Dow Abhors a News Vacuum, and Sinks

Things are good.

So what, a little profit-taking appears to have struck; so what, a five-figure closing Dow Jones Industrial Average, understandably, appears a little camera-shy in the face of all these near-blinding flashes. The mighty Dow continues to be mighty -- even while it's stuffed with some truly mediocre performers. Recently pressured tech stocks have closed in the green for two sessions in a row. The billion-dollar merger and big-name IPO markets are thriving in the almost-spring sun. And, to top it off, you'll probably end the day with a smooth, if not properly poured, Guinness in your hand.

Major Indices INDEX CHANGE % VALUE Dow 64.11 -0.7% 9866.36 S&P 500 12.96 -1% 1293.42 Nasdaq 15.47 -0.6% 2423.80 Russell 2000 2.30 -0.6% 396.87 TSC Internet 4.73 +0.8% 609.38 TSC E-Commerce 0.05 -0.1% 109.84 TREASURY BOND CHANGE VALUE YIELD 30-Year 15/32 96 9/32 5.505%

The Dow lately was down 64 to 9866, well off its session high of 9960.71. American Express (AXP), IBM (IBM), 3M (MMM) and J.P. Morgan (JPM) were contributing the most to the downside. Meanwhile, speaking on behalf of the bulls were United Technologies (UTX), up 0.6% after Lear (LEA) agreed to buy the company's UT Automotive unit for $2.3 billion, and Caterpillar (CAT), up 6.4% following an upgrade from Salomon Smith Barney.

The broader S&P 500 was down 13 to 1293 and the small-cap Russell 2000 was down 2 to 397.

After rising as high as 2441.06 and falling as low as 2419.85, the tech-fleshy Nasdaq Composite Index recently was falling 15 to 2424. News that the Federal Trade Commission approved an antitrust settlement with the chipmaker is apparently already built into Intel (INTC), up only 1 and change. Elsewhere in techland, the Morgan Stanley High-Tech 35 was off 0.4%, while the Philadelphia Stock Exchange Semiconductor Index was up 0.5%.

Internets were mixed, with the TheStreet.com Internet Sector index up 5 to 609 and TheStreet.com E-Commerce Index down a fraction to 110.

Inktomi (INKT) will enter TheStreet.com Internet Sector index after the close of trading today, the Philadelphia Stock Exchange said. Inktomi is replacing Netscape (NSCP), whose acquisition by America Online (AOL) is expected to be completed today.

In other index-reconfiguration news, Beyond.com (BYND) will enter TheStreet.com E-Commerce Index after today's close, the American Stock Exchange said. Beyond.com is replacing N2K (NTKI), whose merger with fellow E-Commerce Index component CDnow (CDNW) is expected to be completed today. The merged CDnow/N2K will remain in the index under its new symbol, CDNWD.

Market internals were decidedly negative. On the New York Stock Exchange, decliners were leading advancers 1,714 to 1,083 on 408 million shares. The downs had the ups 2,052 to 1,502 on 482 million shares in Nasdaq Stock Market activity. 'The same people who get excited about 2-for-1 stock splits are getting excited about Dow 10,000,' SG Cowen's Gary Kaminsky said. 'I don't mean to insult anybody, but after 12 years in the business, I focus on individual companies and how they're performing.'

The bond market also was locking in recent gains. The 30-year Treasury was down 15/32 to 96 9/32, pushing up its yield to 5.51%. (For more on the fixed-income market, see today's early Bond Focus.)

"You've got a level of indecision here," said Gary Kaminsky, managing director of private banking at SG Cowen. "And that's because we're light on news: There's no earnings news for the next few weeks, no economic data to speak of, absolutely nothing macro other than that excitement to move to Dow 10,000. We're closing out the first quarter, and these professional mutual-funds guys are underperforming the S&P 500, and they don't want to be underperforming the S&P. So people are waiting for the quarter to end before they make any major commitments. We'll have a little portfolio adjusting, a little getting out of sectors it doesn't look good to be in."

