March 4, 2000

Market Data as of Close, 3/3/00:

o Dow Jones Industrial Average: 10,367.20 up 202.28, 1.99%; up 5.1% for the week

o Nasdaq Composite Index: 4,914.79 up 160.28, 3.37%; up 8.4% for the week

o S&P 500: 1,409.17 up 27.41, 1.98%; up 5.7% for the week;

o TSC Internet: 1,221.10 up 56.99, 4.90%; up 3.8% for the week;

o Russell 2000: 597.88 up 13.84, 2.37%; up 7.4% for the week;

o 30-Year Treasury: 101 20/32 up 2/32, yield 6.117%

Companies in Today's Bulletin:

Gillette (G:NYSE)

DoubleClick (DLCK:Nasdaq)

CNet (CNET:Nasdaq)


In Today's Bulletin:

o The Coming Week: Market Seeking Answers to Tech-Rally Puzzlement
o Wrong! Rear Echelon Revelations: The Right Stuff
o Evening Update: Gillette in Tentative Deal to Sell White Rain Line
o Bond Focus: Rallying Stocks a Killjoy in Bondland Community:

You know's the place for great market commentary, but didyou know it's also the place for intelligent investing discussion? Checkout our message boards with new and improved forums and formats.

Submit your picks for Jim Cramer and Melissa "Genome" Kasper's biotechrotisserie league. Also, don't miss the conversations on our Commentaryboards, including Cramer's Latest, Jim Seymour's Tech Savvy, Gary B. Smith,Ben Holmes' IPOs and others.

Also, send your suggestions for TSC's Post of the Week and help ushighlight posts you think stand out from the rest. Tell us which ones youthink are best and we'll give the winner a TSC prize.

TSC Message Boards:

Also on

Global Portfolio: Getting In on the Ground Floor

Overseas Web security worries offer investors a chance to get in early.

Hardware & PCs: PC Makers Look a Day Late, Dollar Short in Web-Services Push

The business promises growth opportunities, but not every company is prepared to take advantage.

Telecom: McCaw Passes on Iridium Purchase

The troubled firm gets left behind as the telecom financier continues merger talks with ICO Global.

Internet: Investors Pay Up for CNet's Expansion Plans as ZDNet Lags Behind

But ZDNet appears to deserve more benefit of the doubt than its current valuation suggests.

Telecom: Weisel Telecom Conference: The Stampede to the Next Big Thing

The focus on private companies means outfits like JDS Uniphase pitch to half-empty conference rooms.

The Coming Week: Market Seeking Answers to Tech-Rally Puzzlement


Justin Lahart

Associate Editor

3/3/00 7:00 PM ET

Tech stocks keep running higher, and so does Wall Street's general sense of bewilderment.

That the asset class with the richest valuations is running higher despite the

Federal Reserve's

apparent inclination to continue raising interest rates until the economy slows is an entirely new thing. In the past, whenever economic growth has heated up to the point where the Fed feels it needs to crash the party, it's been a signal to shift into cyclical stocks. This makes sense, because the latter stages of economic growth are usually the time when commodity producers start to get pricing traction. And in fact, this is exactly what's happened lately -- commodity prices


on the upswing.

But cyclical stocks are not. The

Morgan Stanley Cyclical Index

is down 18.1% this year. Meanwhile, the

Morgan Stanley High-Tech 35

is up 16.7%.

"We're in a very interesting situation," said David Bowers, the new chief investment strategist at

Merrill Lynch

, "where either the old model is breaking down, or the market is chasing the wrong sectors."

This, Bowers reckons, is where the battle lines in the market will be drawn in the weeks to come. Some players will adhere to the notion that tech stocks are immune to interest rates, that the demand for technology is so strong that profits in the sector will continue to move ahead at a quick pace even if the overall economy slows.

And ranged on the other side will be those who think that even for tech, interest rates will matter. One argument for this is that a major factor in economic growth has been the performance of tech stocks. So to slow the economy, the Fed needs to slow tech stocks.

"The stock market continues to see an enormous shift out of traditional, old-economy stocks to new-economy stocks," said Richard Berner, chief U.S. economist at

Morgan Stanley Dean Witter

. "The rally in the stock market is being primarily driven by that. That means the Fed, quite frankly, will have more work to do."

With the

Nasdaq Composite Index

knocking on 5000, one wonders how much of a role tech-stock gains specifically play in any wealth effect. It seems like a good guess that they have an outsized influence. Many investors may not really think of their tech-stock gains in the same way they think about the money they've put in their 401(k)s. Then there are those lucky people who have options in tech companies at a very low cost basis -- they, too, may have more of a penchant to spend freely.

Unfortunately, there's no way to quantify whether tech-stock gains influence spending in any way differently from gains in other stocks. "I have been asking myself that question," said Berner. "It's a good one. Don't have the answer."

The two big economic events of the coming week should have something for new- and old-economy types alike. On Monday, Fed Chairman

Alan Greenspan

will give a talk on technology and the economy. If he sticks to recent form, he will probably shy away from the new-paradigm stuff. Yes, the economy can grow more quickly than in the past. No, it cannot safely grow as quickly as it is now.

On Tuesday, however, the revised fourth-quarter productivity report is set to come out. Many economists expect that productivity gained upwards of 6% -- a new-era number if there ever was one.

Wrong! Rear Echelon Revelations: The Right Stuff


James J. Cramer

3/3/00 7:20 PM ET

OK, I admit it: I didn't want the bell to ring. We had gotten it right. We had nailed it. We had the max


(INTC) - Get Report



(CSCO) - Get Report



(DELL) - Get Report

on and a host of other good-looking names. And we breathed it in, and in the end, felt good. Lots of smacked fists and vows to get them on Monday.

