Zooming Stocks Zip Market Down Road to Recovery

SAN FRANCISCO -- All those traders reportedly absent today missed a lulu to the upside. A weaker-than-expected employment report sent bond prices and stock proxies soaring, with tech bellwethers leading the latter.

Major Indices INDEX CHANGE % VALUE YR TO DATE Dow 235.24 +2.2% 11,078.45 +20.7% S&P 500 38.13 +3.9% 1357.24 +10.4% Nasdaq 108.87 +4% 2843.11 +29.6% Russell 2000 8.55 +2% 435.97 +3.3% TSC Internet 33.91 +6% 595.82 +46.7% BOND CHANGE PRICE YIELD 30-Year Treasury 1 18/32 101 14/32 6.020%

Market internals supported today's advance, pleasing those with a bullish bent. There were some negative developments -- notably profit warnings by Coca-Cola (KO Quote) and National Discount Brokers (NDB Quote) -- but their impact was minimized, mitigated and muffled by the jobs data.

Thus did a decidedly volatile week ended on a decidedly positive note ahead of the long holiday weekend. (Financial markets are closed Monday in observance of Labor Day, but you knew that already, didn't you?)

The Labor Department reported nonfarm payrolls grew 124,000 in August vs. the consensus estimate of 220,000. The unemployment rate fell to 4.2%, in line with consensus and matching a 29-year low reached earlier this year. But any negative implication of the jobless rate was overshadowed by the limp payrolls data and average hourly wages, which rose just 0.2% -- or half what economists expected.

The data helped quell fears about a Fed rate hike in October (concerns paramount just yesterday), helping the price of the 30-year Treasury bond rise 1 18/32 to 101 14/32, its yield declining to 6.02%. (For more on the fixed-income market, see today's late Bond Focus.)

With bond yields in retreat, growth stocks soared. The Nasdaq Composite Index rocketed 108.87, or 4%, to 2843.11, its biggest point gain in history (although the percentage move was not among its top 10). The index is now 0.8% below its all-time high of 2864.48, set July 16.

The heaviest of tech heavyweights were all on the rise today; the Nasdaq 100 climbed 4.8%, the Morgan Stanley High-Tech 35 rose 4.7% and the Philadelphia Stock Exchange Semiconductor Index rose 5.2%.

Tech stalwarts Intel (INTC Quote), Sun Microsystems (SUNW Quote), Cisco (CSCO Quote), Orcale (ORCL Quote) and Apple (AAPL Quote) each established a new 52-week high today, as did biotech bellwether Amgen (AMGN Quote).

In New York Stock Exchange trading, Texas Instruments (TXN Quote) and LSI Logic (LSI Quote) also established new highs.

TheStreet.com Internet Sector index jumped 33.91, or 6%, to 595.82 as Net bellwethers rose in unison.

Blue-chip gauges also enjoyed robust gains. The Dow Jones Industrial Average rose 235.24, or 2.2%, to 11,078.45, its eighth-biggest point rise ever but not historic on a percentage basis. The Dow is 2.2% below its Aug. 25 record of 11,326.04. Meanwhile, the S&P 500 gained 38.13, or 2.9%, to 1357.24, leaving it 4.3% below is July 16 record of 1418.78.

J.P. Morgan (JPM Quote) and American Express (AXP Quote) were the Dow's best performers as financials responded to the bond market's advance. The Philadelphia Stock Exchange/KBW Bank Index and American Stock Exchange Broker/Dealer Index each climbed over 4%.

Hewlett-Packard (HWP Quote), IBM (IBM Quote) and General Electric (GE Quote) were also big Dow gainers. Coca-Cola, down 3.4% after its profit warning, was the index's lone substantive drag. Outside the Dow, National Discount Brokers fell 17.6% following its red flag.

The Russell 2000 rose 8.55, or 2%, to 435.97, reflecting solidly positive market internals.

Traders said activity faded as the day progressed, but that did not diminish the nature of the advance.

"People were pretty surprised by the [employment] number and with Globex up 23 before the opening, it really got things fired up," said Timothy Heekin, director of equity trading at Thomas Weisel Partners here. "We had some activity this morning then it really dried up."

Today's advance was "too strong a move" to not carryover into next week, Heekin said. "We've broken through some significant resistance and totally turned the momentum of the market to the upside," the trader said. "This will last another two-three days and maybe all the way through next week. When decision makers get back [next week] and see this momentum is up, they'll stick with it."

Asked to specify about the resistance levels, Heekin said the futures' rise above 1356 "gave us a bullish divergence." The S&P 500 futures contract for September closed up 42.30 to 1362.50.

"There's no way we go right back down from this unless something really weird happens over the weekend," he said. "They'll definitely be good follow-through on Tuesday. We're comfortable being long."

In NYSE trading, 663.2 million shares were exchanged while advancers routed declining stocks 2,281 to 676. In Nasdaq Stock Market action 913.2 million shares traded while gainers led 2,487 to 1,260. New 52-week highs bested new lows 119 to 52 in over-the-counter trading although new lows led 44 to 40 on the Big Board.

