Two Long, Hard Days Later, Nasdaq Emerges From Its Crevasse

Maybe Monday was just a bad dream. Maybe instead of the beginning of the end of tech leadership, it was the end of the beginning of the ferocious rotation out of tech and into cyclical stocks so prevalent last week.

Major Indices INDEX CHANGE % VALUE YR TO DATE Dow 132.87 +1.3% 10,581.42 +15.2% S&P 500 29.95 +2.3% 1336.12 +8.7% Nasdaq 78.65 +3.3% 2488.29 +13.5% Russell 2000 11.23 +2.7% 426.57 +1.1% TSC Internet 40.11 +6.7% 636.06 +56.5% TREASURY BOND CHANGE VALUE YIELD 30-Year 3/32 96 3/32 5.523%

Tech and other growth stocks led the way once again today. But unlike yesterday's more bifurcated session, the majority of stocks dutifully followed big-cap leadership higher.

The Dow Jones Industrial Average drifted in modestly positive territory for much of the session before surging higher in the final hour to close up 132.87, or 1.3%, to an all-time high of 10,581.42. The record is the Dow's ninth in the past 13 sessions.

Dow leadership featured American Express (AXP Quote), General Electric (GE Quote) and Johnson & Johnson (JNJ Quote). United Technologies (UTX Quote) paced laggards.

The Nasdaq Composite Index was again the best performer among the most major of major indices, rising 78.65, or 3.3%, to 2488.29. The index has now recouped all of the 138 points lost Monday.

Microsoft (MSFT Quote) slid 1.3% despite posting better-than-expected earnings last night. Meanwhile, Amgen (AMGN Quote) lost 7.2% after its disappointing profit report.

But those losses were more than offset by gains for tech leviathans such as Cisco (CSCO Quote), Sun Microsystems (SUNW Quote) and MCI WorldCom (WCOM Quote).

Additionally, Qualcomm (QCOM Quote) surged 38.6% and PeopleSoft (PSFT Quote) gained 16.1% after each bested analysts' expectations. The Nasdaq 100 rose 3.7%.

Chip-equipment makers Applied Materials (AMAT Quote), Novellus (NVLS Quote) and KLA-Tencor (KLAC Quote) were also huge winners thanks to positive comments from Donaldson Lufkin & Jenrette. The Philadelphia Stock Exchange Semiconductor Index rose 6.7%.

In New York Stock Exchange trading, Lucent (LU Quote) jumped 7.7% after inking a three-year, $780 million contract with Sprint (FON Quote), which gained 4.9%. Motorola (MOT Quote) and EMC (EMC Quote) were also big gainers; the Morgan Stanley High-Tech 35 rose 4.4%.

After trading as low as 165 1/8, IBM (IBM Quote) rose 1.3% to 171 7/8. After the close, Big Blue reported first-quarter earnings of $1.55 a share vs. the 21-analyst estimate of $1.41 and year-ago results of $1.06.

Micron Technology (MU Quote) was an exception, falling 7.3% after BancBoston Robertson Stephens cut its recommendation.

Meanwhile, Internet bellwethers such as America Online (AOL Quote), CMGI (CMGI Quote), Network Solutions (NSOL Quote) and Lycos (LCOS Quote) stormed higher. TheStreet.com Internet Sector index rose 40.11, or 6.7%, to 636.06.

Fueled by the aforementioned, as well as drug makers, transports and select consumer-focused plays, the S&P 500 rose 29.95, or 2.3%, to 1336.12.

Among druggies, Schering-Plough (SGP Quote) and Johnson & Johnson were big winners, helping the American Stock Exchange Pharmaceutical Index rise 3.3%.

Elsewhere on the sector front, the Dow Jones Transportation Average rose 62.54, or 1.8%, to 3556.46 while the Morgan Stanley Consumer Index gained 3.1%

Meanwhile, while the Russell 2000 gained 11.23, or 2.7%, to 426.57, moving back into positive ground for the year-to-date for the first time since Feb. 3.

"People are walking around saying, 'Nothing can stop this market,'" said Scott Bleier, chief investment strategist at Prime Charter. "We had fear for one day, which brought more pain and anguish than people experienced in a long time. Now, people are wiping big, fat drops of sweat off their brow like it was never there. We're seeing levels of complacency equal to what we saw this time last year before the market crapped out."

After predicting last week the overall market would top and Internet stocks were particularly vulnerable, Bleier admitted being somewhat "befuddled" by today's action.

"My feeling still is Internet stocks at these prices remain the emperor's new clothes," he said. "The phenomena of wild parabolic spikes, a big drop to the breakout, then test of old highs is something that happens from a technical perspective. But the speed, the velocity of their happening is stupendous. I think there's a lot of shorts that over the last two days are getting squeezed really, really, really hard."

The strategist noted VeriSign (VRSN Quote) rose 28.7% "on no news" today. Conversely, "what's the reason for it to be at 188 [on April 13] vs. below 100 yesterday?" he said. "Even in a brand new technology, there really is no justification for 30%-plus moves up or down on a daily basis.

