down severely.
However, a rally in stock futures at mid-morning -- fueled by investors who liked the favorable economic conditions that underpin U.S. markets -- combined with the good news on tech stocks to establish enough forward momentum for a sustained rally.
Networking stocks made a robust rally as Cisco Systems Inc. shot up $4.38 per share to $77.25. Bay Networks Inc. was up $1.88 per share to $29.88 while Ascend Communications Inc. was unchanged at $29.38.
Internet search engine stocks continued their roller coaster ride as Yahoo! Inc. surged up $4.25 per share to $42.25 after losing $9.56 per share Monday. Lycos Inc. lost $6.94 per share Monday, but managed to recoup $3.38 per share. Excite Inc. was up $3 per share to $25.50.