Here a Bear, Where a Bear?

A "ton of negative sentiment" heading into the action helped further today's rally, according to Gary Kaltbaum, chief technical analyst at GSG Securities in Boca Raton, Fla. (The technician recently transferred to GSG from JWGenesis Securities; both are units of JWGenesis Financial (JWG Quote).)

Put/call ratios "spiked up" two days ago and bears were "coming out of the woods," Kaltbaum said, providing "contrarian indicators."

Today's advance likely means equity averages have put in a short-term bottom, the technician said, noting a "head-and-shoulders top" on the chart of the long bond's yield. Looking ahead, the Nasdaq's break above 2820 sets the index up for an "assault on old highs," he continued. The S&P 500 is "still lagging" and needs to close above 1383 "to get things really going topside," but it has been putting in a bottom around 1280-1300; "the longer that holds, the better."

But "it will take time to get the market going full steam because so much damage has been done," Kaltbaum said. "There is still a lot to be desired," technically speaking. "Retailers still look horrible, transports are still in big trouble, advance/decline has been really suspect. There are still negative divergences."

The "divergences" were more favorable today. As noted above, advancers handily beat decliners. Meanwhile, the Dow Jones Transportation Average rose 79.12, or 2.6%, to 3156.90 while the S&P Retail Index gained 2.3%. However, the transportation average remains 16.6% off its May 12 high of 3783.50 while the RLX is down 12.2% from its April 12 high of 949.40.

Among other indices, the Dow Jones Utility Average added 5.01, or 1.6%, to 319.61; and the American Stock Exchange Composite Index rose 7.18, or 0.9%, to 786.39.

For the week, the Dow lost 0.1%, the S&P rose 0.7%, the Nasdaq jumped 3%, the Russell gained 0.8%, the DOT climbed 3.8%, the Dow transports slid 0.5%, the Dow utilities shed 0.4% and the Amex Composite rose 0.5%.

Elsewhere in North American equities today, the Toronto Stock Exchange 300 rose 99.07, or 1.4%, to 7006.10 and the Mexican Stock Exchange IPC Index rose 7.22 to 5026.57. For the week, the TSE 300 xx and the IPC xx.

Friday's Company Report

By Eileen Kinsella
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.)

Times Mirror (TMC Quote), the publisher of the Los Angeles Times, will sell a number of businesses in an effort to boost earnings per share growth in the next year. Among the units to be sold are its professional training company AchieveGlobal, its interactive software firm Allen Communication, its health information company StayWell, and its sports magazine The Sporting News as well as its associated property, sportingnews.com. Times Mirror said after the sale it would concentrate its professional information resources on expanding Jeppesen Sanderson, an aviation information company which is one of its most profitable. The company stock rose 3 7/8, or 6.7%, to 61 1/2.

The Philadelphia Stock Exchange Semiconductor Index jumped 27.75, or 5.2%, to 560.90 after several brokerage firms made positive comments on the industry's stocks. Merrill Lynch maintained its near and long-term buy rating on Novellus Systems (NVLS Quote), highlighting its strong business. Shares of Novellus climbed 5 1/2, or 9.2%, to 65 1/16. Applied Materials (AMAT Quote), which is also rated a Merrill buy, added 2 15/16 to 77 3/8. Amkor (AMKR Quote) moved up 1 3/4, or 9.6%, to 20 after Salomon Smith Barney upgraded its shares to a buy from an outperform.

Mergers, acquisitions and joint ventures

Nokia (NOK Quote) rose 3 3/4 to 87 5/8 after it said it would provide digital packed radio system, or GPRS, equipment to Norway's Telenor Mobile for possible commercialization in the year 2000. GPRS allows for faster transmission in mobile-phone systems, which would make more proficient use of Internet functions and multimedia in future phone models.

Viacom (VIA Quote) and CBS (CBS Quote) have been discussing a possible deal involving their television stations, The New York Times reported. According to the Times, the two media companies are considering ways to benefit from a recent federal judgment that permits a company to own two stations in the same market. Both companies own stations in Dallas, Boston, Miami, Philadelphia and Pittsburgh. Shares of Viacom lifted 3 1/8, or 7.4%, to 45 5/16 while CBS added 1 1//16 to 48 15/16.

Phelps Dodge (PD Quote) lost 1/4 to 57 3/16 after it announced a $2.5 billion hostile takeover bid for Asarco (AR Quote) and Cyprus Amax (CYM Quote). Yesterday, federal securities regulators gave Phelps their approval to offer stock in the transaction. According to Phelps registration statements, the company would use the stock to purchase Asarco and Cyprus, ending their initial plans for a merger. Before launching the hostile bid, Phelps made two friendly offers which the copper producers rejected. Asarco and Cyprus said they would consider a higher offer of $3.3 billion, but Phelps, dismissing the proposal as unreasonable, opted to initiate the hostile takeover. Asarco shares were unchanged at 22 1/16, while Cyprus slipped 1/8 to 17 11/16.

