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January 26, 2000

Market Data as of Close, 1/25/00:

o Dow Jones Industrial Average: 11,029.89 up 21.72, 0.20%

o Nasdaq Composite Index: 4,167.41 up 71.33, 1.74%

o S&P 500: 1,410.03 up 8.12, 0.58%

o TSC Internet: 1,146.48 up 18.71, 1.66%

o Russell 2000: 521.59 down 1.36, -0.26%

o 30-Year Treasury: 93 13/32 up 8/32, yield 6.634%

Companies in Today's Bulletin:

Sun Microsystems (SUNW:Nasdaq)

Bear Stearns (BSC:NYSE)

Ask Jeeves (ASKJ:Nasdaq)

In Today's Bulletin:

o Market Roundup: Big Index Reversal Draws Muted Cheers
o Wrong! Tactics and Strategies: RBOC Rocked
o Evening Update: Qualcomm, Compaq, eBay Top Heavy Slate of Earnings
o Bond Focus: Stood Up by Greenspan, Bonds Fight a Losing Battle With Stocks

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Internet: Direct Hit Buy Polishes Ask Jeeves' Silver Tray

The $500 million stock swap patches holes in Jeeves' capabilities, say observers.

Telecom: Keithley's a Ho-Hum Firm That's Catching a Buzz on Wireless Wave

Shares jump on good earnings and orientation toward wireless giants.

The TaskMaster: Prime Suspect: The Futures

The TaskMaster relates how some calculated action in futures trading triggered Monday's selloff.

Market Roundup: Big Index Reversal Draws Muted Cheers


Brian Louis

Staff Reporter

1/25/00 5:29 PM ET

Around 2 p.m. EST it looked like the market was going to be in for another heinous session like

yesterday's. But then the market, judging that things had fallen far enough for the time being, reversed course as the

Nasdaq Composite Index

erased a 68-point slide to close up 71 points.

Stocks traveled in a relatively narrow range throughout most of the morning. However, late in the morning, major market gauges began a steady slide, bottoming out around 2 p.m. EST. But stocks then rebounded and steadily climbed off their intraday lows to finish higher, particularly technology stocks. Not participating in the party in the green, however, were small caps, as the

Russell 2000

ended down 1.36, or 0.3%, to 521.59, but well off its intraday bottom.

The Nasdaq Comp hopped 71.33, or 1.7%, to 4167.41. The

Nasdaq 100

, also known as the NDX, which traded as low as 3591.34 intraday, reversed course and surged to close up 98.15, or 2.7%, to 3759.11. At its bottom, the NDX had dropped 69.62.

Helping boost the NDX and the Nasdaq Comp were market-cap giants


(MSFT) - Get Microsoft Corporation Report



(CSCO) - Get Cisco Systems Inc. Report



(INTC) - Get Intel Corporation Report


Sun Microsystems

(SUNW) - Get Sunworks Inc. Report


MCI WorldCom




(DELL) - Get Dell Technologies Inc. Class C Report



(QCOM) - Get QUALCOMM Incorporated Report


Qualcomm ran up 8 7/8, or 6.3%, to 149 ahead of its earnings report released after the close. But the company's first-quarter earnings of 25 cents a share beat the 16-analyst

First Call/Thomson Financial

estimate by just a penny, and the stock lately was getting slammed in after-hours trading.

The market: Join the discussion on


message boards.


Dow Jones Industrial Average

rose 21.72, or 0.2%, to 11,029.89, led by a big rally in shares of

American Express

(AXP) - Get American Express Company Report



(DIS) - Get The Walt Disney Company Report



S&P 500

gained 8.50, or 0.6%, to 1410.03. Internet Sector

index advanced 18.71, or 1.7%, to 1146.48, powered up by

Check Point Software Technologies

(CHKP) - Get Check Point Software Technologies Ltd. Report





The 30-year Treasury bond advanced 4/32 to 93 11/32, putting its yield at 6.64%.

Despite the market's climb into positive territory (the Russell 2000 and overall breadth notwithstanding), underneath there's plenty for analysts to be concerned about.

