Publish date:

TheStreet.com's DAILY BULLETIN

December 24, 1999


Market Data as of Close, 12/23/99:

o Dow Jones Industrial Average: 11,405.76 up 202.16, 1.80%; up 1.3% for the week

o Nasdaq Composite Index: 3,969.44 up 32.14, 0.82%; up 5.8% for the week

o S&P 500: 1,458.34 up 22.35, 1.56%; up 2.6% for the week

o TSC Internet: 1,128.52 down 19.58, -1.71%; up 1.4% for the week

o Russell 2000: 482.43 up 4.49, 0.94%; up 3.5% for the week

o 30-Year Treasury: 95 08/32 down 13/32, yield 6.477%

Companies in Today's Bulletin:

Yahoo! (YHOO:Nasdaq)

Amazon.com (AMZN:Nasdaq)

eToys (ETYS:Nasdaq)

Citigroup (C:NYSE)

In Today's Bulletin:

o The Coming Week: Even Bulls Can Fret About Bum Steers
o Wrong! Dispatches from the Front: B2B, Round 2
o Evening Update: Pfizer Delays Attempt to Vanquish Warner-Lambert's Board
o Bond Focus: Dismayed by Stocks' Showing, Bonds Drift to New Lows

"TheStreet.com" on

Fox News Channel

Influential retail analyst

Faye Landes


Thomas Weisel Partners

and chief market technician from

Raymond James


Ralph Bloch

join the regulars on "TheStreet.com" with a special holiday edition of the show. You'll hear if the group thinks a Santa Claus rally will come to Wall Street and how this record-breaking year will end. Also we'll find out what retailers Faye Landes is hot on and our group will give their "Holiday Wi$hes" for investors.

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Also on TheStreet.com:

Internet: E-Commerce Stocks Get a Lump of Coal for Christmas

Competition from Amazon and shrinking margins turn off Grinch-like investors.


Internet: Dot-Coms' Lure Spurs West Coast Law Firm to Boost Salaries 44%

The pay increase for first-year associates doesn't appear to immediately impact New York lawyers.


Online Brokers: In Online Trading, Salomon Takes the Road Less Traveled

Other Wall Street firms are straying into discount brokering. But not Solly, which is leveraging its Citibank ties.


The TaskMaster: An Exchange's Offerings

Nasdaq announces remedies to problems in its trading operations.


The Coming Week: Even Bulls Can Fret About Bum Steers


Justin Lahart

Associate Editor

12/23/99 7:27 PM ET

It's not the coming week that Wall Street is worrying about these days so much as the coming year.

The amused, befuddled look the huge run in tech stocks put on many strategists' faces has given way to more worried countenances. Even strategists who have been forthrightly bullish (and remain forthrightly bullish on stocks' long-term outlook) are concerned that the move has become not just overdone, but speculative in nature.

"I think we are building the speculative bubble that a lot of people have been talking about for a long time," said John Manley, equity strategist at

Salomon Brothers Smith Barney

. Investors are "playing by rules I wasn't taught. For the first time in 10 years, I'm thinking it might end badly."

"I've been at this for 30 years, and I don't remember a time when I've seen this level of euphoria," said

First Albany

chief investment officer Hugh Johnson. "I think at some point there will be a correction or an adjustment, and it may be severe. That's not a bold or irrational forecast."

Yet it is one thing to say the market has gotten frothy, and another to say when it will hit its top.

It is almost an axiom that narrow, momentum-based rallies overshoot and come in. This has been the biggest narrow rally in Wall Street's history, but nobody really knows at what point we are in it or when it ends. Manley reckons things come in "somewhere" in the first quarter. Johnson keeps an overweighting in tech stocks in his portfolio, but reduces his position in a stock whenever it exceeds 7%. So he's trimmed a little


(ORCL) - Get Report

, a little

Sun Microsystems

(SUNW) - Get Report


When people talk about what could make big-cap tech come in, they usually talk about the

Federal Reserve

. Stocks' reaction to this past week's

Federal Open Market Committee

meeting, wherein committee members left their bias unchanged but made it clear that they had no problem with hiking rates at the February meeting, left some observers aghast.

"It's like your mother-in-law calling from the airport and saying her flight's delayed, but it's leaving in 20 minutes," said Manley. "And you shout, 'She's not coming!'"

(Manley made clear that he likes his mother-in-law very much. Moreover, she has a very good sense of humor.)

Many now reckon that the Fed has become increasingly alarmed by the rise in stocks. In the release that accompanied its Tuesday decision, the FOMC said, "At its next meeting, the Committee will assess available information on the likely balance of supply and demand, conditions in financial markets and the possible need for adjustment in the stance of policy to contain inflationary pressures."

That bit about financial markets is "a euphemism for what's happening in the equity arena," said Bill Sullivan, chief money-market economist at

Morgan Stanley Dean Witter


One of the more interesting things about the year-ahead outlooks various economists have given this month is that so many forecasts depend on what happens in the equity markets. "If you think the market's overvalued and that there will be a significant correction, that has a significant effect on your forecast," said

Barclays Capital

senior economist Henry Willmore at his firm's confab.

The corollary to that is that the equity market is having a significant effect on the economy now.

"Everybody's working, and everybody who has tech stocks is watching them go up," said Don Fine, chief market analyst at

Chase Asset Management


Those good times are helping consumers who have not shown any sign of flagging. "This Fed will keep on tightening until the economy slows down to what they think is a noninflationary pace," said Fine. "Even though they have a neutral bias officially, unofficially these guys are getting ready for another tightening."

