Market Slogs Through Mucky Session to Uncertain Finish

SAN FRANCISCO -- The "big picture" was the focus on Wall Street again today, but the outlook for stocks and the economy remains murky. As traders sloshed through another muddied session, major averages reflected the indecisiveness, along with underlying caution.

Major Indices INDEX CHANGE % VALUE YR TO DATE Dow 2.21 +0.02% 11,036.34 +20.2% S&P 500 6.30 -0.5% 1344.15 +9.3% Nasdaq 28.52 -1% 2808.74 +28.1% Russell 2000 2.34 -0.5% 435.90 +3.3% TSC Internet 6.20 -1% 595.41 +46.7% BOND CHANGE PRICE YIELD 30-Year Treasury 2/32 100 22/32 6.074%

Factors contributing to a midday burst of optimism included the absence of any market-specific comments in a speech by Federal Reserve Chairman Alan Greenspan. Word that Goldman Sachs market strategist Abby Joseph Cohen raised earnings estimates and price targets for the S&P 500 also aided the bullish case. But the optimism was subdued by the Bank of England's rate hike and comments by Fed Gov. Laurence Meyer.

Meyer -- considered one of the Fed's most hawkish members -- acknowledged the importance of equity prices in monetary policy in a separate address, saying (among other things) that "a major concern remains that the prevailing balance of supply and demand in the labor market might put upward pressure on inflation, even if growth slows to trend ahead."

The combination of the aforementioned sent the bond market reeling from its intraday heights. However, the price of the 30-year Treasury did rise 2/32 to 100 22/32, its yield unchanged at 6.07%. The bond market's decent showing helped stem the decline in equities.

So, too, did the latest bout of optimism from Goldman's Cohen. The long-bullish strategist upped her earnings per share target for the S&P 500 to $51 this year and $55 for next from $49 and $53, respectively. Cohen also increased here year-end price target for the index to 1385 from 1350, and to 11,500 from 10,300 for the Dow Jones Industrial Average. Cohen set a "rolling" S&P target of 1450 for next year.

"We now see good opportunities among sectors whose performance has lagged due to investor concerns (which we do not share) that economic growth may soon trigger troubling inflation and notable interest-rate gains," Cohen wrote today, naming financials and technology as examples.

Cohen did not provide specific recommendations, nor did she reply to requests seeking additional comment.

Neither financial stocks nor tech responded affirmatively to Cohen's optimism; the Philadelphia Stock Exchange/KBW Bank Index fell 0.5% while the Morgan Stanley High-Tech 35 lost 1.2%.

The Nasdaq Composite Index, weighed down by weakness in tech giants such as Microsoft (MSFT Quote), Intel (INTC Quote) and Cisco (CSCO Quote), fell 28.52, or 1%, to 2808.74 after trading as high as 2851.12. The Nasdaq 100 shed 1.5%.

Chip stocks, which have been powerhouses of late, also reversed; the Philadelphia Stock Exchange Semiconductor Index fell 1.7%. In addition to Intel, the SOX was waylaid by notable weakness in Texas Instruments (TXN Quote), which fell 3% to 88 7/8 after trading as high as 92 11/ 16 and Micron Technology (MU Quote), off 5.2% to 75 1/2 after trading as high as 82 1/2.

Blue-chip gauges held up better, due largely to strength in energy stocks. The Dow industrials rose 2.21 to 11,036.34 after trading as high as 11,117.39 and as low as 10,967. The S&P 500 lost 6.30, or 0.5%, to 1344.15 after trading as high as 1355.20 and as low as 1337.36.

Oil giants Chevron (CHV Quote) and Exxon (XON Quote) were among the Dow's best performers. American Express (AXP Quote) exerted the biggest drag on the index.

Elsewhere, TheStreet.com Internet Sector index fell 6.20, or 1%, to 595.41 while the Russell 2000 lost 2.34, or 0.5%, to 435.90.

Indecision. A Terrible Thing?

Today was "another in a lengthening string of meandering sessions for the market," said Greg Nie, chief technical analyst at Everen Securities in Chicago.

The action evinced the "disjointed" technical picture, which simultaneously contains evidence "there might be some upside in the pipeline" and "some vulnerability," Nie said. "There's not enough on either side to tip the scales to either side. It's neutral, roller-coaster, range-bound, jagged, wavering -- however you want to describe it. There's a multitude of adjectives for 'neutral' [but] you've probably already exhausted those that are readily available."