"I think the picture is deteriorating," said Stephen Shobin, chief technical analyst at

Lehman Brothers


Worrisome to the technician is the fact that the market didn't respond last week to good news. He said a strong market will use any excuse to go up. Another negative is the poor performance of the financials, he said. Shobin pointed out that the market tends to do best when the financials are strong, and the fact that the sector is "tepid at best" suggests the broad list isn't going to fare too well until that sector improves. Those factors signal to him that the market has more correcting to endure.


NYSE Financial Index

rose 0.9% to 485.79. Shobin said a close above 520 in the NYSE Financial Index would be encouraging, while the index has support at 450 to 460.

On the plus side, major market averages have not violated key support levels on a closing basis, Shobin said: 10,950 on the Dow; 1386 on the S&P 500; 3300 on the Nasdaq 100; and 460 on the Russell 2000.

The Dow did fall below 10,950 intraday, however.


New York Stock Exchange

trading, 1.067 billion shares were exchanged while declining stocks beat advancers 1,773 to 1,243. In

Nasdaq Stock Market

action 1.724 billion shares traded -- the seventh-heaviest trading day ever -- while losers beat winners 2,184 to 2,010. New 52-week lows beat new highs 34 to 180 on the NYSE while new highs beat new lows 143 to 95 in over-the-counter trading.

Yesterday marked a record volume day on the Nasdaq. As of yesterday's close, daily volume on the Nasdaq has averaged 1.666 billion shares so far this year, according to Nasdaq.

Mike Hurley, technical analyst with the online investment bank


, said the market's had trouble at the top of its range and now it's time to look at the bottom of it and see if the bottom of the range will hold.

Hurley said 11,000 is a "pretty important number" for the Dow, and 1380 to 1400 are key for the S&P 500. As for the Nasdaq Comp, "you certainly want to see" the Comp hold in around 3700.


American Stock Exchange Broker/Dealer Index

rose 1.5%, thanks in part to a blowout

earnings report from

Merrill Lynch


. New Tech 30

surged 18.25, or 2.9%, to 647.79. The TSC New Tech 30 is an expanded index that replaced the

Red Hots

index. The market-cap-weighted index remains focused on tracking the most scorching part of the market, the magnet for Wall Street's hot money. A list of the index components is available at

Among other indices, the

Dow Jones Transportation Average

shed 48.26, or 1.8%, to 2654.69; the

Dow Jones Utility Average

fell 6.39, or 2.1%, to 305.87; and the

American Stock Exchange Composite Index

rose 9.87, or 1.1%, to 915.36.

Elsewhere in North American equities, the

Toronto Stock Exchange 300

rose 46.73, or 0.6%, to 8505.48 and the

Mexican Stock Exchange IPC Index

added 30.53 to 6885.88.

Wrong! Tactics and Strategies: RBOC Rocked


James J. Cramer

1/25/00 4:54 PM ET

Ah hah, here's a thesis.

The two most beat-up telco equipment providers,





(LU) - Get Lufax Holding Ltd American Depositary Shares two of which representing one Report

, share a similar set of clients, the regional Bell operating companies.

Of course, everybody has dealings with these companies, but Tellabs and Lucent are more leveraged to these companies than just about anybody.

And these companies aren't doing that well, to say the least. When you are leveraged to weak clients, you are in a dangerous space, where you can let Wall Street down. The RBOCs were steady customers of old-fashioned equipment for years, but as providers of sophisticated "last mile" services, they are not dependable customers. And they are creating havoc among the suppliers who give them products.

Join the discussion on


Message Boards.

Nobody ever wants to blame customers for their problems, but I bet that RBOC inconsistency caused some of the problems with both companies' past quarters.

Random musings

: Care to join me on my


chat at 5 p.m.? Would love to have you, and it won't be weather cancelled ... Oh man, earnings parade is incredible. Lot to digest. Will have to get back later.


James J. Cramer is manager of a hedge fund and co-founder of At time of publication, his fund was long AOL. 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

Evening Update: Qualcomm, Compaq, eBay Top Heavy Slate of Earnings


Eileen Kinsella

Staff Reporter

1/25/00 10:46 PM ET

Technology heavyweight


(QCOM) - Get QUALCOMM Incorporated Report

turned in a strong earnings report, but shares fell back in

after-hours trading.



also weighed in with fourth-quarter results but showed less strength, with fourth-quarter profits roughly half those of a year ago. Things were brighter at online auction behemoth


(EBAY) - Get eBay Inc. Report

, which said sales more than doubled.