"The giant game is still underway even though there's been a nice shot across the bow," he continued. "Every time there's been a shot there's always a happy ending, seemingly. All I can say is, God bless America."

In NYSE trading, 920.1 million shares were exchanged while gainers led losers 1,938 to 1,089. In Nasdaq Stock Market activity 1.13 billion shares were exchanged -- its 12th-straight billion-plus session -- while gainers led 2,442 to 1,588. New 52-week highs led new lows 45 to 22 on the Big Board and by 69 to 49 in over-the-counter trading.

Gains Aside, Nervousness Remains

Notwithstanding today's advance, some players still wonder if they're not in the eye of the storm vs. the calm thereafter.

"The biggest theme I'm seeing is people are much quicker to take a profit and be ready to reload on the long side, and the same thing on the short side," said the head equity trader at one Wall Street firm. "I'm noticing a lot of guys that usually have a much longer time horizon are shortening that up and getting a little smaller in position size. There's definitive nervousness out there."

The trader, who requested anonymity, said both hedge-fund clients and accounts more focused on building long-term positions "are picking their levels, but I'm not hearing the usual conviction."

Meanwhile, "on our desk, we're taking profits off the table unless we're real comfortable with the position and real hedged overnight," he admitted. "It's almost not worth it [to stay long]. You're coming in long an Internet stock and it's up 20, down 20; you can blow up."

Among other indices, the Dow Jones Utility Average fell 1.17, or 0.4%, to 302.35 and the American Stock Exchange Composite Index rose 13.61, or 1.9%, to 750.59.

The price of the 30-year Treasury bond slid 3/32 to 96 1/32, its yield at 5.52%.

Elsewhere in North American equities, the Toronto Stock Exchange 300 jumped 94.49, or 1.4%, to 7019.77 and the Mexican Stock Exchange IPC Index lost 53.17, or 1%, to 5284.47.

Wednesday's Company Report

By Heather Moore
Staff Reporter

(Earnings estimates from First Call; new highs and lows on a closing basis unless otherwise specified. Earnings reported on a diluted basis unless otherwise specified.)

Dow component Coca-Cola (KO Quote) fizzed up 2 5/16 to 67 9/16 after announcing first-quarter earnings of 29 cents a share, in line with the 15-analyst estimate and up the year-ago 34 cents. Elsewhere among the gilded 30, Exxon (XON Quote) lowered 2 5/16 to 78 7/16 even after posting first-quarter earnings of 47 cents a share, beating the 20-analyst consensus of 46 cents but falling below the previous year's 76 cents. And Goodyear Tire (GT Quote) slid 1/2 to 56 3/8 even after recording first-quarter earnings of 90 cents a share, matching the five-analyst estimate but falling below the year-ago $1.09.

Elsewhere in earnings, Qualcomm shot up 54 1/4, or 38.6%, to an all-time high of 195 1/16 after last night reporting second-quarter earnings of 82 cents a share, up from 25 cents a year ago and well in excess of the 15-analyst consensus of 59 cents. NationsBanc Montgomery Securities upgraded the stock to buy from hold; Goldman Sachs upgraded it to trading buy from market outperform; and BT Alex. Brown upgraded it to strong buy from buy.

Earnings/revenue reports and previews

Biotech firm Amgen (AMGN Quote) sloughed off 4 15/16, or 7.2%, to 64 after yesterday reporting first-quarter earnings of 46 cents a share on strong sales of lead drugs Epogen and Neupogen. The figure was above both the 35-cent estimate and the year-ago 35 cents. But Morgan Stanley Dean Witter was not impressed, and today downgraded the stock to neutral from outperform.

Aware (AWRE Quote) picked up 3 3/16, or 6%, to 56 1/2 after late yesterday posting first-quarter earnings of 3 cents a share, beating the four-analyst estimate of 2 cents and the year-ago loss of 7 cents. TheStreet.com looked at Aware's growth-potential back in March.

Cadence Design Systems (CDN Quote) tanked 8 5/16, or 39.9%, to an annual low of 12 1/2 after warning it sees slower revenue and earnings growth for the rest of 1999. The company also reported first-quarter earnings of 31 cents a share, a penny better than the 14-analyst outlook and up from the year-ago break-even results. Morgan Stanley Dean Witter lowered the stock to neutral from outperform; BT Alex. Brown dropped it to market perform from buy; and Merrill Lynch downgraded it to neutral from accumulate.

Microsoft slipped 1 1/16 to 82 despite yesterday posting third-quarter earnings of 35 cents a share, beating the 22-analyst estimate of 32 cents and moving up from 25 cents a year ago. Today, Prudential Securities downgraded Mister Softee to hold from accumulate.