As far as the bullish case, the technician noted the Nasdaq Comp, which remains in a "bullish" trend. Conversely, the S&P is "potentially bearish" and needs to sustain a move above 1400 to avoid "the possibility you're tracing out the right shoulder of a head-and-shoulders top" in the intermediate term, he said. Also, he noted the Dow Jones Transportation Average, which fell 28.34, or 0.9%, to 3081.15 today, is down 2.2% year-to-date.

Breadth -- which peaked in April 1998 -- is the "sore point" for the bullish case and "needs a lot of work to get out of bearish territory," Nie added.

In New York Stock Exchange trading today, 791.3 million shares were exchanged while declining stocks led advancers 1,758 to 1,170. In Nasdaq Stock Market action 1.01 billion shares traded while losers led 2,256 to 1,609. New 52-week lows bested new highs 90 to 58 on the Big Board but new highs led 137 to 84 in over-the-counter trading.

Like many market players, Nie noted the Wall Street Journal story about how investors' love affair with stocks has waned.

"The question once again is all about momentum," the technician said. "Firepower has diminished -- you've had a contraction of volume since the spring. Rallies since April have been suspect in terms of momentum. You've got to get back to more days like Friday with 3-to-1 positive breadth. But you need to string those kind of days together [and] you need big volume to show characteristics of a bull market where there's conviction, belief and firepower."

But Nie agreed the environment described by the Journal doesn't augur the kind of blow-off action which historically precedes the end of bull markets.

"I do think the probability favors that neutral will be resolved to the upside," he said. The markets "have not gone to that spot where a smorgasbord of indicators tells you you've pushed the pendulum too far to the upside. We've headed in that direction a few times but never accomplished that feat."

Among other indices, the Dow Jones Utility Average dipped 1.96, or 0.6%, to 312.64; and the American Stock Exchange Composite Index fell 1.28, or 0.2%, to 792.39.

Elsewhere in North American equities, the Toronto Stock Exchange 300 fell 3.53 to 7054.97 and the Mexican Stock Exchange IPC Index lost 55.78, or 1.1%, to 4854.28.

Wednesday's Company Report

By Eileen Kinsella
Staff Reporter

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

Global Crossing (GBLX Quote) ascended 5 7/16, or 26.9%, to 25 9/16 and Microsoft lost 2 1/16 to 92 1/4, after the companies announced a joint venture with Softbank to be called Asia Global Crossing that will provide network-based telecommunications services throughout Asia. Responsibility for the management and operation of the network will fall on Global Crossing. Global Crossing will initially own 93% of the joint venture with Softbank and Microsoft each owning 3.5%.

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Ingram Micro (IM Quote) tumbled 6, or 31.1%, to 13 5/16 after it said it expects to post earnings of 10 cents to 14 cents a share for the third quarter, falling short of the 13-analyst estimate of 41 cents. The company also said it has started a search for its next CEO to succeed Jerre L. Stead. Stead will remain chairman of the board and CEO until a successor is in place and will then continue to serve as chairman of the board.

Mergers, acquisitions and joint ventures

America Online (AOL Quote) rose 11/16 to 94 after it said TV Guide (TVGIA Quote) will supply television program listings to the Internet service provider. TV Guide climbed 3 1/16, or 10.9%, to 31 3/8.

Lycos (LCOS Quote) lost 1/2 to 43 1/8 after saying it is acquiring privately held Quote.com for $78.3 million in stock plus the assumption of the company's stock option plan.

Medeva (MDV Quote), a U.K. pharmaceuticals concern, moved up 1 3/4, or 20.7%, to 10 3/16 after saying it is in talks, which could lead to a recommended cash offer for the company, Reuters reported.

Morrison Knudsen (MK Quote) was unchanged at 10 11/16 after the company said it won a $55.5 million contract from Telecom Egypt to design and install telecommunication lines in Cairo, Port Said and Alexandria.

Prodigy (PRGY Quote) lost 11/16 to 16 3/8 after saying it would buy BizOnThe.Net for $100 million in cash and stock.

Yahoo! (YHOO Quote) lost 1 11/16 to 153 7/16 after it announced it has struck a bill payment service deal with CheckFree (CKFR Quote). CheckFree freed up some cash, losing 2 1/16, or 5.6%, to 35 3/4.

