Impressive Advance Leaves Market Players Wanting More

Amazing what a little pessimism can do for the stock market.

With many market players and pundits suggesting the run to Dow 10,000 was on permanent hiatus, stocks jumped solidly higher today.

Major Indices INDEX CHANGE % VALUE YR TO DATE Dow 118.21 +1.2% 9997.62 +8.9% S&P 500 18.73 +1.4% 1316.55 +7.1% Nasdaq 33.99 +1.4% 2462.96 +12.3% Russell 2000 1.12 +0.3% 399.55 -5.3% TSC Internet 8.53 +1.4% 617.46 +52.4% TSC E-Commerce 6.90 +6.3% 116.61 +37% TREASURY BOND CHANGE VALUE YIELD 30-Year 8/32 96 15/32 5.491%

The Dow Jones Industrial Average moved beyond the millennial mark several times in the waning moments of trading, hitting an apex of 10,001.51, before closing up 118.21, or 1.2% to 9997.62. The index bested the record close of 9958.77 set Monday.

The S&P 500 also parlayed a late-day surge to eclipse its all-time best of 1307.26, rising 18.78, or 1.4%, to 1316.55.

Aside from torturing CNBC producers and traders wanting to wear those "Dow 10,000" hats, the Dow's inability to sustain five figures sparked debate about whether 10,000 represents a barrier.

"I don't think it is a technical level where you'll see a significant amount of sell programs just due to the fact we hit 10,000," countered Rosanne Lang, vice president of program trading at Cantor Fitzgerald. "I don't think it'd be a reason for sell programs to hit. I heard a commentator on CNBC say that and it sounds corny to me. If it's going to sell off it'll sell off due to major fundamentals or a switch in psychology."

Regardless, blue-chip proxies enjoyed the best of both worlds as financial stocks rallied in concert with the bond market while consumer, transportation and technology names also advanced. The February Consumer Price Index and January trade report provided further evidence the economy remains strong but inflation in check, helping the 30-year Treasury bond rose 8/32 to 96 15/32, its yield sliding to 5.49%. (For more on the bond market and the economic reports, see today's late Bond Focus.)

Moreover, a rise in crude prices reversed course midday; after climbing as high as $15.55, April 1999 crude oil futures closed down 5 cents at $15.

Transports stormed higher in reaction. The Dow Jones Transportation Average rose 96.28, or 2.9%, to 3433.07 while the American Stock Exchange Airline Index gained 3.9%. FDX (FDX Quote) was a big influence on the transportation average, rising 5.6% after posting better-than-expected earnings and setting a 2-for-1 stock split.

American Express (AXP Quote) and J.P. Morgan (JPM Quote) led Dow gainers and most financial names rallied. The Philadelphia Stock Exchange/KBW Bank Index climbed 3.1% while the American Stock Exchange Broker/Dealer Index gained 4.5%.

3M (MMM Quote) was the biggest drag on the Dow, falling 3.6% after late yesterday saying the dollar's rally could mean first-quarter earnings estimates are too high.

Technology stocks were also big participants in the broad market's advance, although Compaq (CPQ Quote) fell 4.1%.

Still, most other tech bellwethers were notably higher. America Online (AOL Quote) rose 6.5% to another new high, 116 5/8, after completing its acquisition of Netscape. Because of its recent stock price appreciation and the addition of Netscape, Standard & Poor's said AOL's weighting in the S&P 500 index has increased to 1.04% from 0.94%, prompting index fund managers to add more shares accordingly.

One market watcher, who requested anonymity, noted AOL's recent rise has brought its market capitalization to over $100 billion, or roughly two-and-a-half times that of Motorola (MOT Quote), which rose 4.5% today. "It's ridiculous," he said. "Guys are holding their nose and buying the stock. But they're buying."'I think it acts very well,' D.A. Davidson's Jim Volk said of the market. 'Yes, everything is expensive and the breadth is narrow, but every time you get these minicorrections it bounces right back.'

Thanks to AOL's rise, TheStreet.com Internet Sector index gained 8.53, or 1.4%, to a record 617.46. The DOT was also fueled by CMGI (CMGI Quote) up 5.2% after setting a 2-for-1 stock split, and Amazon.com (AMZN Quote), up 5.6% after receiving a new buy recommendation from Salomon Smith Barney. Meanwhile, TheStreet.com E-Commerce Index gained 6.90, or 6.3%, to an all-time high of 116.61.

The completing of the AOL-Netscape deal also unwittingly aided Microsoft (MSFT Quote), which has claimed the AOL-Netscape combination proves the Justice Department's antitrust case has no merit.