Qualcomm reported first-quarter earnings of 25 cents a share, excluding net nonrecurring charges, a penny ahead of the 16-analyst

First Call/Thomson Financial

estimate and up from the year-ago 8 cents.

Qualcomm said it expects that shipments of its phone chips in the second quarter may be lower than the first quarter due to seasonal factors, inventory balancing by customers due to continued shortages of other phone components, and transition from older chips to the latest chips. Also, the company, again citing seasonal factors, said phone shipments in the second quarter could be lower than the first quarter. Excluding items, Qualcomm expects earnings per share in the second quarter to meet or exceed the 25 cents it earned in the first quarter. The company also said it's comfortable with the current analyst consensus estimate for fiscal 2000. The 17-analyst estimate calls for the company to earn $1.02 for the full fiscal year.

For more on this

story, see coverage from

joint newsroom.

eBay reported fourth-quarter earnings of 4 cents a share, beating the 24-analyst estimate of 2 cents and the year-ago 3 cents a share. The online auction giant said fourth-quarter operating profit surged as sales more than doubled and it added 305,000 users. eBay also issued an upbeat outlook for the current fiscal year, saying it expects revenue to come in between $30 million to $40 million higher than the $350 million analysts expect for 2000.

Compaq posted fourth-quarter earnings of 19 cents a share, including an investment gain, ahead of the 31-analyst estimate of 16 cents, but well below the year-ago earnings of 43 cents a share. Net income fell to $332 million from $758 million a year ago. The decline in profits comes as Compaq struggles to rebound from plunging PC prices, a management house cleaning and problems integrating acquisitions it has made in the past two years.

In other postclose news (

earnings estimates from First Call/Thomson Financial; earnings reported on a diluted basis unless otherwise specified


Earnings/revenue reports and previews

Advent Software


posted fourth-quarter earnings of 43 cents a share, which included an interest and income gain. The three-analyst estimate expected the company to report earnings of 37 cents a share. The year-ago report was 28 cents.


(AMGN) - Get Amgen Inc. Report

reported fourth-quarter earnings of 26 cents a share, including a benefit of 2 cents a share from stockpiling by drug wholesalers ahead of the year 2000 changeover. The 25-analyst estimate called for earnings of 25 cents a share, while the year-ago earnings of 22 cents include a gain. The company said it believed the effect of Y2K stocking by wholesalers increased 1999 sales by a total of $45 million, which boosted income by $25 million. Taking that into account, the company estimated that its total 2000 total product sales growth would slow to the high single digits.



reported fourth-quarter results of less than a cent excluding charges, compared with the year-ago earnings of 34 cents. The 10-analyst expectation was for break-even results. The company said it expects to report break-even results during its first quarter due to lower sales but added it sees revenues returning to year-over-year growth during the second quarter of 2000.

Commerce One


reported a fourth-quarter net loss of 40 cents a share. The 12-analyst estimate called for a loss of 15 cents a share, while the year-ago loss was 21 cents a share. The company said net loss per share is computed on a pro forma basis, giving effect to the conversion of preferred shares to common shares upon completion of the company's initial public offering in early July 1999.



reported a third-quarter loss of 9 cents a share, missing the two-analyst estimate of a 1-cent profit and down from the year-ago profit of 28 cents. The company warned that it is out of compliance with the profitability requirements of its credit agreement but said it is working to receive a 90-day waiver of the requirements from its lenders.



posted fourth-quarter earnings of 27 cents a share, in line with the 12-analyst estimate.

Fairchild Semiconductor


reported earnings for the seven months ending Dec. 26 of 23 cents a share, compared with a year-ago loss of 57 cents. The latest period is a shortened fiscal year that began on May 31. The company decided to convert to a calendar year, changing its fiscal year-end to the last Sunday in December from the last Sunday in May.

