Session Shows Signs of Strength Despite Mixed Indices

If someone asks how "the market" did today, tell 'em: "Great!" But beware, when you mention that two of the three "major" market averages ended with losses and the lone gainer -- the Dow Jones Industrial Average -- was up just 0.5%, he (or she) will probably look at you like you're that talking sandwich in the OJ (that's orange juice) commercial.

Major Indices INDEX CHANGE % VALUE YR TO DATE Dow 55.50 +0.5% 10,395.01 +13.2% S&P 500 8.82 -0.7% 1349.82 +9.8% Nasdaq 15.31 -0.6% 2583.50 +17.8% Russell 2000 4.92 +1.2% 417.24 -1.1% TSC Internet 14.26 -1.8% 776.18 +90.9% TSC E-Commerce 10.57 +7.8% 146.16 +71.7% TREASURY BOND CHANGE VALUE YIELD 30-Year 20/32 96 14/32 5.495%

The Dow, erroneously dubbed "the market" by many, rose as high as 10,418.87 around 11 a.m. EDT and ended up 55.50 to another record, 10,395.01.

American Express (AXP), Caterpillar (CAT) and International Paper (IP) were among the Dow's best performers. Moreover, cyclicals were strong overall. The Morgan Stanley Cyclical Index rose 1.7% and the Philadelphia Stock Exchange Forest and Paper Products Index jumped 2.4%.

For the second consecutive session, IBM (IBM) was the Dow's biggest negative influence. Merck (MRK) was also a big drag after Morgan Stanley Dean Witter initiated coverage with a neutral rating.

Among the finer points of today's action, market internals improved and the Russell 2000 rose 4.92, or 1.2%, to 417.24, its highest level since Feb. 4.

In New York Stock Exchange trading, 810.9 million shares were exchanged while gainers led losers 1,545 to 1,464. In Nasdaq Stock Market activity 1.35 billion shares were exchanged -- the second-busiest day in Nasdaq history and the fifth straight plus-billion-share session -- while gainers led 2,157 to 1,919. New 52-week highs bested new lows 106 to 62 on the Big Board and by 186 to 98 in over-the-counter trading.

Additionally, brokerage stocks -- considered a key gauge of the market's health (or lack thereof) -- were standout performers thanks to strong earnings from Merrill Lynch (MER) and PaineWebber (PWJ).

Merrill actually dipped 2.6% in a "buy the rumor, sell the news" reaction, but PaineWebber gained 7.3%. Elsewhere, Charles Schwab (SCH) jumped 11.5% and Lehman Brothers (LEH) climbed 3.4%. The American Stock Exchange Broker/Dealer Index rose 7.9%.

Internet brokers and banks enjoyed even more impressive gains.

Ameritrade (AMTD) rose 21.8%, E*Trade (EGRP) gained 31.1% and National Discount Brokers (NBD) climbed 38.3% -- each to a 52-week high. Additionally, Siebert Financial (SIEB) jumped 45.7% and J.B. Oxford Holdings (JBOH) gained 32.3%.

In the banking sector, Net.B@nk (NTBK) jumped 47.6% after setting a 3-for-1 stock split, while Florida Banks (FLBK) soared 277% after announcing plans to launch online banking.

Tech Bellwether Blues

Neither the S&P 500 nor the Nasdaq Composite Index demonstrated any of the Dow's perkiness or the Russell's forward thrust.

The S&P 500 closed down 8.82, or 0.7%, to 1349.82 while the Nasdaq Comp lost 15.31, or 0.6%, to 2583.50. Both averages were waylaid by sluggish technology stocks, while weakness in transports and consumer favorites also weighed on the S&P 500.

Despite yesterday's remarkable turnaround, tech investors continue to take profits in the wake of Compaq's (CPQ) profit warning. The common thinking is that traders were awaiting the first-quarter results from Intel (INTC) to be absolutely, positively sure Compaq's problems were, indeed, company-specific.

After the bell, Intel reported first-quarter earnings of 57 cents a share vs. the consensus estimate of 55 cents.

