Dow Finally Closes Above 9000 on an Otherwise Down Day

It was John 'n' Sandy to the rescue of this market day, as the Dow Jones Industrial Average jumped to its first close above 9000 solely on a narrow boost inspired by the planned $70 billion Citicorp (CCI Quote)-Travelers Group (TRV Quote) merger.

Citicorp's John Reed and Travelers' Sandy Weill, in crafting the deal meant to create the gigantic Citigroup, sent their own stocks and the whole financial-services sector rocketing higher. Citicorp, whose stock is the lesser currency in the proposed merger of equals, blasted up 37 5/8, or 26.3%, to an all-time high of 180 1/2. Dow component Travelers surged 10 13/16, or 17.5%, to an all-time high of 72 1/2; at the New York close it was up 11 1/2 to 73, contributing 45.84 points to the Dow's rise of 49.82 to a record 9033.23. Also supporting the Dow were frequent merger-chatter subject J.P. Morgan (JPM Quote), up 10 13/16 (43.10 Dow points), or 8.1%, to a record 144 3/4, and American Express (AXP Quote), up 5 3/4 (22.92 Dow points), or 5.8%, to a record 104 3/4. The three financials added a total of 111.86 points to the Dow, masking what would have been a negative session.

There were no would-have-beens for the rest of the major indices -- they all finished lower. The broad S&P 500 got help from its big financial members, losing just 1.31 to 1121.39, but the tech-soaked Nasdaq Composite Index had no such luck, plummeting 26.26, or 1.4%, to 1829.14. The large-cap Nasdaq 100 plunged 28.29, or 2.3%, to 1205.37. The small-cap Russell 2000 shed 3.91 to 481.88.

Jay Meagrow, vice president of trading at McDonald in Cleveland, said he was less than impressed with the broader market's performance. "I don't think they even would have opened up if it hadn't been for that deal," he said, noting that the S&P 500 futures were up only modestly this morning before the Citigroup announcement. "I don't think we'll close up tomorrow, unless Chase says something about any of its potential 84 buyers or whatever." Chase (CMB Quote), long rumored to have an eye for Merrill Lynch (MER Quote), gained 6 7/8 to an all-time high of 147. Merrill leapt 10 1/2, or 12.1%, to an all-time high of 97.

Equity volume remained robust, but breadth was decidedly to the downside. New York Stock Exchange decliners beat advancers by 1,698 to 1,289 on 625.8 million shares, with 267 new highs ahead of 12 new lows. On the Nasdaq, 2,622 decliners outweighed 1,862 advancers on 769.8 million shares. New Nasdaq highs topped new lows by 270 to 60.

Despite today's negative tone, Tim Morris, chief investment officer at Bessemer Trust, remains sanguine on the market. "We get some backing and filling, but on balance the last few days the market's been very strong," he said. "The market's digested a lot of the earnings changes, the downgrades, and is looking at absolutely another quarter of good earnings gains."

Morris isn't among those worried about stretched valuations, either. "The valuation level is continuing to reflect the fundamentals," he said. "You don't get these valuations in a vacuum. Other than the very short term, it'll reflect the forecast of our economic prospects."

Those economic prospects are strong, Morris said, but the lingering possibility of growth pressures from Asia is keeping him on alert. "We've kind of been looking at the dead-cat bounce in Asia, and now we settle in for the long haul," he said. "Who's going to take the requisite steps to do the reforms and who are going to be the laggards? That's a wild card. The question for Japan is, who wants to invest in a market that's dependent on the government propping it up?"

The bond market sold off, with the benchmark 30-year Treasury down 14/32 to 104 6/32. The yield rose to 5.83%.

Elsewhere in North America, the Toronto Stock Exchange 300 advanced 33.06 to a record 7645.79 and the Mexican Bolsa slipped 3.33 to 4924.58.

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Note to New Yorkers wanting to get on television: Run down to the Wall Street Kitchen & Bar, where CNBC's very lonely Mike Hegedus would be happy to interview you for the ongoing "Dow 9000" special. Really happy.

