TheStreet.com's WEEKEND BULLETIN
April 1, 2000
Market Data as of Close, 3/31/00:
o Dow Jones Industrial Average: 10,921.92 down 58.33, -0.53%
o Nasdaq Composite Index: 4,572.83 up 114.94, 2.58%
o S&P 500: 1,498.58 up 10.66, 0.72%
o TSC Internet: 1,107.07 up 11.73, 1.07%
o Russell 2000: 539.09 up 7.52, 1.41%
o 30-Year Treasury: 105 25/32 up 17/32, yield 5.846%
For the week:
o Dow Jones Industrial Average: down 1.7%
o Nasdaq Composite Index: down 7.9
o S&P 500: down 1.9%
o TSC Internet: down 13%
o Russell 2000: down 6.1%
Companies in Today's Bulletin:
Veritas Software (VRTS:Nasdaq)
Zions Bancorp (ZION:Nasdaq)
First Security (FSCO:Nasdaq)
In Today's Bulletin:
o The Coming Week: Better Than Hell
o Wrong! Rear Echelon Revelations: A Vicious Veritas Play
o Evening Update: Zions Bancorp's Shareholders Reject Merger Bid
o Bond Focus: Treasuries Keep Much of Their Morning Loot
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Also on TheStreet.com:
Silicon Babylon: Wireless Heavyweight InfoSpace Disavows Diversinet Relationship
This could be another blow for Diversinet, a mobile Internet security company.
Internet: The Unbearable Lightness of B2B-ing: Dot-Com Crossover Is All the Rage
Many companies are simply going where the money appears to be, for now.
Banking: Conseco Craters as Writedown Spurs Sale Talk
The announcement raises questions on the future of the firm and its management.
Internet: Excite@Home Plans a Cheaper Broadband Service
In the fourth quarter, Excite will test-market a service that seeks to compete with AOL.
The Coming Week: Better Than Hell
3/31/00 7:12 PM ET
When Wall Street filled out its last ticket, turned off the screen and pushed its chair back under the desk on Friday, it was in no mood for reflecting on the week that had been, with its crushing selling in anything tech.
It was in no mood for thinking about how fund managers had raced to get recently fallen highfliers off their books before quarter end, nor was it in the mood for trying to figure out what role margin calls may have played in the downturn.
The only thing it was in the mood for, really, was a good stiff drink.
And there we'll leave it, sitting at the bar at the Whitehorse Tavern, playing "Lyin' Eyes" over and over again on the jukebox and waiting for its friends from
, who promised they would show up.
The coming week will probably be better. Many weak holders -- investors who were piling into the market for a quick buck -- have been shaken out, and all those fund managers who were busy selling to spruce up their end-of-quarter statements will be looking to put new cash to work.
But though things may settle, it is probably a mistake to think that things will go back to the way they were before. The latest shakeout suggests that the days of indiscriminate gains in hot sectors are probably over. The market's focus has changed.
Thursday, when the
fell 4% while the
New York Stock Exchange Composite
only slipped 0.6%, a crucial day for John Bollinger, president of
"There are two ways a market can go down," he explained. "Money can be withdrawn or money can be rotated. Money came out of the Nasdaq stocks, but it didn't go to the sidelines. That rotation was enough to prevent the decline from spreading beyond the Nasdaq."
Bollinger laid a lot of the blame for the selloff on portfolio managers who, he said "didn't want to show how much they relied on high-tech and volatile issues, so they bought quality growth." He reckons that move into quality growth -- companies that are growing quickly, but in a more quantifiable manner (e.g. they have
) -- will probably persist.
Bollinger is not alone in thinking this.
"You basically had a market that has gone through kind of a blowoff in tech stocks," said Rao Chalasani, chief investment strategist at
First Union Securities
. "At the same time, you're looking at the discovery of the Old Economy stocks."
Chalasani thinks there are some choppy days ahead, but if the Nasdaq can hold recent levels it can stabilize and move up -- but not in the same manner that it did in the fourth quarter and early this year. "If the Nasdaq makes a new high, it will be based on higher quality stocks going up, not the whole market going up," he said.
The economic event of the week will probably be the March
, but it will be hard to make sense of. The problem is that starting in March, the U.S. Census goes on a hiring spree, and that can wreak havoc with the numbers.
"We're looking for a headline of 400,000 jobs added, but for 110,000 of those to be predictions," said Mike Cloherty, senior economist at
Credit Suisse First Boston
. Not that he is brimming with confidence in this forecast.
"Nobody has a good grip on when these people hit the data," he said. "The Street forecasts are all over the place." He's not kidding.
Morgan Stanley Dean Witter
reckons that 300,000 jobs were added.
Salomon Smith Barney
, an incredible 625,000.
Wrong! Rear Echelon Revelations: A Vicious Veritas Play
James J. Cramer
3/31/00 4:20 PM ET
We played the stupid
-add game on
and we got our head handed to us.
We bought into the idea that there would be a lot to buy and we forgot that there would be a lot to sell -- including all of those people locking in a risk-free short .
It was a huge bummer ending to an otherwise well-navigated week, sort of like tripping right at the finish line.