Even after yesterday's big losses, "Compaq could not mount any rally," noted Randy Billhardt, co-head of equity trading at PaineWebber, speaking before Intel's results were released. "People are concerned there's no momentum in that stock, and it carried over into Dell (DELL) and Gateway (GTW). With Intel you get a big key to the rest of the tech group, especially what they're forecasting for the second and third quarters. You certainly took a blow to the side with Compaq's numbers and need Intel to come out and say it's a Compaq problem."

Intel did issue some cautious comments about revenue growth in the second half and reportedly was down in Instinet trading.

Prior to the report, Intel fell 1%. Meanwhile, Microsoft (MSFT), Dell, Oracle (ORCL) and MCI WorldCom (WCOM) each ended in arrears.

Additionally, Cisco (CSCO) lost 3% on word it will acquire GeoTel Communications (GEOC) for $2 billion. GeoTel rose 27.8% but did little to aid the Nasdaq 100, which fell 2%.

"Look at Cisco -- that's telling me that people are taking some profits and moving on, or they're concerned the trends are not as favorable as they were," Billhardt said. "And, let's be honest, the valuations of these stocks are unheard of. It's not unreasonable to see some profit-taking. Some of the action today was people saying 'let's take some profits and reassess what kind of problem this is and react accordingly tomorrow.'"

The trader was encouraged however, noting "people have found alternatives" to big-cap technology, naming cyclicals which have done "phenomenally well."

In NYSE trading, Gateway, Lucent (LU) and Micron Technology (MU) joined IBM on the downside, although Hewlett-Packard (HWP) rose 3.6%. The Morgan Stanley High-Tech 35 lost 1.5% and the Philadelphia Stock Exchange Semiconductor Index shed 2%.

Net proxies, meanwhile, were mixed. TheStreet.com Internet Sector index fell 14.26, or 1.8%, to 776.18 while TheStreet.com E-Commerce Index gained 10.57, or 7.8%, to a record 146.16.

A third-straight session of small-cap outperformance had some pundits predicting the long-awaited small-cap revival is at hand. But Roy Blumberg, chief investment strategist at Chestnut Investment Group/First Allied Securities, isn't among them.

"Certainly it's a positive sign and I'm glad to see the market broaden out, but leadership changes usually take place in selloffs, not rallies," Blumberg said. "My bet is, it's an early sign people realize valuation means something and are shifting into other areas. But I don't think it's a significant trend or long-lasting until the market corrects."

The strategist and money manager hopes the trend signals "the correction will be as narrow as the rally was," but he still contends there will be a correction of 10% "or so" in the second quarter. Still, "with the kind of speculation we're seeing, precise timing is difficult" to assess, he said.

Among other indices, the Dow Jones Transportation Average fell 39.97, or 1.2%, to 3295.92; the Dow Jones Utility Average shed 0.74, or 0.3%, to 298.01; and the American Stock Exchange Composite Index rose 2.48, or 0.3%, to 737.80.

The price of the 30-year Treasury bond fell 20/32 to 96 14/32, its yield rising to 5.50%.

Elsewhere in North American equities, the Toronto Stock Exchange 300 lost 25.58 to 6913.30 and the Mexican Stock Exchange IPC Index slipped 6.97 to 5296.31.

Tuesday'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.)

GeoTel Communications excelled 12 3/16, or 27.8%, to an all-time high of 55 15/16 on news Cisco will buy it for $2 billion. Under terms of the deal, Cisco will exchange 0.51 of a share for each share and option of GeoTel. Cisco dropped 3 9/16 to 114 1/8.

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Companies that provide online trading or banking services continued to watch their stocks log 10%, 20%, even 270% gains.

Charles Schwab jumped 15 1/2, or 11.5%, to an all-time high of 150 1/2 after CIBC Oppenheimer upgraded it to strong buy from hold and set a price target of 200 a share. E*Trade jumped 29 7/8, or 31.1%, to an all-time high of 125 1/2; Ameritrade jumped 31, or 21.8%, to an all-time high of 173 1/4; and National Discount Brokers jumped 23 15/16, or 38.3%, to an all-time high of 86 1/2.