Yogen Fruz WorldWide said it has plans to scoop up some of Eskimo Pie (EPIE Quote), after the ice cream company's board accepted a plan to sell its assets. Canadian-based Yogen Fruz, which has twice attempted to take over Eskimo Pie, said it would bid on some of the company's assets and licenses when they go on sale. Shares of Eskimo inched up 5/8, or 6.4%, to 10 3/4.

Earnings/revenue reports and previews

Carbide Graphite (CGGI Quote) slipped 3/16 to 12 5/8 after posting fourth-quarter earnings of 32 cents a share, beating the two-analyst estimate of 30 cents, but down from the year-ago 54 cents.

CSX (CSX Quote) added 1/16 to 44 15/16 after the company said it will post a fourth-quarter charge between $55 million and $75 million for the cost of an early retirement plan. The company said it expects to cut about 800 jobs which will result in $75 million in annual savings.

Esterline Technologies (ESL Quote) fell 1, or 6.3%, to 15 after reporting third-quarter earnings of 34 cents a share, missing the two-analyst estimate of 39 cents and coming in below the year-ago 45 cents.

H.J. Heinz (HNZ Quote) lost 5/16 to 45 1/8 after reporting first-quarter earnings of 65 cents a share, missing the 14-analyst estimate of 66 cents but beating the year-ago 60 cents.

Korn/Ferry International (KFY Quote) added 13/16 to 17 1/2 after it posted first-quarter earnings of 15 cents a share, beating both the two-analyst estimate of 11 cents and the year-ago 5 cents.

Movado (MOVA Quote) moved down 15/16 to 26 3/8 after it posted second-quarter earnings of 34 cents a share, ahead of the two-analyst estimate of 31 cents and up from the year-ago 25 cents.

Salton (SFP Quote) lost 1 7/16 after posting fourth-quarter earnings of 48 cents a share, beating the two-analyst estimate of 30 cents and up from the year-ago 16 cents.

Serologicals (SERO Quote) lost 1 3/32, or 17.9%, to a multiyear low of 5 after saying it expects to post a third-quarter loss due to shipping delays and other problems.

Stewart Enterprises (STEI Quote) added 1/4 to 6 1/4 after it reported third-quarter earnings of 26 cents a share, beating both the 10-analyst estimate of 25 cents and the year-ago 25 cents.

Value City (VCD Quote) lost 1/4 to 12 5/16 after posting second-quarter earnings of 12 cents a share, in line with the five-analyst estimate of 12 cents and beating the year-ago 9 cents.

Offerings and stock actions

AnnTaylor Stores (ANN Quote) added 2 15/16, or 7.6%, to 41 15/16 after its board authorized a buyback of $40 million common shares or convertible debt and an $85 million capital spending plan for fiscal 2000. The clothing retailer said the spending plan would subsidize a 90-store real estate expansion.

Brookdale Living Communities (BLCI Quote) added 3/8 to 13 1/4 after its board authorized a buyback of up to 2 million shares of the company's stock.

Ditech Communications (DITC Quote) has filed a 2.5 million share offering with the Securities and Exchange Commission.

Analyst actions

Alcatel (ALA Quote) lost 5/8 to 29 1/16 after Donaldson Lufkin & Jenrette initiated coverage of the stock with a market perform rating.

Alltel (AT Quote) dropped 2 to 69 1/16 after Banc of America Securities rolled out coverage with a buy rating and set a price target of 90.

Amresco (AMMB Quote) lost 13/32, or 7.2% to 5 1/4 after ABN Amro dropped its rating to hold from outperform.

Apple (AAPL Quote) peeled off 1 13/16 to 74 1/2 despite a lift from Warburg Dillon Read, which raised its price target to 90 from 75, while maintaining a buy rating.

Ariba (ARBA Quote) lost 2 7/16 to 143 7/8 after SG Cowen began coverage with a buy rating and a price target of 165.

Commerce One (CMRC Quote) added 3, or 5.6%, to 54 after Soundview Technology analyst Steven Kohn rolled out coverage with an initial buy rating and set a price target of 65.

Covance (CVD Quote) lost 4 7/8, or 31.5%, to 10 5/8 after Lehman Brothers sliced its price target to 20 from 32. Yesterday, the company said it expects to report third-quarter earnings of 21 cents a share, missing the analyst estimate of 26 cents.

Dal-Tile (DTL Quote) lost 5/16, to 8 11/16 after Goldman Sachs upped its rating to market outperform from market perform.