We thought we had a
, one of those massive blow-offs to the upside, and we didn't. We took a loss at the bell and moved on for all but a handful.
It was instructive -- like the way a noose is an instructive way to measure the neck size of a shirt.
Don't kick the chair on your way out.
James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of publication, his fund was long Yahoo! and Veritas. 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: Zions Bancorp's Shareholders Reject Merger Bid
3/31/00 6:50 PM ET
, as expected, turned down a proposal to merge with
, Utah's largest bank, whose stock price has fallen sharply since the deal was announced last June.
Offerings and stock actions
said it revised its Dutch auction tender offer for up to 12 million, or 9.1% of its outstanding shares.
Bond Focus: Treasuries Keep Much of Their Morning Loot
3/31/00 4:46 PM ET
Treasury prices surged Friday morning as the major stock proxies struggled, then gradually pared their gains as stocks clawed their way into positive territory.
Still, intermediate- and long-term Treasuries ended with substantial gains, and their yields dropped to new lows for the year. It was the fifth consecutive session in which intermediate- and long-term Treasury prices rose.
Today's action was driven by a combination of things, market participants said: Fear of big trouble in stocks and riskier bonds, a situation in which Treasuries should perform extremely well. Political issues dogging the agency sector of the riskier bond market. The shrinking supply of Treasury issues. And still-low inflation, which allows investors to buy long-maturity debt instruments without fear that their value will sink.
And so, Treasury prices keep rising, even as the economy keeps showing signs of strength, dumbfounding many traders.
"I'm just watching it go higher. It's killing me here," one snapped around midsession.
Against a backdrop of second- and third-tier economic data, the benchmark 10-year Treasury note, which traded up as much as 11/32 when stocks bottomed shortly before noon, ended up 7/32 at 103 17/32, dropping its yield 2.9 basis points to 6.019%, the lowest since Nov. 16. The 30-year Treasury bond, which gained as much as 21/32 earlier, ended 17/32 higher at 105 25/32, lowering its yield 3.7 basis points to 5.839%, the lowest since May 28.
But the two-year Treasury note remained stuck in place, at a yield of 6.483%, as it typically does during periods when the
is in the process of raising the
fed funds rate
, the short-term interest rate it controls.
Chicago Board of Trade
, the June
Treasury futures contract gained 16/32 to 97 22/32.
"Treasuries are being looked at much like they were in the latter part of 1998, as an insurance policy on any type of equity correction or credit event," said David Connors, head of government bond trading at
Credit Suisse First Boston
. "The idea is, Treasuries are still the security that investors will flee to in the event they're getting out of stocks or credit products."
Combine that dynamic with the
plans to reduce the supply of Treasury securities through lessened new issuance and buybacks, and low inflation, and "everything is conspiring to lift Treasuries right now," Connors added.
And he doesn't see the conspiracy giving up the ghost. "We're not at a level at which people are balking," he said. "If the bond rallies another 50 basis points, maybe we would start hitting a limit."
Still, from moment to moment, the Treasury market has been responding most directly to stock prices. "It's very well bid, but starting to feel tired as the equity market is recovering,"
Banc One Capital Markets
trader Richard Bodkin said around midday.
It certainly isn't responding to evidence that the economy is slowing, since there isn't much of that. And because the riskier bond markets are under pressure, leaving mortgage and corporate bond rates at relatively high levels, the move in Treasuries won't have a stimulative effect on the economy.
"It's not going to have an economic impact, nor does it reflect one," said Jim Glassman, senior U.S. economist at
. "It doesn't contradict what the economic factors are saying because the market is already priced for Fed tightening. Strong news isn't news. It just means there are other things going on."
In economic news, the
Chicago Purchasing Managers' Index
advanced for the third month in a row in March, rising to 57.4 from 56.7. But it remains well below its April 1999 peak of 63.3. A sub-index measuring prices paid by Chicago-area manufacturers rose to 74.2 from 68.9.
Another manufacturing indicator dipped in March. The
APICS Business Outlook Index
fell to 49.8 from 53.5.
Manwhile, spending grew at a faster pace than incomes in February, common occurrence lately.
rose 0.4% while personal consumption expenditures rose 1.0%.
slipped 0.8% in February, but the year-on-year pace rose to 8.3% from 6.8%. The report revised the February change in
durable goods orders
from -2.3% to -2.7%, and the change ex-transportation durable goods orders from -0.2% to -0.7%.
Consumer Sentiment Index
fell to 107.1 in March from 111.3 in February. It reached an all-time high of 112 in January.
Currency and Commodities
The dollar sank against the yen and gained against the euro. It lately was worth 102.77 yen, down from 105.39. The euro was worth $0.9555, down from $0.9609. For more on currencies, please take a look at
Currency Watch column.
Crude oil for May delivery at the
New York Mercantile Exchange
rose to $26.85 a barrel from $26.70.
Bridge Commodity Research Bureau Index
rose to 214.31 from 211.46.
Gold for April delivery at the
rose to $281.40 an ounce from $279.10.
TO VIEW TSC'S ECONOMIC DATABANK, SEE:
Chat with John J. Edwards on AOL's MarketTalk, hosted by Sage Monday, April 3 at 3:30 p.m. EDT. (Keyword: AOL Live)
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