midday04-20-00

TheStreet.com's MIDDAY UPDATE

April 20, 2000

http://www.thestreet.com

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Market Data as of 4/20/00, 1:37 PM ET:

o Dow Jones Industrial Average: 10,813.64 up 138.68, 1.30%
o Nasdaq Composite Index: 3,629.28 down 77.13, -2.08%
o S&P 500: 1,428.03 up 0.56, 0.04%
o TSC Internet: 789.99 down 16.87, -2.09%
o Russell 2000: 479.87 down 6.36, -1.31%
o 30-Year Treasury: 105 31/32 up 12/32, yield 5.822%

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In Today's Bulletin:

o Midday Musings: Sharp Separation Returns as Dow Jumps, Nasdaq Slumps
o Wrong! Dispatches from the Front: Shoot First; Don't Ask Questions

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Ask Cramer

Jim Cramer will answer your stock question this week on TheStreet.com on Fox News Channel. We're taping a day early this week, so you have to call today, Thursday, April 20, at 6:45 P.M. ET to get on. The number to call is 1.888.TELL FOX. (1.888.835.5369).

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Also on TheStreet.com:

Charted Territory: The Art of Safe and Profitable Shorts

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Dear Dagen: Alternative Downside Protection on Your Investment

While complex and hard to figure out, MITTS, or market index target-term securities, provide peace of mind.

http://www.thestreet.com/funds/deardagen/924234.html

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Midday Musings: Sharp Separation Returns as Dow Jumps, Nasdaq Slumps

By Tara Murphy
Staff Reporter
4/20/00 1:23 PM ET It's certainly not all work and no play on Wall Street, as investors gear up for a three-day holiday. Despite a flow of first-quarter earnings that are due out today, most indices are calming after a week of stormy trading, giving stocks a breather from recent volatility.

Major Indices INDEX CHANGE % VALUE Dow 113.86 +1.1% 10,788.82 S&P 500 2.30 -0.2% 1425.17 Nasdaq 95.52 -2.6% 3610.89 Russell 2000 7.32 -1.5% 478.91 TSC Internet 21.67 -2.7% 785.19 NOTE CHANGE PRICE YIELD 10-Year Treasury 4/32 103 26/32 5.978%

The Nasdaq Composite Index was an exception, though, having quietly eroded to a loss of 95 1/2, or 2.6%, to 3611. Tech giant Intel (INTC Quote), which is also included in the Dow, continued to get punished for its weak first-quarter revenue report.

Most insiders were confident that it would be a quiet day compared with the market's recent ups and downs, but today's trading lull is considered to be nothing more than a respite, as traders gear up for what could be a bumpy ride next week.

"Traders will probably be evening out positions and stepping to the sidelines with the options expiration," said Harry Laubscher, market analyst at Tucker Anthony. "But we're a little bit disappointed because we expected to have a true selling climax earlier this week and we didn't get it, so we're waiting for further negative next week."

But with better than expected first-quarter earnings, some savvy investors like Brian Gilmartin, portfolio manager at Trinity Asset Management, see stocks poised for a bounce. "As much as 80% of companies have beat earnings expectations," he said, referring to a report from First Call/Thomson Financial. "Assuming that there are no bad economic data, the second quarter will be a good one."

With that said, even an optimist like Gilmartin is proceeding with caution. "Unit labor costs, due out next week, might be a tough number," he said. "I might shed a little of my portfolio before the announcement."

Lately, the Dow Jones Industrial Average was showing strength, up 114, or 1.1%, to 10,789. The index was getting a positive jolt from McDonald's (MCD Quote) after it posted better than expected first-quarter earnings this morning. Auto component General Motors (GM Quote) was also a driving force behind the Dow on news related to its exchange offer for Hughes Electronics (GMH Quote) stock.

Cyclicals across the board were faring better today. The Morgan Stanley Cyclical Index was bouncing 1.4%.

On the New York Stock Exchange, UPS (UPS Quote) was up 4 11/16, or 7.9%, to 63 3/4, after delivering first-quarter earnings that beat the Street by 4 cents a share.

