Friday: A Middling End to It All

The witches brew was tame.

Expected volatility from the double witching of options expirations never manifested itself today as the Dow Jones Industrial Average traded within a narrow range, ending with a gain of 4.23 to 6931.61.

The broader market finished lower with the S&P 500 off 0.96 to 801.84, the Nasdaq Composite Index tumbling 10.09 to 1337.31 and the Russell 2000 dropping 1.19 to 336.37. Advancers nipped decliners 1,271 to 1,210 on the Big Board as volume reached 481 million shares.

The bond market was quieter than the local library, with no major economic news and Federal Reserve Chairman Alan Greenspan talking about arcane fiscal and governmental policy rather than the economy. The yield on the benchmark 30-year Treasury bill edged higher to 6.63%. Traders are awaiting Greenspan's Humphrey-Hawkins testimony before Congress next week.

"While the basic fundamental drivers of the market are intact, liquidity is low at this point, with 5.7% of mutual fund net assets held in cash, and leadership is lacking," says A.C. Moore, chief investment strategist of Principal Financial Securities/Dunvegan Associates.

The technology sector, which has of late surrendered its leadership role, got hit again today after a SoundView Financial analyst made comments that personal computer manufacturers will have a tough time in the second quarter.

Mark Specker of SoundView said that gross margins in the personal computer industry have peaked for the foreseeable future and that many of the big PC manufacturers will have to follow Compaq's (CPQ) recent sharp price cuts, though he did not cut his ratings or earnings estimates on any of the stocks.

Compaq dropped 2 7/8 to 79 3/4, Dell (DELL) tumbled 1 3/8 to 71 1/8 and Gateway 2000 (GATE) eased 1 1/2 to 60 1/2.

Among the bellwether tech stocks, Intel (INTC) lost 3 1/2 to 146 3/8, Microsoft (MSFT) dipped 1/4 to 95 and Cisco Systems (CSCO) sagged 4 1/2 to 58 3/8.

Scholastic's (SCHL) stock is smarting, down 25 to 36 3/4, after the company announced last night that it expects to post a loss of 70 to 80 cents per share in its third quarter as compared with First Call estimates of profit of 68 cents per share. This morning there was a flurry of downgrades from brokerage houses.

The once-highflying Diana Corp. (DNA) fell 7/8 to 8 after its two-day trading halt was lifted this afternoon. The New York Stock Exchange says it will suspend trading of the stock by March 10 because operating assets have been substantially reduced.

Giftware distributor Department 56 (DFS) tumbled 4 7/8 to 19 after the company reported net income of 19 cents per share for its fourth quarter as compared with 25 cents per share for the same quarter last year. First Call estimates called for earnings of 21 cents per share.

Mafco Consolidated Group (MFO), which owns stakes in Consolidated Cigar (CIG) and Power Control Technologies (ATP), gained 4 3/8 to 42 after the company said directors had approved the purchase of publicly held shares and a special cash dividend valued at $43.50 a share.

Graco (GGG), a manufacturer of construction equipment, slipped 2 1/8 to 32 3/4 after Dain Bosworth cut its rating from buy to hold.

By Avi Stieglitz
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