Playing the Stock Game -- Sometimes You Lose

SAN FRANCISCO -- Today was nothing like yesterday, when being long stocks was like love -- an easy game to play.

After moving higher at the opening bell, major stock proxies struggled for much of the rest of the session. The negativity intensified in the final hour, with blue-chip proxies leading the downward thrust. Still, the Nasdaq Composite Index managed to edge further beyond 5000.

Major Indices INDEX CHANGE % VALUE YR TO DATE Dow 81.91 -0.8% 9928.82 -13.6% S&P 500 6.62 -0.5% 1395.07 -5% Nasdaq 1.78 +0.04% 5048.64 +24% Russell 2000 2.23 -0.4% 603.82 +19.6% TSC Internet 12.91 -1% 1320.31 +14.4% NOTE CHANGE PRICE YIELD 10-Year Treasury 8/32 100 26/32 6.389%

The Nasdaq rose 1.78 to 5048.64, good enough for its 16th record of 2000 but well below its intraday high of 5132.52, hit around 10:45 a.m. EST.

Blue-chip averages were whipsawed by renewed weakness in consumer giants and strength in financial services companies. The Morgan Stanley Consumer Index fell 1.6% while the American Stock Exchange Broker/Dealer Index rose 3.6%.

Dial (DL Quote) fell 22.8% after issuing a profit warning and Clorox (CLX Quote)lost 11.7% after a J.P. Morgan downgrade.

Those developments refocused unwanted attention on Procter & Gamble (PG Quote), which was hit today by a shareholder lawsuit in the wake of Tuesday's red flag. P&G fell 6.1%, helping drag the Dow Jones Industrial Average back into four-digit territory.

The Dow fell 81.91, or 0.8%, to 9928.82 after trading as high as 10,091.39. Hewlett-Packard (HWP Quote) was the Dow's biggest negative influence, returning 3.3% of Thursday's big advance.

American Express (AXP Quote) was the Dow's best performer, rising 3.2%.

Brokerage stocks such as Goldman Sachs (GS Quote), Charles Schwab (SCH Quote) and Merrill Lynch (MER Quote) were in big demand amid speculation a major financial institution was on the acquisition prowl.

Such rumors have been floated repeatedly and most market players dismissed them if only because it's Friday, always a big day for scuttlebutt.

Still, the talk took on added emphasis today in the wake of Deutsche Bank's (DTBKY Quote) acquisition of Dresdner Bank (DRSDY Quote).

Chase (CMB Quote), long rumored to be eyeing a big broker, fell 3% and declined to comment after the New York Stock Exchange inquired about "unusual market activity" in its stock.

The Nasdaq's miniscule rise was led by chip names such as Rambus (RMBS Quote), which rose 10.6% after setting a 4-for-1 stock split. The Philadelphia Stock Exchange Semiconductor Index was up 3.3%. Motorola (MOT Quote) jumped 5.2% in Big Board action after Salomon Smith Barney reiterated its 200 price target for the stock.

The Comp was restrained by weakness in bellwethers such as Sun Microsystems (SUNW Quote) and Cisco (CSCO Quote) as well as Internet stalwarts such as CMGI (CMGI Quote).

TheStreet.com Internet Sector index fell 12,91, or 1%, to 1320.31 after climbing as high as 1350.16.

Meanwhile, Microsoft (MSFT Quote) rose 1.1% after unveiling its "X-Box" videogame console, designed to compete with Sony's (SNE Quote) Playstation. Sony fell 5.9%.

Nvidia (NVDA Quote), whose graphics technology is employed in X-Box, rose 18.4%. But Microsoft's use of Intel (INTC Quote) chips for X-Box helped send Advanced Micro Devices (AMD Quote)down 3.9%.

Separately, SRS Labs (SRSL Quote) climbed 59.5% after announcing Microsoft had bought a stake in the company.

The other big story of the day involved Qwest Communications (Q Quote), down 11.9%, and U S West (USW Quote), which lost 8%. Qwest said a major suitor, widely reported to be Deutsche Telekom (DT Quote), had pulled out of merger talks. Separately, the Federal Communications Commission approved the pending Qwest-U S West merger.

Also, Crayfish (CRFH Quote) dumped 35.2% after its debut in Tokyo met with less demand than did its U.S. IPO on Wednesday.

Similarly, recent biotech favorite Medarex (MEDX Quote) fell 15.1% after announcing plans to jointly develop drugs with Regeneron Pharmaceuticals (REGN Quote), which slid 3.5%.

Same Old, Same Old

Among broader market averages, the Russell 2000 fell 2.23, or 0.4% to 603.82 while the S&P 500 shed 6.62, or 0.5%, to 1395.07.

"It's kind of a pattern, Friday's haven't been too good," said Jim Benning, a trader at BT Brokerage. "A lot of daytraders jump in when it looks like the market is strong in the morning, but they don't want to carry anything over the weekend. There's an awful lot of that kind of speculation leading to these Friday selloffs."

But "you can't make too much of a big deal out of the Dow down 80," the trader said.

Meanwhile, market players agree the focus remains squarely on over-the-counter stocks at the expense of blue-chips.

Bryan Piskorowski, market analyst at Prudential Securities, noted TrimTabs.com reported that of the $16 billion of inflows into U.S. equity funds for the week ended March 6, $13 billion went into aggressive growth funds.

"That overwhelming allocation is why Nasdaq pullbacks are short and sweet and the value camp is suffering," Piskorowski said. "It exacerbates the dichotomy. In one of best value markets in last 5 years, [value fund managers] are being forced to sell positions they'd normally love to hold to meet redemptions. That's the underlying reason why" blue-chips continue to lag.

In New York Stock Exchange trading, 1.1 billion shares were exchanged while declining stocks led advancers 1,712 to 1,214. In Nasdaq Stock Market action 1.95 billion shares traded while losers led 2,315 to 1,950. New 52-week lows bested new highs 144 to 69 on the Big Board while new highs led new lows 353 to 122 in over-the-counter trading.

Among other indices, the Dow Jones Transportation Average rose 23.85, or 1%, to 2365.29; the Dow Jones Utility Average added 2.05, or 0.7%, to 277.74; and the American Stock Exchange Composite Index climbed 14.57, or 1.4%, to 1033.33.

For the week, the Dow fell 4.2%; the S&P 500 lost 1%; the Nasdaq Comp gained 2.7%; the Russell 2000 advanced 1%; the DOT jumped 8.1%; the Dow transportation average slid 2.8%; the Dow utility average fell 4.3%; and the Amex composite added 1.9%.

The price of the 10-year Treasury note slid 8/32 to 100 26/32, it yield rising to 6.39%.

Market data above are preliminary. For coverage of today's top stocks in the news, see the Company Report, published separately.