Along with "selected Internet stocks," Kaminsky's favored sector is telecommunications, he said, and he believes telecom-tech -- companies focused on increasing capacity -- will takeover from PCs as the new leadership group. He is long Paymentech (PTI), Global Crossing (GBLX) (which agreed to buy Frontier (FRO) today; see below) and his "favorite stock right now," Synetic (SNTC).

"Old-fashioned computer hardware and software names are exactly that: old-fashioned. Telecom is where it's at," a tech trader agreed. "We've seen that for a few weeks now." He said the entire sector was "extremely active" today -- potential acquirers to the downside, potential takeover targets to the upside -- following the GBLX/FRO deal.

After a couple weeks of sideward motion, Kaminsky expects major indices to move steadily higher due to the beginning of the first-quarter earnings prerelease season and the March 31 end of Japan's fiscal year. "The bond market will be surprised that Japanese money hasn't been pulled out of Treasuries and bond yields will go down and prices will go up on the lack of repatriation," he said.

As for Dow 10,000, the otherwise bullish strategist said: "The general public is focused on this as a monumental thing. But the same people who get excited about 2-for-1 stock splits are getting excited about Dow 10,000. I don't mean to insult anybody, but after 12 years in the business, I focus on individual companies and how they're performing. There's no new money coming into Dow 10,000. Of course, if the Fed starts raising [short-term interest] rates, 10,000 will be a memory."

Wednesday's Midday Movers

By Aaron L. Task
Senior Writer

Market proxies may have struggled this morning, but construction and equipment manufacturers were doing some heavy lifting after Salomon Smith Barney upgraded several names in the sector. Raised to buy from neutral were Caterpillar, lately up 2 3/4, or 6.4%, to 46 13/16; Deere (DE) up 2, or 6%, to 35 1/8; and Case (CSE), up 2 7/16, or 11.3%, to 24. Upped to outperform from neutral were AGCO (AG), higher by 9/16, or 9.3%, to 6 5/8, and New Holland (NH), up 1/2, or 5.5%, to 9 9/16.

Sticking with the hard-hat theme, oil-service companies were also strong percentage gainers this midday, notably Smith International (SII), up 3 3/16, or 9.5%, to 36 7/8 and BJ Services (BJS), lately higher by 1 3/16, or 6.5%, to 19 1/2. The Philadelphia Stock Exchange Oil Service Index was up 5%.

At the opposite end of the spectrum, Multex.com (MLTX) was lately up 20 5/8 to 34 5/8, or 147% from its IPO price of $14. Separately, 24/7 Media (TFSM) was lately up 2 1/2, or 8,9%, to 30 5/8 after signing a deal with a division of General Electric's (GE) NBC unit to a create an advertising team focused exclusively on the convergence of the Internet and television.

Earnings movers

Dollar Thrifty Automotive Group (DTG) was up 2 1/16, or 16.9%, to 14 1/4 after saying it expects first-quarter earnings to exceed 15 cents a share, sharply above the current four-analyst consensus estimate of 6 cents. Goldman Sachs upped its recommendation to market outperform from market perform.

Foamex International (FMXI) was down 2 7/16, 32.2%, to 5 1/8 after forecasting a fourth-quarter loss of $1.37 a share, including charges. No estimates were available; a year ago, the company earned 20 cents a share in the fourth quarter. Additionally, Foamex named John Johnson Jr. president and CEO, replacing Andrea Farace. Marshall Cogan was elected chairman. The company also said it hired J.P. Morgan to explore strategic alternatives.

IVI Checkmate (CMIV) was down 1 1/4, or 27%, to 3 1/4 after warning its first-quarter profits will be "significantly below" the three-analyst estimate of 8 cents a share. In fact, the company said it expects a loss of up to 13 cents a share.

New England Business Service (NEB) was down 5 1/2, or 18.2%, to 24 3/4 after forecasting its third-quarter earnings will not meet the four-analyst consensus of 50 cents a share.