But not all stocks are rewarded for reporting better-than-expected earnings. "Earnings reports sometime result in people selling on the news, said Laubscher, referring to General Electric's (GE Quote) decline last week after reporting solid profits.

Sometimes analysts and portfolio mangers feel that the good news is out and they're not going to see anymore for three months," said Gilmartin. "Especially for tech. They see the numbers and use it as an exit."

In Nasdaq Stock Market trading, onetime hot biotechs Affymetrix (AFFY Quote) and Idec Pharmaceuticals (IDPH Quote) were dragging after releasing their earnings reports. Affymetrix posted a loss than was narrower than expectations, while Idec's profit was in line with the consensus.

Legato (LGTOE Quote) was falling 4 9/16, or 28.3%, to 11 7/16 after the Nasdaq Stock Market told the software maker it might be delisted. Legato has failed to file its 1999 annual report.

Elsewhere in tech, the Philadelphia Stock Exchange Semiconductor Index was down 1.5%.

TheStreet.com Internet Sector index was sinking 22, or 2.7%, to 785. During yesterday's trading session, investors returned to Web stocks such as America Online (AOL Quote) and other tech issues that posted solid earnings and revenue. The issues had been shunned for big-cap tech names in recent weeks after being deemed speculative investments.

And with today's decline in small-caps and Web stocks proof positive, most investors are hesitant to test their risk threshold. "I'll pay 200 times earnings for Cisco (CSCO Quote), but I won't do it for a company with a $500 million market cap," said Gilmartin. "There's just a lot more information on large-cap."

Lately, the broad S&P 500 was off 2 to 1425, while the small-cap Russell 2000 was sliding 7, or 1.5%, to 479.

Market Internals

Breadth was mixed on moderately light volume.

New York Stock Exchange: 1,411 advancers, 1,310 decliners, 564 million shares. 17 new 52-week highs, 28 new lows.

Nasdaq Stock Market: 1,696 advancers, 2,138 decliners, 900 million shares. 14 new highs, 59 new lows.

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For a look at stocks in the midsession news, see Midday Stocks to Watch, published separately.

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Wrong! Dispatches from the Front: Shoot First; Don't Ask Questions

By James J. Cramer

4/20/00 12:31 PM ET

Accounting irregularities=sell. I don't care how many times I write that. I don't care how many times you read it. This is the most important thing I can teach you.

After Legato (LGTO Quote) blew-up, but before anybody could get out of it, someone asked me recently what I thought he should do with it. I reiterated the yellow post-it I have on my ILX workstation: "Accounting irregularities=sell."

Immediately, he was all over me with how it had to be worth more, that EMC(EMC Quote) had to buy them, that there was little downside, that nothing more bad could happen.

This morning, LargeToe -- as we call it now because Nasdaq made it add an E to its pre-accounting problem symbol, LGTO -- learned that it might be delisted from Nasdaq.

It is now down almost five points to $11, a catastrophic percentage loss.

When will people learn? With these issues, you shoot first and ask questions later. Or, in my case, you shoot first with accounting problems and you don't even bother to ask. It just isn't worth it.

Random musings: Still no rest for the wary NDX Comp. We are unenthused. Things that worked yesterday aren't working today. There is no consistency. A positive optic backdrop doesn't help the optic stocks. Strong semi orders don't prevent the semis from going down. Take JDSU(JDSU Quote). No flies on the story, but it seems to fall under its own weight. We have no desire to buy any more until it stops the velocity of the decline. Frankly, I would rather buy more General Mills(GIS Quote), a nice stable, boring food stock.

WITH NO MARGINED OWNERS AND A NICE SHARE BASE AND A GOOD BUYBACK, THAT ALLOWS ME TO SNORE AT NIGHT. AND DURING THE DAY, TOO!

Which I am doing.

James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of publication, his fund was long GIS and JDSU. His fund often buys and sells securities that are the subject of his columns, both before and after the columns are published, and the positions that his fund takes may change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Cramer's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to comment on his column at [e-mail].

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