Ravenous tech-stock investors could not wait for the official start of the season of conspicuous consumption, bidding some of the market's most richly priced names higher today. Blue-chip averages also gained, but investors' appetites for non-tech names was far less robust.
| Major Indices | | INDEX | CHANGE | % | VALUE | YR TO DATE | | Dow |  
12.54 | +0.1 | 11,008.17 | +19.9% | | S&P 500 |
12.44 | +0.9% | 1417.08 | +15.3% | | Nasdaq |
77.56 | +2.3% | 3420.43 | +56% | | Russell 2000 |
1.48 | +0.3% | 455.93 | +8.5% | | TSC Internet |
18.75 | +2% | 968.04 | +138% | | TSC Red Hots |
10.97 | +3.39% | 334.45 | N/A | | BOND | CHANGE | PRICE | YIELD | | 30-Year Treasury |  |
6/32 98 27/32 8/32 | 6.210% |
|
The
Nasdaq Composite Index rose 77.56, or 2.3%, to 3420.43, racing back into record territory after
yesterday's respite.
The Comp got a lift from big components such as
Cisco (CSCO Quote), up 4.5% to an all-time high after signing a $200 million deal to provide networking equipment to a Swedish telecommunications company (with a very long and unpronounceable name).
Other bellwethers hitting new highs included
Sun Microsystems (SUNW Quote) and
Nextel Communications (NXTL Quote), up 17.8% after receiving a favorable ruling from a U.S. Appeals court and positive comments from
Morgan Stanley Dean Witter. The
Nasdaq 100 jumped 3.6% to a record 3108.08.
Elsewhere,
Intuit (INTU Quote) rose 14.5% to a 52-week high of 50 3/8 after its narrower-than-expected losses, posted
last night , were met with a slew of positive analyst comments today.
Internet favorites such as
Yahoo! (YHOO Quote) also prowled higher, lifting
TheStreet.com Internet Sector index up 18.75, or 2%, to 968.04. Additionally,
TheStreet.com Red Hots index rose 10.97, or 3.39% to 334.45. The 20-stock index tracks action in particularly volatile stocks and is meant to measure so-called hot money.
Traditional tech bellwethers gave blue-chip gauges a boost as well. The
Dow Jones Industrial Average rose 12.54, or 0.1%, to 11,008.17 after trading as high as 11,044.26. The
S&P 500 gained 12.44, or 0.9%, to 1417.08, while the Russell 2000 rose 1.48, or 0.3%, to 455.93.
In addition to
Microsoft (MSFT Quote), and
Intel (INTC Quote) -- up 4.1% following an upgrade from
Bank of America Securities -- the Dow was hoisted by
Hewlett-Packard (HWP Quote) and
AT&T (T Quote). Ma Bell rose 5.1% after
The Wall Street Journal furthered speculation that the company will issue tracking stock for its wireless business.
Other blue-chip standouts included
American Home Products (AHP Quote), up 3.3% after receiving preliminary approval for a settlement with people who took its "fen-phen" diet drugs. Also,
Avon Products (AVP Quote) rose 11.4%, thanks to an upgrade from
Prudential Securities.
Coinciding with the bond market's drop, financials were among the few major industry groups with notable losses today. Fittingly,
American Express (AXP Quote) and
J.P. Morgan (JPM Quote) were among the Dow's biggest laggards.
The price of the 30-year Treasury bond finished down 6/32 to 98 27/32, its yield rising to 6.21%. An upward revision to third-quarter gross domestic product to 5.5% from 4.8% plus continued weakness in the dollar vs. the yen kept the downward pressure on bonds.
"We thought interest rates were going to turn around -- they didn¿t," said Sam Ginzburg, Managing director of equity trading at
Gruntal. "Hopefully we'll see the economy slow and the bond market come back. If it doesn't, we're going to run into a lot more problems."
While acknowledging the Comp's impressive performance, Ginzburg said "it feels like we're going to get smacked" next week. "Everybody is saying things are okay, but I don't feel that irrational exuberance anymore."
Today was busier than a typical preholiday session, he said, suggesting market players were "selling what they could" and "squaring up" ahead of the end of the month.
"If you don't have a name stock or one where management is going to pump it up at a conference or aren't in the right sector, everything else is dead and going one way -- down," he said. "I do see the Comp is up but if it gives it up, if it has one bad day they're going to come after everything else with a vengeance."
In
New York Stock Exchange trading, 737.3 million shares were exchanged while declining stocks led advancers 1,625 to 1,391. In
Nasdaq Stock Market action 1.277 billion shares traded while gainers led 2,146 to 1,861. New 52-week lows outpaced new highs 244 to 41 on the Big Board while new highs led 145 to 77 in over-the-counter trading.
All Bets Are On
Like Ginzburg, many market players are concerned about the market's narrowing breadth and the rise in bond yields. But Scott Bleier, chief investment strategist at
Prime Charter, expects equities to remain strong for the duration of 1999.
