Late Gains Appear Unlikely to Hold

This morning promises an early selloff after yesterday's late-afternoon rally.
Publish date:

After yesterday's late-day run into the record books, stocks look like they'll open this morning on a weaker note.

The market seems due for a break after its recent run, and those looking to point fingers will find plenty of culprits. Global bourses are mostly lower, suggesting that overseas investors don't trust yesterday's gains. European bonds keep on taking licks, prompting sympathy pains in their U.S. counterparts. Oil's up again. The euro's sucking wind.

At 9 a.m. EDT, the

S&P 500

futures were down 7.9, nearly 10 below fair value and indicating a drop at the open. The 30-year Treasury was down 18/32 to 88 15/32, lifting the yield to 6.10%.



took back most of its losses in overnight trading on the back of its second-quarter earnings of 11 cents per share. That was 3 cents above estimates, but more importantly, it met the whisper number people had been touting. Yesterday, rumors were rife that the company wouldn't be able to do that, and that revenue growth was going to be weak.

Meanwhile, it seemed like everybody on the Street was talking about how Yahoo!'s earnings always mark an intermediate peak in its stock and Net stocks in general -- a pattern that's held for the last four quarters. And anyone who took Technical Analysis 101 could see that if Yahoo! topped out, then its chart was going to put in a head-and-shoulders pattern, which everyone knows is a very bad thing.

When everyone's talking about it, maybe it's little too easy. Yahoo! was lately trading at 171 1/2 in preopening trade, up 4 7/16.

But interestingly, it doesn't look like the Yahoo! report will do anything for the rest of the dot-coms.

"We're not seeing the other I stocks trading up on it," said Dan Mathisson, head stock trader at

D.E. Shaw Securities

. "People are looking at it as a report about Yahoo!, not a report about the Internet sector."

One of the reasons the other Internets aren't going up big on Yahoo!: a negative Heard on the Street article in

The Wall Street Journal



(EBAY) - Get Report

, focusing on worries that the company may uncharacteristically not post a profit in the quarter just ended. Though lately Heard on the Street is sometimes derided as "Herd on the Street" -- by the time the


writes the story, everybody already knows it -- eBay's getting hurt ahead of the open today. eBay was lately trading at 134, down 4 3/16.

Confident that the recent gains weren't undeserved, yet lacking any fresh incentives to take stocks higher, Tokyo traders left the


pretty much where it was. The index added 8.75 to 17,967.65.


Taichi Sakaiya

, novelist turned head of Japan's

Economic Planning Agency

, said it's still too early to tell if the country's economy has rebounded, though signs are hopeful. He also suggested that

gross domestic product

in the first quarter will contract, though it probably won't drop enough to take away all of the fourth quarter's surprising 1.9% gain.

After a strong open, Hong Kong stocks turned tail and sold off in the afternoon as investors continued to worry that yesterday's big share-placement announcements were just the beginning. The

Hang Seng

dropped 31.14 to 14,226.30.

European bourses were weak. In Frankfurt, the


was down 25.77 to 5562.73. In Paris, the


was off 35.52 to 4626.68. In London, the


was down 60.7 to 6536.7.

Thursday's Wake-Up Watchlist


Brian Louis

Staff Reporter

  • General Electric (GE) - Get Report posted second-quarter earnings of 85 cents a share, beating the First Call 13-analyst estimate by a penny and up from the year-ago 74 cents. GE's earnings per share and second-quarter earnings of $2.82 billion were the highest for any quarter in the corporate giant's history, it said. Revenue rose to a record $27.4 billion, 9% more than last year's quarter, GE said.
  • Yahoo! after the close reported second-quarter earnings of 11 cents a share, topping the 21-analyst First Call estimate by 3 cents and beating the year-ago 1 cent. reported on the earnings in a story yesterday. Credit Suisse First Boston raised its 1999 earnings estimate for Yahoo! to 41 cents a share from 38 cents and its 2000 earnings estimate to 67 cents from 58 cents.
  • In the first class-action lawsuit brought by smokers ever to go to trial, a Florida jury found that cigarette makers are liable for producing a defective product that causes emphysema, lung cancer and other illnesses. In other news (earnings estimates are from First Call):
  • Pimco Advisors Holdings (PA) has been approached by Allianz, a German insurer, for a possible takeover, Reuters reported, but the German insurer may not necessarily be more successful than other suitors, a Pimco managing director said in an interview with Reuters Television. An Allianz spokesman confirmed that the insurance giant was in discussions on a possible takeover of Pimco, a U.S. fund management concern, the news agency reported. The Wall Street Journal Europe reported yesterday that Pimco is looking into a possible sale of part or all of the company to Allianz in a deal that could be valued at as much as $5 billion.
  • Merrill Lynch yesterday priced Interliant's (INIT) 7 million-share IPO midrange at $10. The company is a Web site management company. It will begin trading today.
  • Ireland's Telecom Eireann (EIR:NYSE ADR) will begin trading on the Big Board today. Telecom Eireann's IPO was priced at 3.90 euros.
  • Consolidated Stores (CNS) - Get Report expects to post a second-quarter loss of 2 to 4 cents a share, below the 13-analyst consensus estimate that expected the company to earn 6 cents. It said June same-store sales rose 3.5%.
  • Federated Department Stores' (FD) June same-store sales rose 8.4%.
  • Gap's (GPS) - Get Report June same-store sales rose 13%.
  • Kmart's (KM) June same-store sales advanced 9.2%.
  • Sears Roebuck's (S) - Get Report June same-store domestic sales rose 1.9%.
  • Wal-Mart's (WMT) - Get Report total company June same-store sales rose 6.5%.
  • Some large hedge funds are making big bets against eBay, the online auctioneer, the Heard on the Street column in The Wall Street Journal reported. A few analysts warn that the coming quarter will be a letdown to some investors, and that the second half of the year could bring even more disappointments, the column reported.
  • A study in today's editions of the journal Nature says Internet search services cannot keep up with the rapidly expanding Web and they check -- at most -- only one of every six pages, USA Today reported.

Mergers, Acquisitions and Joint Ventures

Offerings and Stock Actions

June Same-Store Sales