Meanwhile, Sanchez Computer Associates (SCAI) shot up 47 9/16, or 149.2%, to an all-time high of 79 7/8 following a weekend trade show where the financial-services software company talked up its new Internet banking service. Equitex (EQTX) shot up 18 1/8, or 77.5%, to an all-time high of 41 7/8 on yesterday's news that it will acquire First TeleBanc in a stock deal to create an Internet bank called Net1Bank. And Florida Banks soared 22 13/16, or 276.5%, to an all-time high of 31 1/4 after saying it will offer real-time, full-service Internet banking.

Still elsewhere, Net.B@nk advanced 75 1/2, or 47.6%, to an all-time high of 235 1/32 after announcing a 3-for-1 stock split. TeleBanc (TBFC) advanced 33 7/16, or 31.1%, to an all-time high of 140 1/2 after saying it will offer 3.8 million shares at $105 a share. And Marketing Services Group (MSGI) advanced 9 1/2, or 22.8%, to an all-time high of 51 1/4 on enthusiasm about the company's e-commerce operations.

Mergers, acquisitions and joint ventures

Ericsson (ERICY) tacked on 1/16 to 25 5/8 on word it's acquiring Torrent Networking Technologies for $450 million and Internet Protocol for $46 million and that the acquisitions may negatively influence 1999 results.

Informix (IFMX), which makes software for e-commerce sites, surged 1 11/16, or 24.3%, to 8 21/32 after teaming up with CyberCash (CYCH), which makes e-commerce payment technology, to offer customers a secure way to process online business transactions. CyberCash hopped up 5 13/16, or 38.4%, to 21 1/8.

Premiere Technologies (PTEK) swelled 1 3/4, or 11.3%, to 17 1/4 after agreeing to promote unified messaging services and Web-based communications with Sun Microsystems (SUNW). Sun Micro shed 2 5/16 to 65 1/2.

RealNetworks (RNWK) gave up 17, or 6.9%, to 229 -- after rising as high as 163 3/4 -- following news that it's buying privately held Xing Technology, a developer and provider of MP3 software, for up to $75 million in stock. RealNetworks expects to record a charge for acquisition-related costs after closing the deal, to be completed in the third quarter.

Earnings/revenue reports and previews

Firstar (FSR) added 1 9/16 to an all-time high of 103 7/16 after reporting first-quarter earnings of 27 cents a share vs. the year-ago 21 cents, both reflecting a 3-for-1 stock split. The 16-analyst estimate called for 77 cents on a pre-split basis.

Harley Davidson (HDI) scored 2 9/16 to 60 7/8 after last night reporting first-quarter earnings of 38 cents a share, 2 cents above the 14-analyst outlook and higher than the year-ago 29 cents.

Hewlett-Packard expanded 2 7/16 to 70 13/16 after Chief Executive Lewis Platt said the company is on track to record double-digit sales growth in 1999, with the second half of the year providing most of the strength. Platt sees a rebound in recently sluggish sales due, in part, to an expected recovery in Asia.

Rare Hospitality (RARE) vaulted 4 5/16, or 31.8%, to an annual high of 18 after last night saying it sees first-quarter earnings of 33 cents to 34 cents a share, excluding items. The six-analyst outlook called for 29 cents vs. the year-ago 22 cents. The company said its LongHorn Steakhouse unit provided most of the growth, with a 5.2% increase in same-store sales for the quarter.

Rent-A-Center (RCII) picked up 2 9/16, or 10.2%, to 27 13/16 after last night saying it expects first-quarter earnings coming 20% higher than the eight-analyst forecast for 28 cents a share, reflecting its acquisition of Thorn Americas. The company earned 31 cents in the year-ago period.

Versant (VSNT) climbed 1/2, or 29.6%, to 2 3/16 after last night saying it sees a first-quarter loss of 14 cents to 17 cents a share, including restructuring charges. The three-analyst view calls for an operating loss of 20 cents. The company lost 65 cents in the year-ago period.