Microsoft rose 3.2%, helping the Nasdaq Composite Index gain 33.99, or 1.4%, to 2426.96.

Other bellwethers on the rise included MCI WorldCom (WCOM Quote) and Intel (INTC Quote), which rose 1% after receiving positive comments from U.S. Bancorp Piper Jaffray and from Merrill Lynch's new semiconductor analyst, Joe Osha. The Nasdaq 100 rose 1.9% and the Philadelphia Stock Exchange Semiconductor Index gained 0.9%.

More than Dow 10,000, traders said today's action was influenced by tomorrow's triple-witching session, when index futures, index options and stock options expire concurrently.

"I think a lot of times people anticipate the triple-witch and the consensus has been it will be to the buy side," said Jim Volk, co-head of institutional trading at D.A. Davidson in Portland, Ore. "People buy today because they figure the market will open up tomorrow and rally into the close" because of the expirations.

Volk, who has been skeptical of the market's advance, was impressed by its performance today.

"I think it acts very well," he said. "Yes, everything is expensive and the breadth is narrow, but every time you get these minicorrections it bounces right back."

In New York Stock Exchange trading, 834.6 million shares traded while advancers bested declining stocks 1,559 to 1,353. In Nasdaq Stock Market activity 943.8 million shares were exchanged while losers led 1,993 to 1,927. New 52-week lows led new highs 66 to 45 on the Big Board and by 97 to 71 in over-the-counter trading.

More Bullishness From Goldman

"What's going on is we went up 10% in four weeks and -- forget about 10,000 -- that's a long way to go in a short period of time," said Al Goldman, chief market strategist at A.G. Edwards & Sons in St. Louis. "Yesterday and the day before the market showed normal signs of fatigue, which it showed early today. Now it's getting back some of its energy."

Goldman acknowledged the lackluster breadth figures but noted upside volume more than doubled down volume on the NYSE, 545.6 million to 250.8 million.

Saying triple-witching "tends to help," Goldman foresees the Dow eclipsing 10,000 tomorrow, "if not Monday. Then we'll got to about 10,300 before we take another pause to refresh."

Perhaps because of his penchant for using phrases like "pause to refresh," or because of A.G. Edwards' locale, Goldman has not received the accolades of other market seers. Yet he has been one of the market's most vociferous bulls in recent years, and thus more right than not. More importantly, perhaps, he remains ever optimistic.

"I think we're going to go higher," he said. "This bull market is based on a very strong, very positive economic environment. It's the old Goldilocks story. We're growing at a healthy pace with inflation benign with a marketplace dominated by a mood of people wanting to buy and hold stocks for the long-term and investors in a 'glass is half full rather than half empty' attitude. That's the fuel for a bull market."

The performance of AMR (AMR Quote), which rose 8% despite an earnings warning late yesterday, embodies that attitude, he said. Investors recognized the shortfall was due to the pilots' strike and not operations and judged the news to be "ancient history."

Among other indices, the Russell 2000 rose 1.12, or 0.3%, to 399.55; the Dow Jones Utility Average gained 3.75, or 306.16; and the American Stock Exchange Composite Index fell 0.97, or 0.1%, to 714.86.

Elsewhere in North American equities, the Toronto Stock Exchange 300 crept down 7.38 to 6586.44 and the Mexican Stock Exchange IPC Index crept up 9.63 to 4864.80.

Thursday'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.)

As noted above, the Internet sector demanded that blue-chips share today's glitzy record stardom.

CMGI vaulted 9 3/16, or 5.2%, to 184 13/16 after last night setting a 2-for-1 stock split. Also, The Wall Street Journal reported that the company will allow the proposed merger of Lycos (LCOS Quote) and USA Networks (USAI Quote) to go to a shareholder vote instead of immediately proposing an alternative. Lycos lost 4 1/4 to 97 3/4; USA Networks rose 1 to 38 9/16.

Elsewhere in Netland, Barnes & Noble (BKS Quote) scored 5 1/2, or 19.1%, to 34 3/8 after it and Germany's Bertelsmann filed a registration statement with the Securities and Exchange Commission for an IPO for barnesandnoble.com, which will trade on the Nasdaq Stock Market under the symbol BNBN. BT Alex. Brown reinitiated coverage on Barnes & Noble and Borders (BGP Quote), which lifted 7/8, or 6.1%, to 15 1/8, with buy ratings.

Rival Amazon.com climbed 7 3/8, or 5.6%, to 138 7/16 after Salomon Smith Barney started coverage with a buy and a price target of 175 a share. Salomon began coverage of eBay (EBAY Quote), which expanded 5 1/16 to 160 3/4, with an outperform.