Monday's Company Report

By Heather Moore
Staff Reporter

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

Today's number 9000 (and change) was brought to you by Citicorp and Travelers -- or Citigroup (with a little red umbrella over the "p"), as the parties to the largest corporate marriage ever will soon prefer to be called.

Under the terms of this '90s-style $70 billion merger between equals, Travelers' Sandy Weill and Citicorp's John Reed will serve as co-chairmen and co-CEOs. Citicorp shareholders will exchange each of their shares for 2.5 shares of the newly formed company. Shareholders in Travelers, which bought Salomon last year to form Salomon Smith Barney, will receive one share of the new company for each share owned.

Helping to disguise an otherwise down day were the following financial services groups: Donaldson Lufkin & Jenrette (DLJ Quote), which rose 4 5/16 to a high of 92; PaineWebber (PWJ Quote), which rose 2 1/16, or 5%, to a high of 43 3/4; Jefferies (JEF Quote), which rose 3/16 to 56; Hambrecht & Quist (HQ Quote), which rose 1 3/4, or 5.1%, to 35 7/8; and Raymond James (RJF Quote), which rose 1 9/16, or 5.1%, to a high of 32 1/8. Morgan Stanley Dean Witter (MWD Quote), which jumped 4 9/16, or 6.1%, to a high of 80, raised Travelers to strong buy from neutral.

Mergers, acquisitions and joint ventures

In other (much smaller) merger news, Security First (SFSL Quote) soared 5 1/2, or 24.9%, to a high of 27 7/8 after agreeing to be acquired by FirstMerit (FMER Quote) in a $256 million stock deal. FirstMerit slipped 3/16 to 32 7/8.

MoneyGram Payment Systems (MNE Quote) sailed 1 5/16, or 8.4%, to 16 7/8 after agreeing to be acquired by Viad (VVI Quote) for $17 per share. Viad closed flat at 24 15/16.

Level 3 Communications (LVLT:Nasdaq) fell 1 to 61 1/2 after signing a $165 million merger agreement with privately held Xcom Technologies.

Earnings reports and previews

Edify (EDFY Quote) plummeted 6 7/8, or 37.9%, to 11 1/4 after saying that it expects a first-quarter loss between 8 cents and a dime per share, missing the five-analyst estimate of a 4-cent profit. The company said it suffered order delays, especially from larger financial services and call center customers.

Robotic Vision Systems (ROBV Quote) shrank 3 9/16, or 28.5%, to 9 after announcing that it expects to report a $2.5 million second-quarter loss because of a fall in orders and revenues in its semiconductor equipment group.

Ruby Tuesday (RI Quote) flourished 3 3/16, or 9.8%, to 35 3/4 after reporting third-quarter earnings of 54 cents per share, beating the eight-analyst estimate of 53 cents and last year's 46 cents. The company said it will repurchase up to 2 million shares and set a 2-for-1 stock split.

Alcoa (AA Quote) added 9/16 to 69 9/16 after reporting first-quarter earnings of $1.24 per share, beating the 18-analyst estimate of $1.06 and last year's 91 cents.

Viasoft (VIAS Quote) lost 2 7/8, or 16%, to 15 5/32 after saying it expects to report 1998 earnings in the range of 80 cents to 85 cents per share, significantly missing the nine-analyst estimate of $1.01. (As originally posted, this story incorrectly said that Viasoft lost 1 1/4 to 53 11/16.)

Offerings and stock actions

Manatron (MANA Quote) flew 7/8, or 35%, to 3 9/16 after saying it will buy back up to 150,000 shares of its stock.

Analyst actions

DII Group (DIIG Quote) plunged 2 3/8, or 11.5%, to 18 5/16 after Bankers Trust Alex. Brown cut it to buy from strong buy.

4Front Technologies (FFTI Quote) surged 1 5/16, or 10.2%, to 14 1/4 after Wheat First Union started coverage with a buy and a 12-month price target of $17.50 per share.