In other earnings news:

Upside Surprises
Company	Qtr	EPS	First Call View	Yr. Ago EPS	Number of Analysts	Price Change	Close
AmSouth Bancorp (ASO)	1Q	59c	58c	51c	14	-13/16	46 1/4
Enron (ENE)	1Q	68c	65c	65c	16	+3 15/16	65 15/16
Fannie Mae (FNM)	1Q	88c	87c	78c	19	-1 7/8	66 1/2
International Paper (IP)	1Q	14c	5c	25c	12	+2 1/4	48 5/8
Investment Tech (ITGI)	1Q	52c	45c	38c	3	+6 3/4	68
Jefferies (JEF)	1Q	83c	74c	77c	1	+5 13/16	61 3/8
Manitowoc (MTW)	1Q	47c	43c	36c	4	+1 5/16	32 5/16
Merrill Lynch (MER)	1Q	$1.44	$1.23	$1.26	9	-2 9/16	97 3/8
MGIC Investment (MTG)	1Q	90c	88c	75c	11	+1/4	36 3/8
PaineWebber (PWJ)	1Q	$1.01	73c	77c	7	+3 11/16	47 1/4
Phelps Dodge (PD)	1Q	1c	-10c	70c	13	-5/16	50 7/16
Tribune (TRB)	1Q	53c	51c	46c	14	+2 1/8	78 5/16
Weyerhaeuser (WY)	1Q	51c	36c	43c	16	+2 5/16	64 7/16

Downside Surprises
Company	Qtr	EPS	First Call View	Yr. Ago EPS	Number of Analysts	Price Change	Close
W.W. Grainger (GWW)	1Q	60c	62c	58c	12	+1 1/16	46 3/8
PanAmSat (SPOT)	1Q	20c	22c	24c	12	-1 1/2	28 15/16
SLM Holding (SLM)	1Q	69c	70c	58c	7	+1/8	42 7/16

In-Line Reports
Company	Qtr	EPS	First Call View	Yr. Ago EPS	Number of Analysts	Price Change	Close
AlliedSignal (ALD)	1Q	59c	59c	52c	14	-1/16	53 1/16
Associates First Capital (AFS)	1Q	46c	46c	40c	22	-1 3/8	47 1/2
King World Productions (KWP)	2Q	53c	53c	44c	5	+5/16	35 3/16
MBNA (KRB)	1Q	22c	22c	18c	19	-3/4	24 3/8
Newport News Shipbuilding (NNS)	1Q	50c	50c	44c	2	+5/16	28
Synovus Financial (SNV)	1Q	18c	18c	15c	7	-1/16	22 3/16

Offerings and stock actions

Metromedia Fiber Network (MFNX) reeled in 9 11/16, or 14.2%, to an all-time high of 77 15/16 after setting a 2-for-1 stock split.

MIH (MIHL) surged 2, or 11.1%, to 20 after Merrill Lynch last night priced its 9.1-million-share IPO top range. MIH is a multinational provider of pay-TV services and technology based in the British Virgin Islands.

Analyst actions

Coca-Cola (KO) popped up 1 7/16 to 63 5/16 after Merrill Lynch upgraded it to near-term accumulate from neutral.

DaimlerChrysler (DCX) tacked on 1 3/8 to 98 5/8 after Merrill Lynch upgraded the stock to near-term buy from accumulate.

Knight-Ridder (KRI) lifted 2 to 53 on heavy volume after Credit Suisse First Boston lifted it to buy from hold.

Knight/Trimark (NITE) climbed 20 1/8, or 20.7%, to an all-time high of 117 1/2 after CIBC Oppenheimer started coverage with a strong buy.

Miscellany

AMR (AMR) sloughed off 2 1/4 to 65 5/16 after saying it's been cooperating with Justice Department investigators for two years but that it plans to keep its discussions private. The announcement was issued as a response to a piece in The Wall Street Journal which said investigators are closing in on an antitrust case against AMR's American Airlines unit for allegedly driving a small rival out of the airline's hub in Dallas.

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