Foster Wheeler


reported fourth-quarter earnings of 31 cents a share excluding charges, beating the six-analyst estimate of 28 cents but down from the year-ago earnings of 41 cents which includes a loss.


(KMB) - Get Kimberly-Clark Corporation Report

reported fourth-quarter earnings of 79 cents a share, beating the 14-analyst estimate of 76 cents and the year-ago 68 cents. The company said it expects 6% to 8% annual top-line growth as well as double-digit earnings growth.

LSI Logic

(LSI) - Get Life Storage Inc. Report

reported fourth-quarter earnings of 47 cents a share, beating the 21-analyst estimate of 43 cents and the year-ago earnings of 5 cents. LSI set a 2-for-1 stock split in the form of a dividend to shareholders of record Feb. 4 and the new stock will be distributed Feb. 16.

Nortel Networks


reported fourth-quarter earnings of 44 cents a share, 2 cents better than the 20-analyst forecast. The company also set a 2-for-1 stock split.

(PLRX) - Get Pliant Therapeutics Inc. Report

posted a fourth-quarter pro forma loss of 75 cents a share, narrower than the six-analyst expected loss of 83 cents.


(RNWK) - Get RealNetworks Inc. Report

reported fourth-quarter earnings of 7 cents a share, 2 cents ahead of the 19-analyst outlook and up from the year-ago loss of 3 cents. The company also set a 2-for-1 stock split. Further, RealNetworks announced that it has acquired download management software maker


for 1.7 million shares, or about $265 million as of Tuesday's close.

Sealed Air

(SEE) - Get Sealed Air Corporation Report

posted fourth-quarter earnings of 50 cents a share, in line with the 10-analyst estimate.



reported second-quarter earnings of 36 cents a share, beating the 17-analyst estimate of 33 cents and the year-ago earnings of 25 cents. The company said it signed a $100 million deal with

Charter Communications

(CHTR) - Get Charter Communications Inc. Report

to supply optical equipment and digital cable TV set-top boxes.



reported a fourth-quarter loss of 56 cents including items. The 15-analyst estimate called for a loss of 59 cents. Year-ago results were not available as the company went public on Jan. 20 1999. The company proposed a public offering of 6 million common shares. USinternetworking said it expects it will sell 2 million shares and selling security holders will sell 4 million shares.

Wallace Computer


warned it sees second-quarter earnings below expectations citing weakness in certain markets. The company said it sees earnings in the range of 28 cents to 33 cents a share, below the two-analyst estimate of 50 cents a share.

Wisconsin Energy

(WEC) - Get WEC Energy Group Inc. Report

reported fourth-quarter earnings of 41 cents, missing the 10-analyst estimate of 47 cents and the year-ago earnings of 45 cents. The company said the results are partially attributable to warmer-than-normal weather in the fourth quarter and a smaller contribution to earnings from the operating non-regulated subsidiaries.

In other earnings news:

Offerings and stock actions

Dallas Semiconductor

(DS) - Get Drive Shack Inc. Report

set a 2-for-1 stock split.

SG Cowen

priced 3.75 million shares of

Healthgate Data


at $11 a share. The company provides health-care information for physicians and other health-care professionals over the Internet.

Bond Focus: Stood Up by Greenspan, Bonds Fight a Losing Battle With Stocks


David A. Gaffen

Staff Reporter

1/25/00 4:29 PM ET




Alan Greenspan

taking a powder due to the weather, the bond market spent today waltzing with the stock market and reacting to a few billion dollars of corporate supply. Treasuries realized a decent rally today, until equities staged a recovery, destroying most of the bond market's gain.

Lately, the 30-year Treasury bond was up 4/32, dropping the yield 1 basis point to 6.64%. The 10-year bond was down 2/32 to yield 6.70%. Tracker


reported volume of $42.7 billion by 3 p.m. EST, about average for Tuesdays in the past month. The market had little reaction to today's economic news, including the

Consumer Confidence Index

, which rose to an all-time high of 144.7 in January.

As with yesterday, the market reacted positively to the weakness in equities. Treasuries were a mixed bag in early trading, as corporate hedging weighed on the market, but as stocks declined, the bond market began to look better.