Sometimes these days can be so low, so lonely, so depressing that you wear them on your back like old black steamer trunks filled with bricks. Other days are as light as a feather and you can't stand to look up and see that short hand on the four.

Today was one of those days. We had called the reversal right and we had placed our bets smack into the maw of worry that Fridays and employment numbers had created.

Oh yeah, and I felt real good that I had

shared this view with the site. I want people on this site to make money. Ah shucks, we can't promise anything -- we all know that "past performance" gibberish. And we can't guarantee jack. The world doesn't work like that. But when we get it right we have to crow about it. Nobody else will.

You will never read an article in any newspaper or magazine in the country that says makes you money


Instead you will just see the carping and the rearguard actions and the belief that we will just wither.

Days like today make the battle all the sweeter. No, it's not Agincourt, but those who were with me today were indeed smiling all the way to the bell.


James J. Cramer is manager of a hedge fund and co-founder of At time of publication, his fund was long Intel, Cisco and Dell. 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: Gillette in Tentative Deal to Sell White Rain Line


TheStreet Recommends

Tara Murphy

Staff Reporter

3/3/00 7:50 PM ET


(G) - Get Report

said it has entered a tentative deal to sell its

White Rain

product line to an undisclosed party. Gillette would not reveal the value of the deal but said it would make an announcement by March 31. The line, which brought in about $100 million in revenue last year, includes products such as




. Gillette retained investment bankers to considered options for its stationery and


hair care, household products and personal diagnostics lines.

In other postclose news:


Pioneer Group


said it has retained

Merrill Lynch


Salomon Smith Barney

to considered strategic options for the company that could lead to a possible sale.



named Samuel Hubbard Jr. president and CEO. He replaces the retired John Wehle Jr., who remains chairman. Hubbard had been president and COO.

For a look into this evening's after-hours trading action, please check out's

The Night Watch.

Bond Focus: Rallying Stocks a Killjoy in Bondland


Elizabeth Roy

Senior Writer

3/3/00 4:19 PM ET

The weaker-than-expected February

employment report

triggered a rally in Treasuries that benefited the shortest-maturity issues most.

The action reflected the view that if future employment reports look anything like

last month's, the


won't have to hike the

fed funds rate

, a short-term rate, as much or as quickly as previously believed.

The report initially sent all Treasury prices higher, but the gains moderated over the course of the day as stock proxies moved inexorably higher.

The exuberance in stocks "makes it tough to get any sizable reaction in Treasuries,"

Credit Suisse First Boston

senior market economist Mike Cloherty said. "It really is amazing how bond trading is sort of a second derivative of equity trading lately."

Rising stock prices have dogged the bond market because of the connection between the stock market and the rapid pace of consumer spending, which is fueling economic growth at what the Fed has called an unsustainable pace.

The benchmark 10-year Treasury note, which rose as much as 10/32 in the 40 minutes after the 8:30 a.m. EST release of the jobs report, ended up just 1/32 at 100 27/32, trimming its yield a fraction of a basis point to 6.383%. The two-year note, which spiked 6/32 at 8:30 a.m., ended up 2/32 at 100, cutting its yield 3.5 basis points to 6.499%.

The 30-year bond, the erstwhile benchmark whose price has been driven up by government plans to reduce the supply of long-maturity debt, finished up 3/32 at 101 22/32, trimming its yield a fraction of a basis point to 6.126%.

At the

Chicago Board of Trade

, the June

Treasury futures contract closed up 13/32 at 95 15/32.

The February jobs report was positive for the bond market in all major respects. The economy's weaker-than-expected performance was seen as taking pressure off the Fed to hike the fed funds rate aggressively in the months ahead.

Nonfarm payrolls

, the report's most closely watched component, expanded by just 43,000 in February. Economists polled by


had forecast a gain of 206,000.

At the same time, the

unemployment rate

edged up from January's 30-year low of 4.0% to 4.1%. A slackening of the labor market is positive because it reduces the threat of wage inflation.

Speaking of which,

average hourly earnings

rose 0.3%, in line with expectations. At 3.6%, the year-on-year pace of wage growth remains lower than it's been for most of the last three years.

But while the results were unambiguously positive for the markets, they don't change the likely outcome of the

Federal Open Market Committee's

March 21 meeting, which is a hike in the fed funds rate from 5.75% to 6%, market analysts said. At the CBOT, the

fed funds futures

continue to fully discount the move.

Rather, the report raises the hope that over the course of the next several months, the Fed won't hike rates as many times or as quickly as some fear it might.

"This far from puts an end to the tightening, but if we get more data like this is could alter the pace," Cloherty said. The February data "clearly tell you the extraordinary numbers of the previous two months were overstating matters." The economy added 384,000 jobs in January and 309,000 in December.

Economic Indicators

Also today,

factory orders

were reported to have dropped 1.1% in January, dropping the year-on-year growth rate to 7.1% from 10.6%. The factory orders report revised the January drop in

durable goods orders

to 1.9% from 1.3%. The ex-transportation drop was revised from 0.5% to 1.2%.


Consumer Sentiment Index

for February was revised to 111.3, down from a record high of 112 in January.

And the

Purchasing Managers' Non-Manufacturing Index

rose to 58 in February from 52.5 in January.

Currency and Commodities

The dollar fell against the yen and rose against the euro. It was worth 107.67 yen, down from 107.78 yesterday. The euro was worth $0.9610, down from $0.9642 yesterday. For more on currencies, please take a look at



Currency Watch column.

Crude oil for April delivery at the

New York Mercantile Exchange

fell to $31.45 a barrel from $31.69 yesterday.


Bridge Commodity Research Bureau Index

rose to 213.51 from 212.12 yesterday.

Gold for April delivery at the


rose to $290.30 an ounce from $289.70 yesterday.


Copyright 2000,