A big reason being there's "so much performance" for fund managers to "chase," Bleier said, noting nearly 400 stocks with at least $500 million market caps are up over 100% year-to-date. Given the multibillion dollar market caps of many companies with only a fraction of the revenue, he predicted the "capital shift" will continue. Soon, "virtual" companies will be buying up "old world" names because of their compelling "value," he said (confessing value is a "dirty" word these days).
"This is the ultimate casino and the money is coming in fast and hard," the strategist continued. "Believe it or not, you have better odds here than in a casino. Now wonder gambling companies are doing so poorly."
Bleier, who called the top in e-commerce stocks back in
mid-April before their swoon, believes the current hot names in business-to-business and Internet infrastructure will ultimately suffer a similar comeuppance.
But, the market "is going to be strong for the rest of the year," he said. "There might be a few days of drawdowns, but this casino doesn't want to die so fast."
Among other indices, the
Dow Jones Transportation Average shed 56.96, or 1.9%, to 2923.33; the
Dow Jones Utility Average rose 1.64, or 0.6%, to 283.20; and the
American Stock Exchange Composite Index dipped 0.02 to 822.84.
Elsewhere in North American equities, the
Toronto Stock Exchange 300 rose 55, or 0.7%, to 7764.6 and the
Mexican Stock Exchange IPC Index jumped 71.29, or 1.2%, to 6182.04.
Wednesday's Company Report
By Eileen Kinsella
Staff Reporter (
Earnings estimates from First Call/Thomson Financial; earnings reported on a diluted basis unless otherwise specified. New highs and lows on a closing basis unless otherwise specified.)
Among high-flying Nasdaq gainers, Nextel Communications popped 17 3/8, or 17.8%, to a record 115 1/16 close after it said Dan Akerson would remain the company's chairman through 2000, a year longer than expected. Mergers, acquisitions and joint ventures
Coca-Cola (KO Quote) rose 1 to 67 15/16 after saying it will not adjust its offer to purchase Pernod-Ricard's Orangina soda brand, after a French government decision to stop the acquisition. The French government threw out the offer due to concerns that Coke was creating a monopoly in the French soft drink market. General Electric (GE Quote) lost 0.5% to 136 7/8 and Time Warner (TWX Quote) climbed 3 3/16 after saying GE hasn't offered to sell NBC to Time Warner. The denials came after Rupert Murdoch said on the Fox News Channel that GE offered to sell NBC to Time Warner for $25 billion. Murdoch is chairman and CEO of News Corp. (NWS Quote), which owns Fox News Channel. Shares of News Corp slipped 3/16 to 32 7/8. Goldman Sachs (GS Quote) fell 5/8 to 77 1/8 after saying it is talking with some market players, including the Chicago Stock Exchange, about creating an electronic options exchange. Korea Thrunet (KOREA Quote) jumped 5 1/2, or 16.4%, to 39 5/16 after it said Microsoft plans to exercise its option to purchase an additional 6% interest in the company, boosting its holding to 10.5%. Once the option is exercised, Microsoft will be eligible to appoint one of Korea Thrunet's directors. Microsoft rose 2 1/8 to 91 11/16. Separately, analysts say Microsoft's plans to take a majority interest in Japanese cable television giant Titus Communications, is part of its effort to expand data pipelines for disseminating its product lines globally, reported in the Nihon Keizai Shimbun. In January, Microsoft took a stake in the Britain-based cable operator NTL Group and in May, it forged a capital tie-up with AT&T, in order to pursue telecom investment opportunities domestically. Mead (MEA Quote) slipped 1.2%, to 36 1/16 after saying it sold a 50% stake in Northwood, which owns and operates a pulp mill in Prince George British Columbia, to Canfor. The purchase price was $635 million, payable by cash of $480 million and the issuance to Mead subsidiary Nexfor, a total of $155 million of convertible subordinated debentures of Canfor. Unilever (UN Quote) climbed 1.1%, to 57 7/16 after saying it's buying Amora Maille for about $744 million. Amora Maille is a French mustard maker. Earnings/revenue reports and previews
ING Groep (ING Quote) lost 9/16 to 60 11/16 after saying its nine-month operational net profit soared 51% to 2.42 billion euros. The Dutch financial services group said it expects operational net profit for the entire year to increase by 40% to 45% compared to 1998. Offerings and stock actions