"There's been a clear impact from the stock market," said Tony Crescenzi, chief bond market strategist at

Miller Tabak

. "We also had that Clinton talk -- it was all theatrical, but think because the announcement did help the market."

Bonds were boosted by

President Clinton's

announcement that the Treasury could pay off the outstanding $3.6 trillion in debt in 2013, two years earlier than expected, and at one point the 30-year bond was up 17/32.

The market: Join the discussion on


Message Boards. But the market's failure to sustain this rally indicates that asset allocation away from stocks doesn't move bond investors to buy the market. Fear of Fed and a general lack of buying interest still dominate trading. The March bond contract, traded on the

Chicago Board of Trade

, reached its high for the year today of 91, but couldn't sustain that level and fell back to close at 90 19/32, up 8/32.

With the

Federal Open Market Committee

meeting looming next week and several important economic indicators coming, including the fourth-quarter

Employment Cost Index

Thursday, bonds will probably continue to be an unforgiving market.

"As a whole we're going to need evidence of a slowdown," said Mark Sauvigne, government bond trader at

Chase Securities

. "The economy doesn't have to drop off a cliff, but it has to piece together some evidence of a slowdown."

Whatever danger the market was looking for today was removed when Greenspan, instead of walking up the Hill to testify before the

Senate Budget Committee

, got to sled back down. The chairman was scheduled to speak on the

Congressional Budget Act

. That's been postponed until Friday.

The chairman is still scheduled to appear tomorrow at 10 a.m. before the

Senate Banking Committee

for hearings on his confirmation for a fourth term as Fed head. Whatever he says, it's unlikely that Greenspan's views have changed much from the harsh tones he expressed in a

speech on Jan. 13.

Earlier today

President Clinton

announced a new plan designed to pay off the $3.6 trillion in debt held by the public by 2013, two years earlier than originally projected. In addition, the

Congressional Budget Office

released new budget projections, saying that the budget surplus could total $800 billion to $1.9 trillion over the next 10 years. (Last year, the Treasury ran a surplus of $124.4 billion.)

The government's projections are obviously optimistic. But the bond market, perhaps beholden by the continued decline in Treasury supply during the last few years due to fiscal discipline -- along with the Treasury's recent announcements regarding buying back old, long-dated Treasury securities, has been a boon to the long bond and off-the-run Treasuries.

The corporate market was active today.

Bear Stearns


earlier today sold $850 million in five-year notes, and

Goldman Sachs

(GS) - Get Goldman Sachs Group Inc. (The) Report

sold $1.5 billion in five-year and 10-year notes. Generally, underwriters will buy back previously-hedged Treasuries after a corporate deal is sold. That's helping bonds in this lightly traded market.

Economic Indicators

The Consumer Confidence Index's 144.7 reading bests the previous high of 142.3, set in October 1968. December's figure was revised upward to 141.7 from 141.4. Economists were looking for a 141.8 reading for January, according to


. Last month's reading was the second-highest in the 32-year history of the index.

The report "hasn't really changed the consensus view of what the economy is doing, that growth remains strong and that consumer spending is robust," said Mike Cloherty, senior market economist at

Credit Suisse First Boston


The consumer expectations index also rose sharply, up to 119.7 in January from a revised 115 in December.


National Association of Realtors

, which originally put off the

sales of existing homes

report until tomorrow, pulled a reverse and released the report around 12:30. Sales of existing homes fell 1.4% in December to a seasonally adjusted annual rate of 5.06 million units, down from November's revised rate of 5.13 million.



weekly chain store sales index rose 1% for the week ending Jan. 22, after a 0.5% increase the previous week. The

Redbook Retail Average

for the month through Jan. 22 was up 1.7% vs. December, down from the previous week's 1.9% reading.

Currency and Commodities

The dollar was lately trading at 105.90 yen, up from 105.67 yen yesterday. The euro was lately trading at $1.001, down from $1.0075 yesterday.

Crude oil for March delivery at the

New York Mercantile Exchange

rose to $28.26 per barrel, up 43 cents from $27.83 yesterday.


Bridge Commodity Research Bureau Index

rose to 212.07, from 211.05 yesterday.

Gold for February delivery at the


was lately down 1.5 to 286.6 from 288.1 yesterday.


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