NEW YORK - Philip Morris Cos. surged to its biggest gain in at least 20 years after agreeing to buy Nabisco Holdings Corp., the largest U.S. maker of cookies and crackers, for $18.9 billion.
Johnson & Johnson led the Dow Jones industrial average yesterday to its largest advance in three weeks.
Philip Morris soared $3.6875, or 15 percent, to $27.125, and Nabisco rose $1.125 to $52.75. The world's largest tobacco company will pay $55 a share for Nabisco, a 6.1 percent premium over its closing price Friday.
Separately, Nabisco Group Holdings Corp., whose sole asset is its majority stake in the Nabisco food company, rose $1.1875 to $26.75. R. J. Reynolds Tobacco Holdings Inc. agreed to buy its former parent for $30 a share, 18 percent more than Nabisco Group's closing price Friday. R. J. Reynolds rose $1.50 to $8.375.
Johnson & Johnson rose $5.75 to $95.50 after analyst David Lothson raised his rating on the maker of the Band-Aids and Tylenol and said the drugmaker could climb to $115 in 12 months.
The Dow climbed 138.24, or 1.3 percent, to 10,542.99, its biggest gain since June 2. The Standard & Poor's 500 index rose 13.77, or 1 percent, to 1,455.25.
The Nasdaq composite index gained 66.78, or 1.7 percent, to 3,912.12, led by Nextel Communications Inc.
Elsewhere on the broad market, the Russell 2000 index, a benchmark of small-cap stocks, rose 5.95 to 516.96; the Wilshire 5000 index increased 125.47 to 13,603.16; the American Stock Exchange composite index advanced 1.42 to 934.83; the New York Stock Exchange composite index climbed 3.98 to 643.94; and the S&P; MidCap 400 index added 2.06 to 490.88.
The Sun-Bloomberg Maryland index of the top 100 Maryland stocks gained 1.47 to 265.33. Ciena Corp. rose $11.75 to $157.1875, and United Therapeutics Corp. spurted $5.125 to $90 to lead the index higher.
Advancing issues outnumbered decliners 5-to-4 on the NYSE in trading of 889 million shares. Nasdaq advancers outpaced decliners 7-to-6 as 1.28 billion shares traded.
Nextel surged $4.9375 to $58.625, after shares of the wireless phone service provider slid 21 percent last week.
Stocks rose on the eve of the Federal Reserve meeting today and tomorrow. The central bank has raised rates six times in the past year in a bid to slow the economy and ease the threat of inflation.
Financial stocks, which benefit from stable interest rates, led the blue-chip Dow higher. J. P. Morgan & Co. rose $1.1875 to $118.4375, and Citigroup rose $2.4375 to $64.125.
Tyco International Ltd. gained $5.625 to $48.875. The world's biggest maker of electronic connectors, whose three-year acquisition spree led to a review of its accounting by U.S. securities regulators, amended its financial statements for fiscal 1999 and the first two quarters of fiscal 2000.
The changes resulted in an increase in earnings of 2 cents a share in fiscal 1999 after nonrecurring charges and credits and a decrease of 2 cents in the first quarter of 2000 after nonrecurring charges and credits.
Microsoft Corp., the world's largest software maker, gained $1.8125 to $79.50, and Oracle Corp., the No. 1 maker of database software, rose $3.1875 to $82.6875. Sun Microsystems Inc. increased $3.875 to $90.4375.
AT&T; Corp., the No. 1 U.S. long-distance phone carrier, fell $1.50 to $32.875. Jack Grubman, an analyst with Salomon Smith Barney, lowered his profit estimates for the next three quarters.
Shares of biotechnology companies fell after PE Corp.'s Celera Genomics Group and President Clinton announced that U.S. and European researchers had completed a draft map of the human genetic code. Celera tumbled $14 to $113. Protein Design Labs Inc. sank $8.6875 to $163.9375.
Alcoa Inc. dropped $1.375 to $28.875. Merrill Lynch & Co.'s Daniel Roling lowered his second-quarter earnings estimates on the biggest aluminum maker by 10 cents to 45 cents a share. A drop in aluminum prices and recent mergers are likely to dilute the company's earnings, the analyst wrote in a report to clients. Roling kept his full-year forecast of $2.30 a share.
Owens Corning fell $3 to $11.75 after it warned that second-quarter earnings will be about $1 a share, 13 cents less than analysts estimated. The biggest U.S. insulation maker expects this quarter's sales to be below the $1.3 billion reported a year ago because of a slowing housing market.
Eastman Kodak Co. rose $1.3125 to $60.375. The world's biggest photography company agreed to buy a stake in Internet film and photo processor Snapfish.com for an undisclosed sum to expand its digital-picture business.
UnitedGlobalCom Inc. rose $7.1875 to $50.75 after Liberty Media Group, AT&T; Corp.'s cable television unit, agreed to buy a 72 percent voting stake in the company for $3.48 billion, creating the world's biggest cable TV company outside the United States.
Lilly Industries Inc., a maker of paints and coatings, surged $17.4375 to $30.3125 after Valspar Corp., a maker of corrosion protection for metal products, said it will buy Lilly for $31.75 a share in cash, plus the assumption of $213 million in debt. That's almost 2.50 times Lilly's closing price Friday.
Webvan Group fell $1.8125 to $7.3125 after it agreed to buy rival Internet grocer HomeGrocer.com for stock worth about $9.39 a share, or $1.2 billion.
HomeGrocer, the largest online grocery, fell $1.2188 to $6.875. Both stocks had surged ahead of the news. Webvan rose 38 percent in the previous four sessions, and HomeGrocer gained 17 percent.
Motorola Inc. fell $2.375 to $30 after Lehman Brothers Inc. analyst Tim Luke cut the stock to "outperform" from "buy" and lowered his profit forecasts.
Motorola's cell-phone handset business may not be as profitable as expected in the second quarter, and its share of the market for new cell-phone equipment may slip, Luke said. He lowered his price forecast on the shares to $55 from $67.
Overseas, Japan's Nikkei stock average fell 0.2 percent; Germany's DAX index rose 0.7 percent; Britain's FTSE 100 gained 0.2 percent; and France's CAC-40 rose 0.6 percent.