American Industrial Properties (IND Quote) inched up 3/16 to 11 7/8 after saying it has brought Salomon Smith Barney and Prudential Securities on board, "to evaluate strategic alternatives to increase shareholder value." American Industrial said it is considering options including a merger, sale or other business combination. Amcore Financial (AMFI Quote) rose 11/16 to 24 7/8 after it said it has set 1.4 million share repurchasing program. Electronic Boutique (ELBO Quote) fell 7/8 to 20 1/2 after it said it was offering 3.5 million common shares at 21 3/8. Hormel (HRL Quote) climbed 2 5/8, or 6.5%, to 43 1/16 after it said its board approved a 2-for-1 stock split. Insurance titan Metropolitan Life filed with the Securities and Exchange Commission to raise up to $6.5 billion in an IPO. MetLife said it plans to sell 225 million shares, or 31% of the company, and expects to price the shares between $14 to $24 a share. CIBC World Markets priced 3.75 million shares of PNV (PNVN Quote) at $17 a share, the top of the expected range. Shares turned in a lackluster performance, sliding 1 1/2, or 8.8%, to close at 15 1/2. Analyst actions
J.P. Morgan started coverage of Annuity & Life Re (ALRE Quote) with a buy rating and a price target of 34. Annuity rose 3/4 to 27. Credit Suisse First Boston raised its rating on shares of Autodesk (ADSK Quote) to buy from hold. Autodesk climbed 3/4 to 27. Prudential Securities upped its rating on Avon Products (AVP Quote)to strong buy from hold. Avon jumped 3, or 11.4%, to 33 1/2. Deutsche Banc Alex. Brown raised its rating on Black & Decker (BDK Quote) to strong buy from buy. Shares climbed 2, or 5.3%, to 47. First Boston started coverage of Bsquare (BSQR Quote) with a buy rating. Bsquare slipped 1 to 46 1/16 despite the news. Robertson Stephens initiated coverage of Celgene (CELG Quote) with a long-term attractive rating. Celgene lost 2 15/16 to 59 3/4. Deutsche Banc Alex. Brown said it rolled out coverage of Digital Insight (DGIN Quote) with a buy rating. Digital climbed 3/16 to 44 3/4. Merrill Lynch rolled out coverage on Epcos (EPC Quote) with a buy rating and a price target of 71. Epcos gained 2 11/16 to 59 1/2. Banc of America raised its rating on Intel (INTC Quote) to strong buy from buy. Intel climbed 3 1/4 to 82 3/16. Robertson Stephens reiterated its buy rating on Intuit . First Boston reiterated a strong buy rating and Warburg Dillon Read raised Intuit's price target to 70 from 37. Intuit jumped 6 3/8, or 14.5%, to 50 3/8. Merrill Lynch upgraded Kent Electronics (KNT Quote) to intermediate-term accumulate from neutral. Shares inched up 5/16 to 24 1/16. Deutsche Banc raised its rating on Martin Marietta Materials (MLM Quote) to strong buy from buy. Martin Marietta slipped 9/16 to 38 11/16. Merrill Lynch reinstated coverage of Masco (MAS Quote) with a buy rating and set a price target of 39. Masco moved down 11/16 to 26. Merrill raised its price target on shares of Methode Electronics (METHA Quote) to the mid-40s from around 30. Methode moved up 1 5/8, or 6.4%, to 27 1/4. Morgan Stanley Dean Witter cut its rating on Novell (NOVL Quote) to neutral from outperform. Novell slipped 15/16 to 21 1/16. First Boston started coverage of SDL (SDLI Quote) with a buy rating. Shares rose 1 3/16 to 168 3/4. Salomon Smith Barney upped its rating on Sovereign Bancorp (SVRN Quote) to buy from outperform. Sovereign climbed 7/16 , or 5.5%, to 8 7/16. First Boston started coverage on Sycamore Networks (SCMR Quote) with a buy rating. Sycamore popped 5 1/16 to 238 7/16. SG Cowen upgraded shares of Vignette (VIGN Quote) to strong buy with a 250 price target. Vignette shot up 13 5/16, or 7.3%, to 196 5/16. Deutsche Banc cut its rating on shares of Vulcan Materials (VMC Quote) to buy from strong buy. Vulcan fell 1 to 39 1/2. Miscellany
Ikon Office (IKN Quote) climbed 3/4, or 11.7%, to 7 3/16 after saying it reached an agreement to settle a class-action lawsuit and will pay $111 million before taxes. Ikon said it would take a one-time charge for the settlement. National City (NCC Quote) lost 1 1/8 to 25 after it said the Internal Revenue Service had disallowed some of its tax deductions and was seeking $200 million. Newbridge Networks (NN Quote) lost 3/16 to 22 7/16 after it laid off 300 staff at its Ottawa headquarters and announced 400 additional layoffs in other operations. Newbridge, which plans to cut another 200 U.S. jobs on Monday, is slashing expenses after opening the door to takeover bids last week. The Heard on the Street column in the Journal reports IBM (IBM Quote) is facing scrutiny for its use of an accounting method which raised operating income by lowering reported costs. IBM dropped 1 to 104 1/16. IBM reported a 53% rise in operating income to $8.9 billion, on a mere revenue jump of only $63.4 billion, or 12%, in the nine months ended Sept. 30. At issue is the manner in which IBM booked one-time gains of $4 billion from the sale of its Global Network business to AT&T (T Quote) in the second and third quarters. Value America (VUSA Quote) dropped 3/4 to 14 11/16 after it said Glenda Dorchak has been named CEO, replacing Tom Morgan who's leaving for personal reasons. Westpoint Stevens (WXS Quote) rose 1, or 5.6%, to 19 after it announced it plans to consider strategic and financial options for the company and said it has withdrawn its tender offer for 6% of its shares.