Meanwhile, drugstore.com, a privately held online pharmacy in which Amazon.com has a 40% stake, announced an agreement with Excite (XCIT Quote) promoting drugstore.com on select Excite portions of Netscape's Netcenter. Excite tacked on 3 7/8 to 113; Netscape's new parent, America Online, grew 7 1/16, or 6.5%, to an all-time high of 116 1/8.

Still elsewhere, Safeguard Scientifics (SFE Quote) soared 19 1/16, or 35.1%, to an all-time high of 73 3/8 after the high-tech venture capital firm announced the first investment under its new focus on Internet companies announced earlier this week. Yesterday, the company said it acquired a 20% interest in Extant. Also, First Albany reinitiated coverage of the stock with an accumulate and near-term price target of 100 a share.

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Chase (CMB Quote) flourished 1 1/2 to 83 7/8 on a Wall Street Journal report that Chairman and Chief Executive Walter V. Shipley has made informal overtures to potential merger partners on Wall Street in the past year and that he has offered senior execs the possibility of a CEO slot in the merged firm. Among the firms approached, according to the Journal: Goldman Sachs, Merrill Lynch (MER Quote), Morgan Stanley Dean Witter (MWD Quote) and J.P. Morgan. In general, financial stocks glowed today, with J.P. Morgan up 3 11/16 to 124 3/16 and American Express up 6 11/16, or 5.5%, to 127 5/8. J.P. Morgan Securities started coverage of AXP at buy with a 12-month price target of 150.

Mergers, acquisitions and joint ventures

Advanced Lighting Technologies (ADLT Quote) advanced 2 15/16, or 40.5%, to 10 1/4 after last night saying General Electric (GE Quote) agreed to buy a $20.6 million stake in the company. Advanced Lighting said it plans to issue preferred shares to GE which convert into about 3 million Advanced Lighting shares at a $6.75 conversion rate. GE added 1 9/16 to 110.

AT&T (T Quote) sliced off 1 7/8 to 82 1/8 after saying it will try out Lucent's (LU Quote) new switching enhancement designed to bring Internet protocol capabilities to voice networks. Lucent gave up 7/8 to 102 5/8. Meanwhile, The Wall Street Journal reported AT&T is preparing for a massive bond sale next week that could add as much as $8 billion to its coffers.

Audiohighway.com (AHWY Quote) shot up 4 5/8, or 53.6%, to 13 1/4 after agreeing to provide audio content to Microsoft's MSN Web Events site. Separately, at a launch event for Microsoft's new Internet Explorer 5.0 browser, Bill Gates announced plans to release the second edition of the company's Windows 98 operating system in the fall.

Circuit City Stores (CC Quote) rallied 7 1/8, or 10.3%, to an all-time high of 76 1/8 on word it might sell a stake in its Digital Video Express business to Blockbuster Video.

Staff Leasing (STFF Quote) flew 4 11/16, or 45.5%, to 15 1/16 after a unit of France's Paribas made an unsolicited $17.50-a-share bid for the remaining shares in the company it doesn't already own.

Earnings/revenue reports and previews

Aetrium (ATRM Quote) sank 1 1/2, or 20%, to 6 1/8 after last night warning of lower first- and second-quarter earnings due to weak conditions in the semiconductor industry. The company expects to post a net loss of 22 cents to 24 cents a share for the first quarter. The four-analyst view called for a loss of 13 cents vs. the year-ago profit of 27 cents. Aetrium also said it cut its workforce by about 10%.

American Airlines parent AMR climbed 4 5/8, or 8%, to 62 1/8 despite last night's first-quarter earnings warning. Apparently the stock was helped by the company's other announcement -- that it will repurchase up to $500 million in stock. Blaming its 10-day pilot sickout, the airline said it sees earnings of 30 cents to 35 cents a share. The 11-analyst forecast called for 65 cents vs. the year-ago $1.62. Today, BT Alex. Brown lowered its first-quarter estimate for the company to 30 cents a share from 70 cents.

Carnival (CCL Quote) closed flat at 45 1/16 after posting first-quarter earnings of 26 cents a share, topping the 19-analyst estimate by 2 cents and moving ahead of the year-ago 18 cents.

CKE Restaurants (CKR Quote) dribbled down 5 1/8, or 21.6%, to 18 5/8 after recording fourth-quarter earnings of 25 cents a share, a penny short of the 11-analyst outlook but above the year-ago 24 cents.

CSK Auto (CAO Quote) soured 2, or 5.8%, to 32 1/4 even after last night reporting fourth-quarter earnings of 31 cents a share, 2 cents above expectations.