Advanced Technical Products (ATPX Quote) rose 2 3/8, or 21.6%, to 13 3/8 after Veritas Capital said it would buy the company for about $80 million in cash. Veritas will pay $14.50 a share for Advanced which makes materials for aerospace and defense markets.

Earnings/revenue reports and previews

Coca-Cola lost 2 1/8 to 57 3/8 after it warned that third-quarter earnings would come in shy of Wall Street expectations. The company expects third-quarter earnings of 34 cents to 35 cents a share before the financial impact of its European product withdrawal, which it estimates will be about 2 cents to 3 cents a share. The 16-analyst consensus estimate calls for Coke to earn 36 cents in the third quarter. Coke said it's "comfortable" with the current range of analyst projections for earnings per share for full year 2000. The 15-analyst consensus projects earnings of $1.56 a share for 2000.

Newell Rubbermaid (NWL Quote) bounced down 8 7/16, or 20.4%, to 32 7/8 after the company lowered its earnings expectations for the third-quarter and full year due to a slowdown in retail demand across its business segments. The company said it expected third-quarter earnings before items of between 43 cents and 47 cents a share. The 16-analyst estimate called for earnings of 51 cents a share.

PepsiCo (PEP Quote) bubbled up 1 1/16 to 34 5/8 after saying it anticipates a rise in third-quarter earnings per share despite lower operating income from its North American operations. The company said earnings will be helped by increased operating income at Frito-Lay and Tropicana. The 15-analyst estimate calls for third-quarter earnings of 33 cents a share. Earlier today, Schroder raised its rating on its shares to outperform from a perform in line and set a price target of 44.

Sterling Software (SSW Quote) lost 1/8 to 20 after saying it sees fourth-quarter earnings, before charges, coming in at about 47 cents a share. The seven-analyst estimate calls for earnings of 52 cents a share.

Wellman (WLM Quote) edged down 7/8, or 5.3%, to 15 11/16 after it said it expects to see a third-quarter pre-tax income cut from an electrical failure.

Analyst actions

American Mobile Satellite (SKYC Quote) added 11/16 to 19 1/8 after Deutsche Banc Alex. Brown initiated coverage with a buy rating.

Alltel (AT Quote) rose 2 7/8 to 71 13/16 after Deutsche Banc Alex. Brown rolled out coverage of the stock with a buy rating.

American National Can (CAN Quote) added 3/8 to 16 1/4 after Lehman Brothers initiated coverage of the stock with an outperform rating and a 12-month price target of 21.

Campbell Soup (CPB Quote) gained 1/4 to 43 13/16 after Donaldson Lufkin & Jenrette sliced its rating to underperform from market perform.

Covad (COVD Quote) rose 3 7/8, or 8.8%, to 47 11/16 after Deutsche Banc Alex. Brown upgraded its shares to a strong buy from a buy.

General Dynamics (GD Quote) added 11/16 to 63 1/2 after Credit Suisse First Boston boosted its rating to strong buy from buy.

InfoUSA (IUSAA Quote) was unchanged at 5 1/16 after ABN Amro upped its rating to outperform from hold, citing strong cash flow and Internet business growth.

Ingram Micro (IM Quote) lost 2 1/4, or 9.3%, to 22 after Morgan Keegan lowered its rating to market perform from outperform.

Pillowtex (PTX Quote) lost 13/16, or 8.2%, to 9 1/8 after Credit Suisse First Boston downgraded its shares to a hold from buy.

Shopko (SKO Quote) slipped 1/16 to 28 13/16 after Banc of America Securities sliced its fourth-quarter estimates to $1.70 from $1.81.

West Pharmaceuticals (WST Quote) added 3/8 to 38 1/8 after Warburg Dillon Read rolled out coverage on the stock with an initial buy rating and a price target of 45.

Miscellany

Amazon.com's (AMZN Quote) vice president of logistics, Jimmy Wright, has announced his retirement from the company, The Wall Street Journal reported. The Journal said that Wright's decision to leave was amicable and the company would look outside the company to fill his position. Shares of Amazon added 2 5/16 to 62 7/16.

Law enforcement officials said that hundreds of accounts at international banks took in about $10 billion in connection with a money laundering investigation at Bank of New York (BK Quote), the Journal reported. According to the newspaper, the Fed conducted an inquiry in 1995 into possible illegal banking activities at Russian bank Menatep, which is now a focus of the investigation. Bank of New York added 1 13/16, or 5%, despite the news.

Seagate Technology (SEG Quote) gained 1 3/4, or 5.2%, to 35 3/4 after it announced plans to restructure its software division and purchase all of its outstanding shares. The company is attempting to cut costs and excess production.

Stillwater Mining (SWC Quote) rose 3/8 to 22 3/4 after it said it reached a temporary agreement with Montana land environmental groups regarding its proposed land development. The deal calls for the company to pay for several environmental activities including the formation of a Watershed Protection Group.

Tandy (TAN Quote) lost 1 3/4 to 43 7/8 despite saying August same-store sales at Radio Shack rose 10%.