Wrong! Dispatches from the Front: B2B, Round 2


James J. Cramer

12/23/99 3:10 PM ET

The supplemental

B2B draft lacked the tension of the one a few weeks ago, but it didn't lack fireworks or surprising themes. Content management took precedence over procurement plays. Application-services stocks went begging. And a couple of recent hot issues found their way into the five-team lineups that we each crafted with $500,000 mythical dollars.

Matt "Online Auction" Jacobs

drew first, paying $100,000 for red-hot



. Then I went for a message-board fave,

I2 Technologies


for $125,000. Can't get enough of that supply-chain-management company with the "real businesses" behind it.

Join the discussion on

Cramer's Latest, go to the

Red Hots Forum

, or visit our

B2B Forum


We then both passed on



, which we had our eyes on because

Gary B. Smith's

column had moved it too much, making the stock too expensive to own here.

Matt then paid $75,000 for

Art Technology


, as he is a Dynamo fan. That was a sleeper -- I wasn't even prepared to bid for it. Then I snuck in



for $25,000, as I am a fan of the company's hit reporting. (


uses it.)

Matt parried with $150,000 for



, a colossal overpay in my book, but this stock has juice and content management is something this market loves.

I wanted to round out an all-


team and went for



, the automated email company that the customer-service department of


swears by. Got it for $50,000.

Matt has loved



ever since he saw the company's management a half-dozen times at conferences, and he shelled out $150,000 to get it. I made him pay up for that one, which had the most spirited bidding of the day.

I completed my club by paying $100,00 for



, the B2B online computer play that

US Airways

(U) - Get Report

had just bought some of in real life, and $200,000 for

Be Free


-- don't get too excited, as I only had room for one more player on the roster, so I had to use all of my money to get it since we had to put all of our money to work.

And Matt finished his team with a $25,000 investment in


(MSTR) - Get Report

. Go figure -- he says they give great presentations.

There you have it. I don't think I have the horses to catch Matt with these supplemental plays. But we did learn a whole lot. And that's what it was about anyway.

All the companies that were left out? Don't worry, we are saving them for more layers to join the league.

Help choose more Red Hots:

With the


continuing to rage, we're planning to add more stocks to our

Red Hot Index. Visit our

message boards to post your comments on the candidates -- and make your own nominations.


James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of publication, his fund was long Be Free and pcOrder.com. Cramer's fund also may be long or short certain stocks in his B2B rotisserie league or Red Hot index. 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: Pfizer Delays Attempt to Vanquish Warner-Lambert's Board


Eileen Kinsella

Staff Reporter

12/23/99 7:05 PM ET


(PFE) - Get Report

said it will not begin an effort to oust



board of directors until a court rules on whether its unsolicited $72.6 billion takeover offer violated a deal under which the two companies co-market the drug Lipitor.

After-Hours Trading

Biotechnology stocks dominated trading on Island ECN in after-hours trading on Thursday.

Biomune Systems


was the most active, followed by




Genome Therapeutics

(GENE) - Get Report


In other post-close news (

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


Earnings/revenue reports and previews

Western Gas


said it sees a fourth-quarter loss of 13 cents a share, well below the five-analyst estimate of a profit of 8 cents a share.

Mergers, acquisitions and joint ventures

First Security


said it was delaying a Dec. 28 shareholder meeting on its pending merger with

Zions Bancorp

(ZION) - Get Report

because Zions said it had to restate its financial statements to reclassify some of its acquisitions from 1997 and 1998.

Offerings and stock actions

Neurocrine Biosciences

(NBIX) - Get Report

said it entered into a definitive agreements to sell 2.3 million newly issued shares to five institutional investors for $42 million. The company said the purchase price was $18 a share.

Bond Focus: Dismayed by Stocks' Showing, Bonds Drift to New Lows


Elizabeth Roy

Senior Writer

12/23/99 4:26 PM ET

For no apparent rhyme or reason -- apart from the exuberant show put on by the stock market -- and on exceeding light volume, which promotes volatility, the Treasury market finished an abbreviated session moderately lower. The drop in prices lifted yields to new closing highs for the year.

The benchmark 30-year bond traded up as much as 13/32 in the early part of the session, in part on a benign German inflation report and in part on short-covering,

CIBC World Markets

market strategist Larry Berman said.

The market: Join the discussion on


Message Boards.

Today's key domestic economic releases were more or less in line with expectations. The

Labor Department's

weekly tally of

initial jobless claims rose to 281,000 from 267,000 the previous week, and November

durable goods orders rose 1.2%, just 0.1% more than expected.

That's a strong reading, but durable goods orders is a volatile data series, and the big increase in November follows a sizable decline in October. Both the November increase and the 0.9% October decline owed much to the electrical equipment component, which fell 7.4% in October and rebounded 8.7% in November.

But as the day wore on and the stock market rocked on, Treasuries surrendered its gains. The benchmark long bond finished down 14/32 at 95 7/32, lifting its yield 3 basis points to 6.49%. That's its highest close in yield terms since Sept. 15, 1997. The previous high for the year was yesterday's, 6.46%. Shorter-maturity note yields also made new highs for the year, rising 4 basis points.

"The only immediate impetus today was the general bearish mood," said Jon Jacobs, fixed-income analyst at


. That, and the fact that

yesterday's action created some profits to be taken.

As for the stock market's performance, Jacobs said: "I don't know if anyone's trading Treasuries against the stock market," but to the extent they are, "outsized stock gains are bearish for bonds" inasmuch as they encourage unbridled consumer optimism and tempt the

Fed to raise interest rates.

"At a minimum, the soaring stock market proves that monetary policy is anything but tight," Jacobs said. "In fact it's quite the opposite."

Staff Reporter David A. Gaffen contributed to this story.



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