Engelhard (EC Quote) declined 1 1/8, or 6.2%, to 17 1/8 after last night saying it sees first-quarter earnings of about 28 cents a share because of difficult year-ago comparisons in its volatile platinum operations. The three-analyst estimate called for 32 cents vs. the year-ago 30 cents.

FDX excelled 5 3/16, or 5.6%, to an all-time high of 98 1/8 after posting third-quarter earnings of 52 cents a share, including costs from contingency plans related to the FedEx pilot negotiations and merger expenses related to its acquisition of Caliber. That's higher than the 12-analyst forecast of 41 cents but below the year-ago 65 cents. FDX also set a 2-for-1 stock split.

Four Media (FOUR Quote) advanced 27/32, or 14%, to 7 after posting second-quarter earnings of 19 cents a share, 4 cents higher than the five-analyst view and ahead of the year-ago 7 cents.

General Cable (GCN Quote) tanked 3, or 23.5%, to an all-time low of 9 3/4 after last night warning it expects to report first-quarter earnings of 15 cents to 17 cents a share due to pricing pressure in the building wire market. The four-analyst view called for 37 cents vs. the year-ago 54 cents. Today, Merrill Lynch lowered the stock to intermediate-term accumulate from buy while maintaining its long-term buy. Warburg Dillon Read dropped it to buy from strong buy.

Italy's Gucci (GUC Quote) pushed up 4 3/8, or 6.7%, to 70 following a partial earnings announcement for its fiscal year ended Jan. 31. The release, previously scheduled for Monday, said the company's 1999 net profit was $195 million, up from $175.5 million in 1998.

3M shed 2 3/4 to 73 5/8 after executives said the dollar's rally could mean that the nine-analyst consensus calling for first-quarter earnings of 93 cents a share is too high. The company made 98 cents in the year-ago period. Merrill Lynch lowered its 1999 and 2000 earnings estimates for the company, saying, "Sales and currency were not as positive as we were anticipating in January and February."

RF Monolithics (RFMI Quote) slid 3 7/16, or 32.5%, to an annual low of 7 1/8 after last night reporting second-quarter earnings of 11 cents a share, including $300,000 in research and development costs. The four-analyst outlook called for 17 cents vs. the 18 cents. The company also warned its second-quarter sales could come in flat.

Stericycle (SRCL Quote) hopped up 1 1/4, or 8.6%, to 15 3/4 after beating fourth-quarter earnings estimates by 6 cents a share last night with a profit of 20 cents.

Tektronix (TEK Quote) added 1 1/4, or 7%, to 19 after reporting third-quarter earnings of 31 cents a share, on target with the eight-analyst estimate but behind the year-ago 67 cents.

Analyst actions

Anthracite (AHR Quote) picked up 9/16, or 8.6%, to 7 1/8 after Prudential Securities upped the stock to accumulate from hold.

Best Buy (BBY Quote) tacked on 3 7/16 to an all-time high of 109 1/2 after Credit Suisse First Boston started coverage with a buy and a price target of 120 a share.

Egghead.com (EGGS Quote) reeled in 5, or 29.6%, to 21 7/8 after Piper Jaffray initiated coverage with a strong buy.

Network Associates (NETA Quote) dropped 8 15/16, or 21.7%, to 32 1/4 after BancBoston Robertson Stephens slashed the stock to buy from strong buy. There's also concern on the Street that the company will miss analysts' first-quarter earnings estimates.

Sensormatic Electronics (SRM Quote) jumped 1 3/8, or 15.8%, to 10 1/16 after Lehman Brothers raised it to buy from outperform.

Miscellany

Boston Scientific (BSX Quote) lifted 4 1/2, or 13.2%, to 38 1/2 after naming James R. Tobin president and chief executive. Tobin has served as president and CEO of Biogen (BGEN Quote). Yesterday, the Food and Drug Administration allowed Boston Scientific to market the Constellation mapping catheter, which is used to diagnose abnormal heart beats. Today, Credit Suisse First Boston upgraded the stock to buy from hold.

CDnow (CDNWD Quote) changed its name to CDnow/N2K and said it will now trade under the symbol CDNWD. The stock rose 15/16, or 5.1%, to 19 7/16.

Merck (MRK Quote) picked up 2 to 86 after saying its investigational Cox-2 specific inhibitor, Vioxx, relieved moderate to severe acute pain to the same degree and in the same amount of time as high doses of two leading traditional medicines in studies of menstrual and dental-surgery pain.

Motorola surged 3 1/8 to 72 5/8 after unveiling a new line of digital personal communications products and promising Internet-browsing capability across its entire digital mobile phone range in 2000 at the CeBIT exhibition in Hannover, Germany.