In other earnings news:

Upside Surprises
Company	Qtr	EPS	First Call View	Yr. Ago EPS	Number of Analysts	Price Change	Close
Allstate (ALL Quote)	1Q	81c	80c	81c	17	-1 3/8	38
Alltel (AT Quote)	1Q	59c	58c	46c	9	+1/8	71
AMR (AMR Quote)	1Q	34c	33c	$1.62	11	+2	69 13/16
C.R. Bard (BCR Quote)	1Q	51c	50c	44c	13	+2 13/16	53 1/16
Bristol-Myers Squibb (BMY Quote)	1Q	53c	52c	46c	24	+5	64 1/4
Colgate (CL Quote)	1Q	65c	64c	60c	15	+7 3/8	100 3/8
Compaq (CPQ Quote)	1Q	16c	15c	1c	29	+1/4	24 1/4
Cyprus Amax Minerals (CYM Quote)	1Q	-33c	-41c	0c	13	+3/16	13 7/8
General Dynamics (GD Quote)	1Q	78c	72c	65c	9	+4 1/2	71
Harrah's Entertainment (HET Quote)	1Q	30c	27c	25c	19	+1 3/8	23
Harris (HRS Quote)	3Q	52c	51c	75c	3	+1/4	34 1/4
ITT Industries (IIN Quote)	1Q	45c	44c	17c	6	+1/16	39 9/16
Kimberly-Clark (KMB Quote)	1Q	72c	65c	51c	10	+4 1/8	58 7/16
Mead (MEA Quote)	1Q	22c	15c	32c	13	-1/4	37 11/16
Northrup Grumman (NOC Quote)	1Q	$1.50	$1.33	-18c	9	+3/16	64 13/16
Praxair (PX Quote)	1Q	67c	59c	62c	14	+2 1/8	48 11/16
Republic New York (RNB Quote)	1Q	$1.03	90c	$1.03	11	-11/16	52 11/16
Ryder (R Quote)	1Q	43c	34c	54c	9	+5/8	27
Textron (TXT Quote)	1Q	93c	90c	59c	11	+1 3/8	91 3/8
Unicom (UCM Quote)	1Q	43c	36c	25c	11	+3/16	38 7/16
US Airways (U Quote)	1Q	49c	45c	96c	10	+2 11/16	55 9/16

Downside Surprises
Company	Qtr	EPS	First Call View	Yr. Ago EPS	Number of Analysts	Price Change	Close
Burlington Resources (BR Quote)	1Q	-5c	-4c	27c	24	-5/8	42 7/8
Fruit of the Loom (FTL Quote)	1Q	-13c	-6c	43c	6	-1/2	10 3/16
Jostens (JOS Quote)	1Q	23c	24c	28c	2	-3/8	22 1/4

In-Line Reports
Company	Qtr	EPS	First Call View	Yr. Ago EPS	Number of Analysts	Price Change	Close
Liz Claiborne (LIZ Quote)	1Q	70c	70c	69c	12	-1 1/8	34 9/16
Hilton Hotels (HLT Quote)	1Q	16c	16c	14c	13	+7/16	16 13/16
Stanley Works (SWK Quote)	1Q	48c	48c	51c	9	-11/16	31
U S West (USW Quote)	1Q	78c	78c	78c	15	+1 5/16	56

Analyst actions

Boston Scientific (BSX Quote) climbed 7 3/16, or 19.6%, to an all-time high of 43 7/8 after J.P. Morgan upgraded it to buy from market performer and raised its 12-month price target to 48 from 40 a share.

COR Therapeutics (CORR Quote) hopped up 1 3/16, or 12.8%, to 10 1/2 after CIBC Oppenheimer raised it to strong buy from buy.

Foodmaker (FM Quote) vaulted 3 1/4, or 14.5%, to 25 5/8 after Morgan Stanley Dean Witter raised it to strong buy from outperform.

Inktomi (INKT Quote) surged 10 1/2, or 9.1%, to 125 1/2 after CIBC Oppenheimer started coverage as a strong buy.

ISS Group (ISSX Quote) leapt 9 3/8, or 21%, to 54 1/4 after Goldman Sachs pushed it up to trading buy from market outperform.

Lattice Semiconductor (LSCC Quote) grew 10 7/8, or 22.9%, to 58 1/2 after Prudential upgraded it to strong buy from accumulate and Goldman Sachs lifted it to market outperform from perform.

RayChem (RYC Quote) skidded 1 1/2, or 5.4%, to 26 1/2 after Goldman Sachs rated the stock a market outperform, removing it from the firm's recommend list.

Tyco (TYC Quote) tacked on 3 11/16 to 81 7/8 after Credit Lyonnais upped it to buy from add.

Miscellany

DepoMed (DMI Quote) plunged down 9 7/16, or 67.4%, to an annual low of 4 9/16 after saying Bristol-Myers Squibb (BMY Quote) won't be using the company's gastric retention system in an unnamed drug from Bristol-Myers, which rose 5, or 8.4%, to 64 1/4. (See the above earnings chart for additional news on Bristol-Myers.)

Dow Jones (DJ Quote) expanded 1 13/16 to 54 3/8 after saying it will launch next month dowjones.com, a free Web site targeted at business people. The company also said The Wall Street Journal will produce an original weekly package of articles and information focused on personal finance and careers that will be published as branded pages in major metropolitan Sunday newspapers. Merrill Lynch upgraded the stock to long-term buy from accumulate.