US STOCKS-Wall St advances; Internet stocks lift Nasdaq

Reuters - UK Focus

* Internet names jump; concerns remain over valuation

* AT&T (NYSE: T - news) to buy DirecTV (Frankfurt: DIG1.F - news) 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 (Frankfurt: HX6.F - news) , May 19 (Reuters) - U.S. stocks rose on Monday,with another drop in bond yields supporting equities and gainsin Internet and biotech stocks giving the Nasdaq an outsizedadvance.

Equities have been pressured recently, with the S&P 500coming off its first two-week decline since January as investorshave become concerned about the U.S. economy's growth prospects.Last week, readings on retail sales and consumer sentiment fellshy of expectations while labor and housing data provided reasonfor optimism.

But with the yield on the 10-year U.S. Treasury note near 2.5 percent, investors may have felt compelledto wade into equities and help keep them afloat.

"The listlessness in the market shows the struggle investorsare having right now: Valuations are full but not stretched, andthere's a lack of decisive evidence that the economy will kickinto higher growth and justify these valuations," said MarkLuschini, chief investment strategist at Janney Montgomery Scottin Philadelphia.

"Equities remain a better choice than bonds or cash thisyear, but on a near-term basis, they might succumb to gravity."

High-growth "momentum" stocks were among the strongest ofthe day, with TripAdvisor Inc (NasdaqGS: TRIP - news) up 5.2 percent at $86.44and Netflix Inc (NasdaqGS: NFLX - news) up 4.1 percent at $364.29. VertexPharma gained 3.6 percent to $67.36.

Internet and biotech names have been among the most volatilein recent weeks, advancing on signs of economic improvement andslumping on concerns that their valuations are too hefty. Thesmall-cap Russell 2000 index was up 0.8 percent afterthree straight declines. The index has several times approachedcorrection territory, a decline of 10 percent from a recenthigh, 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 ofbeing oversold, which is attracting short-term traders and someshort covering," said Luschini, who helps oversee about $63billion in assets. "Nothing has changed to make them a screamingbuy, 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. TheNasdaq Composite Index was up 33.62 points, or 0.82percent, at 4,124.21.

The Dow's gain was limited as AT&T Inc fell 1.7percent to $36.12 a day after agreeing to buy DirecTV for $48.5 billion. DirecTV shares fell 1.9percent to $84.58.

U.S.-listed shares of AstraZeneca (NYSE: AZN - news) sank 11.4 percentto $71.12. The British drugmaker rejected a sweetened and"final" merger offer from Pfizer (NYSE: PFE - news) that would have createdthe world's largest pharmaceuticals group. Pfizer shares climbed0.9 percent to $29.40.

Campbell Soup Co fell 2.5 percent to $44.01 andranked as one of the S&P 500's worst performers after postingweaker-than-expected quarterly sales and cut its full-year salesforecast. (Editing by Bernadette Baum, Nick Zieminski and Jan Paschal)

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