Advanced Micro Devices (AMD Quote) lifted 1 13/16, or 6.4%, to 30 3/8 after Piper Jaffray initiated coverage with a buy and a 12-month price target of $40.

Sunbeam (SOC Quote) dropped 2 1/8, or 6.2%, to 32 1/4 after Goldman Sachs lowered the company to market perform from its recommended list and Bear Stearns downgraded it to neutral from buy. On Friday, Sunbeam said it expected to report disappointing first-quarter sales and a loss.

CSK Auto (CAO Quote) swelled 1 3/8, or 5.7%, to 25 5/16 after Salomon Smith Barney and Lehman Brothers started coverage with buys and Morgan Stanley Dean Witter initiated coverage with an outperform. The company had its IPO in early March.

Cigna (CI Quote) added 4 7/8 to 209 13/16 after Salomon Smith Barney upgraded it to buy from neutral.

Cooper Industries (CBE Quote) jumped 2 7/16 to 67 13/16 after Salomon Smith Barney raised it to buy from outperform.

Delta & Pine Land (DLP Quote) descended 3/4 to 49 5/8 after Salomon Smith Barney downgraded it to neutral from buy.

First Tennessee National (FTEN Quote) picked up 1/2 to 33 3/4 after Bear Stearns raised it to buy from attractive.

Miscellany

Cephalon (CEPH Quote) dwindled 3 1/16, or 20.1%, to 12 3/16 and Chiron (CHIR Quote) lost 11/16 to 20 7/8 after announcing that the Food and Drug Administration cancelled Thursday's Peripheral and Central Nervous System Drugs Advisory Committee meeting so that the feds can continue reviewing the companies' application for approval to market Myotrophin Injection for the treatment of Lou Gehrig's disease.

Gilead Sciences (GILD Quote) expanded 7 1/4, or 20.1%, to 43 1/4 after a study indicated that the company's Preveon drug reduced the HIV RNA, or viral load, of HIV patients when used with a combination of other anti-HIV drugs.

Concentric Network (CNCX Quote) soared 4 3/4, or 18.9%, to 29 7/8 after agreeing to provide backbone data network services to Internet services provider Teligent (TGNT Quote). Teligent fell 7/8 to 29 5/8.

National Semiconductor (NSM Quote) picked up 3 7/16, or 17%, to 23 11/16 after announcing that it will put an entire PC system on a single chip by the middle of next year. The move could lower PC prices to less than $400. Rival Intel (INTC Quote) tumbled 2 13/16 to 73 7/8 on the news, and the Philadelphia Stock Exchange Semiconductor Index lost 3.25 to 302.28.

St. Mary Land & Exploration (MARY Quote) lowered 6 1/4, or 16%, to 32 3/4 after reporting that an initial test at its 40%-owned Atchafalaya Bay has shown the zone to be nonproductive.

Biovail (BVF Quote) slumped 6 1/16, or 13.7%, to 38 1/16 on concerns that outside litigation could affect the timing of approval of its heart drug Cardizem CD.

Zeneca (ZEN Quote) leapt 9 3/4, or 7.1%, to 147 after a study showed that its breast cancer drug Tamoxifen can prevent the disease from occurring. Eli Lilly (LLY Quote) advanced 2 13/16 to 61 3/8 on hopes that its chemically similar osteoporosis drug Evista will benefit from the Tamoxifen news. Furman Selz upgraded Lilly to buy from hold.

Microsoft (MSFT Quote) decreased 3 1/16 to 89 15/16 after The Wall Street Journal reported that the Justice Department may bring new antitrust charges against the software giant this month.

Datatec Systems (DATC Quote) increased 1/2, or 9.2%, to 6 after Microsoft selected the company to help its clients install and test its upcoming Windows 98 and NT 5.0 operating systems.

Boeing (BA Quote) added 1 1/16 to 56 after announcing that it delivered 108 commercial jets in its first quarter and that it expects to deliver 550 planes this year.