Progress Software (PRGS) was up 3 1/8, or 10.5%, to 32 7/8 after posting first-quarter earnings of 35 cents a share, 7 cents ahead of the four-analyst consensus and up from 19 cents a year ago.

Saks (SKS) was off 2 1/16, or 7.1%, to 26 7/8 after last night reporting fourth-quarter earnings of 97 cents a share, on target with the 14-analyst view and ahead of the year-ago 77 cents. But the retailer said it will record almost $35 million in first-quarter charges and extraordinary losses.

Southdown (SDW) was up 2 3/8, or 5.1%, to 49 1/8 after forecasting first-quarter earnings, excluding a 10-cent gain, in a range of 57 cents to 64 cents a share, better than the current four-analyst consensus estimate of 41 cents.

Tekelec (TKLC) was down 3 1/16, or 28.3%, to 7 3/4 after warning its first-quarter earnings will fall below both the six-analyst forecast of 11 cents a share and the year-ago dime due to lower product revenue. BT Alex. Brown cuts its recommendation to buy from strong buy.

Texas Industries (TXI) was up 2 1/8, or 9.5%, to 24 7/16 after posting first-quarter earnings of 48 cents a share. That's down from 85 cents a year ago but well ahead of the nine-analyst consensus of 23 cents.

Wendy's (WEN) was up 1 3/4, or 6.4%, to 29 after forecasting first-quarter earnings, excluding a penny gain, to come in at 22 cents to 23 cents a share, above the current 10-analyst consensus estimate of 21 cents.

Williams-Sonoma (WSM) was lately halted -- but projected to open down at 25 to 28 from a close last night of 36 -- after posting fourth-quarter earnings of 75 cents a share, up from 61 cents a year ago but a penny shy of the eight-analyst consensus. Goldman Sachs removed the retailer from its recommended list and downgraded it to market outperform.

Winnebago (WGO) was up 1 9/16, or 11.2%, to 15 9/16 after reporting second-quarter earnings of 45 cents a share, blasting away the single-analyst outlook for 26 cents and the year-ago 18 cents.

In other news:

Atrion (ATRI) was up 1 3/8, or 17.5%, to 9 1/2 after announcing plans to purchase of up to 400,000 shares of its outstanding common stock for $8 to $10 a share in a Dutch auction.

Ciber (CBR) was up 2 1/2, or 13.2%, to 21 1/2 after Credit Suisse First Boston reiterated its strong buy recommendation and upped its earning estimates for fiscal year 2000 to $1.29 from $1.25.

Daniel Industries (DAN) was up 2 11/16, or 22.3%, to 14 3/4 after announcing it has received and unsolicited $15 a share buyout bid from an unnamed suitor. The company has hired Simmons & Co. International to help it evaluate strategic alternatives.

Donaldson Lufkin & Jenrette (DLJ) was down 3 1/2, or 5.1%, to 65 5/16 after it filed a preliminary registration statement with the Securities and Exchange Commission for an IPO of a new stock that will track its online brokerage unit, DLJdirect. DLJ's shares had risen precipitously in anticipation of the filing.

Frontier was up 7 5/16, or 16.4%, to 51 15/16 after Bermuda-based Global Crossing agreed to buy the long-distance and local carrier for $11.2 billion in stock. Global Crossing was down 3 15/16, or 7.7%, to 47 1/4. The companies said the merger will create the first owned and operated global Internet protocol-based fiber-optic network able to provide customers with integrated worldwide Internet, data, long-distance, local telephone and conferencing services.

Ventas (VTR) was up 5/16, or 6.3%, to 5 5/16 after hiring Merrill Lynch as an adviser to explore alternatives for paying off its $275 million term loan. The alternatives include a sale of certain assets, a private equity placement, refinancing of the principal through conventional and/or commercial mortgage-backed securities, and drawing on its existing credit facility.

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