* Internet names jump; concerns remain over valuation
* AT&T to buy DirecTV for $48.5 billion
* Russell 2000 rebounds after three-day decline
* Dow up 0.2 pct; S&P 500 up 0.4 pct; Nasdaq up 0.8 pct
(Updates to late afternoon trading)
By Ryan Vlastelica
NEW YORK, May 19 U.S. stocks rose on Monday,
with another drop in bond yields supporting equities and gains
in Internet and biotech stocks giving the Nasdaq an outsized
Equities have been pressured recently, with the S&P 500
coming off its first two-week decline since January as investors
have become concerned about the U.S. economy's growth prospects.
Last week, readings on retail sales and consumer sentiment fell
shy of expectations while labor and housing data provided reason
But with the yield on the 10-year U.S. Treasury note
near 2.5 percent, investors may have felt compelled
to wade into equities and help keep them afloat.
"The listlessness in the market shows the struggle investors
are having right now: Valuations are full but not stretched, and
there's a lack of decisive evidence that the economy will kick
into higher growth and justify these valuations," said Mark
Luschini, chief investment strategist at Janney Montgomery Scott
"Equities remain a better choice than bonds or cash this
year, but on a near-term basis, they might succumb to gravity."
High-growth "momentum" stocks were among the strongest of
the day, with TripAdvisor Inc up 5.2 percent at $86.44
and Netflix Inc up 4.1 percent at $364.29. Vertex
Pharma gained 3.6 percent to $67.36.
Internet and biotech names have been among the most volatile
in recent weeks, advancing on signs of economic improvement and
slumping on concerns that their valuations are too hefty. The
small-cap Russell 2000 index was up 0.8 percent after
three straight declines. The index has several times approached
correction territory, a decline of 10 percent from a recent
high, only to bounce back slightly.
"I don't know what to make of the gain in growth stocks,
other than the fact that they've been beaten up to the point of
being oversold, which is attracting short-term traders and some
short covering," said Luschini, who helps oversee about $63
billion in assets. "Nothing has changed to make them a screaming
buy, and we're still not interested in them."
The Dow Jones industrial average was up 24.54 points,
or 0.15 percent, at 16,515.85. The Standard & Poor's 500 Index
was up 7.09 points, or 0.38 percent, at 1,884.95. The
Nasdaq Composite Index was up 33.62 points, or 0.82
percent, at 4,124.21.
The Dow's gain was limited as AT&T Inc fell 1.7
percent to $36.12 a day after agreeing to buy DirecTV
for $48.5 billion. DirecTV shares fell 1.9
percent to $84.58.
U.S.-listed shares of AstraZeneca sank 11.4 percent
to $71.12. The British drugmaker rejected a sweetened and
"final" merger offer from Pfizer that would have created
the world's largest pharmaceuticals group. Pfizer shares climbed
0.9 percent to $29.40.
Campbell Soup Co fell 2.5 percent to $44.01 and
ranked as one of the S&P 500's worst performers after posting
weaker-than-expected quarterly sales and cut its full-year sales
(Editing by Bernadette Baum, Nick Zieminski and Jan Paschal)