Fresh Del Monte Produce (FDP Quote) added1/16 to 12 7/8 after U.S. Bancorp Piper Jaffray sliced its 1999 earnings estimates to $1.88 from $1.99 a share but maintained its buy rating on the stock.

General Motors (GM Quote) subsidiary Hughes Electronics (GMH Quote) was unchanged at 51 1/2 after J.P. Morgan auto analyst Marc Corssman initiated coverage with a buy rating.

Hilton Hotels (HLT Quote) lost 1/4 to 10 15/16 after Merrill Lynch sliced its rating to long-term accumulate from buy.

HomeStore.com (HOMS Quote) fell 2 3/4, or 5.8%, to 44 5/8 after Morgan Stanley Dean Witter rolled out coverage with an outperform rating. Merrill Lynch stamped the stock with near-term accumulate, long-term buy ratings.

IMRglobal (IMRS Quote) lost 5 1/4, or 32.1%, to 11 1/4 after Lehman Brothers chopped its price target to $20 from $28 and its fiscal 1999 estimates to 69 cents a share from 94 cents.

Mead (MEA Quote) climbed 1/8 to 39 1/2 after Warburg Dillon Read initiated coverage with a buy rating and a $50 price target.

Mortgage.com (MDCM Quote) rose 2, or 12.9%, to 17 1/2 after U.S. Bancorp started coverage of the stock with a strong buy rating and set a $28 price target.

National Service Industries (NSI Quote) lost 1/4 to 33 1/8 after Salomon Smith Barney upgraded it to buy from neutral, citing its recent acquisition of Holophane.

Nokia (NOK Quote) added 1 to 87 7/8 after DLJ initiated coverage with a top pick rating.

Nova (NIS Quote) slipped 5/16 to 26 3/16 despite a hand from Goldman Sachs, which initiated coverage by placing the stock on its recommended list.

PanAmSat (SPOT Quote) dropped 2 1/8, or 5.6%, to 35 5/8 after J.P. Morgan started coverage with a long-term buy rating.

Promus Hotel (PRH Quote) lost 1/4 to 34 9/16 after Prudential Securities joined Deutsche Banc Alex. Brown and Credit Lyonnais in downgrading the stock. Prudential hammered Promus' rating to hold from accumulate after the hotel announced that it would be acquired by Hilton Hotels (HLT Quote).

Provant (POVT Quote) added 1/4 to 12 3/4 after Warburg rolled out coverage with a buy rating and set a 12-month price target of 23.

Ryerson Tull (RT Quote) added 7/8 to 21 5/8 after Morgan Stanley upped its rating to outperform from neutral.

Texas Instruments (TXN Quote) lost 2 3/4 to 88 7/8 after PaineWebber increased its price target to 110 from 85 and maintained its buy rating.

Viacom (VIA.B Quote) slipped 5/8 to 46 5/16 after Merrill Lynch upgraded it to near-term buy from near-term accumulate.

Miscellany

Disney (DIS Quote) added 3/8 to 29 1/16 after it named Steven Bornstein, president of its ABC unit, to head Disney's Internet group. Bornstein, who was named chairman of Buena Vista Internet Group after Jake Winebaum departed in June, will become president of Web portal go.com later this year.

Fair Isaac (FIC Quote) gained 5/16 to 27 1/4 after the company said Thomas Grudnowski will become the company's president and chief executive officer as well as a member of its board. Grudnowski, currently a managing partner at Andersen Consulting, will replace Larry Rosenberger, who will step down to assume the role of leading Fair's research and development efforts.

Procter & Gamble (PG Quote) slipped 1/8 to 102 3/4 after The Wall Street Journal reported that the company is preparing to launch an upscale hair-care brand called "Physique".

Quixote (QUIX Quote) was unchanged at 14 15/16 after it said Phillip Rollhaus would retire from his role as CEO on Sept. 30 but remain as the company's chairman. The highway safety products maker said Leslie Jezuit would replace Rollhaus as chief executive and will continue to act as president and COO.

TRW (TRW Quote) lost 5/16 to 56 1/8 after the company announced plans to form a new division within its systems and information technology group called Global Enterprise Solutions, uniting its e-commerce consulting business with its logistics and supply-chain management services. The company attributes 16% of its revenues to the systems and information technology group. TRW also said that it sold its Data Services unit to Computer Sciences (CSC Quote), lately down 1 5/16 to 67 3/8, as part of the restructuring changes.

Russian President Boris Yeltsin told President Clinton that reports linking him to a corruption scandal through payments from a Swiss firm were not true.