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April 8, 2000

Market Data as of Close, 4/7/00:

o Dow Jones Industrial Average: 11,111.48 down 2.79, -0.03%

o Nasdaq Composite Index: 4,446.45 up 178.89, 4.19%

o S&P 500: 1,516.35 up 15.01, 1.00%

o TSC Internet: 1,052.57 up 37.14, 3.66%

o Russell 2000: 542.99 up 10.49, 1.97%

o 30-Year Treasury: 107 24/32 up 1 08/32, yield 5.708%

For the week:

o Dow Jones Industrial Average: up, 1.7%

o Nasdaq Composite Index: down, 2.8%

o S&P 500: up, 1.2%

o TSC Internet: down, 4.9%

o Russell 2000: up, 0.7%

TheStreet Recommends

Companies in Today's Bulletin:

Intel (INTC:Nasdaq)

Cisco (CSCO:Nasdaq)

Oracle (ORCL:Nasdaq)

Sun Microsystems (SUNW:Nasdaq)

In Today's Bulletin:

o Market Roundup: 'You Must Buy the Dips': Traders Thunder Into Tech Stocks
o Wrong! Rear Echelon Revelations: A Wee Ramp, but a Ramp Nonetheless
o Evening Update: Hewlett-Packard Sets Terms of Agilent Spinoff
o Bond Focus: Mania for Treasuries Lives Another Day

Also on

Biotech/Pharmaceuticals: Healtheon Rallies, but Not Everyone Cheers

Some investors say a big stock buy doesn't answer fundamental questions about the business.

Internet: CBS Belatedly Lurches Toward a Bigger Web Presence

The Tiffany Network hires away a Sony executive.

Market Features: Strong Earnings Coming, but Big Rallies May Not Follow

Companies that knock the cover off the earnings ball will get a boost, but the market is unlikely to surge overall.

Roque's Gallery: It Ain't Over, Folks

The action's a lot better than earlier in the week, but several signs point to more trouble ahead.

Market Roundup: 'You Must Buy the Dips': Traders Thunder Into Tech Stocks


Aaron L. Task

Senior Writer

4/7/00 4:56 PM ET

SAN FRANCISCO -- Continuing the comeback from Tuesday's near

wipeout, tech proxies posted big gains today as investors rode a wave of renewed faith and confidence in their favorite group.

But many market players were obviously thinking about being at the beach (or on the links), as trading volumes were relatively light. Weakness -- or merely tepid gains -- outside of tech also kicked sand in the face of some of the excitement.


employment report


stronger than expected, but not egregiously so and not nearly as strong as some feared. The fact extenuating circumstances accounted for nearly half of the 416,000 nonfarm payrolls produced in March assuaged concerns about the strength in the labor market. The consensus estimate was for a headline figure of 375,000. The unemployment rate held steady at 4.1% while average hourly earnings climbed 0.4%.

In addition to the relatively benign jobs data, an

earnings warning by

Tommy Hilfinger


and subsequent drubbing to its stock -- which fell 32% -- further convinced investors of the merits of tech stock purchases.


Nasdaq Composite Index

surged 178.89, or 4.2%, to 4446.45 as bellwethers such as


(INTC) - Get Intel Corporation Report



(CSCO) - Get Cisco Systems, Inc. Report



(ORCL) - Get Oracle Corporation Report


Sun Microsystems

(SUNW) - Get Sunworks, Inc. Report

flexed their market-cap muscles.



(DELL) - Get Dell Technologies Inc Class C Report

rose 7.2% after several brokerages -- including

Merrill Lynch


Salomon Smith Barney

-- made cautiously positive comments about the firm's plans to focus on the server market.

New York Stock Exchange

-traded tech favorites such as









also rallied sharply.


Nasdaq 100

rallied 5% while the

Morgan Stanley High-Tech 35

gained 3.8%. The

Philadelphia Stock Exchange Semiconductor Index

romped ahead by 5.8% as chip and equipment makers such as

National Semiconductor



Novellus Systems


posted sharp gains.

Tech leaders got "oversold" earlier this week, said Phil Orlando, chief investment officer at

Value Line

. That sense, plus expectations they will report stellar first-quarter earnings, proved to be a "strong elixir" and "too compelling a combo for investors to ignore."

Additionally, "when you stripped out exogenous variables" -- such as the five-week reporting period and hiring of consensus workers -- the employment report "told us the economy is still doing well but not running excessively fast and we don't have an inflation problem," Orlando said.

Further adding to the good tidings were comments by

Federal Reserve


Alan Greenspan

, who delivered the latest in a series of testimonials to the inflation-dampening impact of technology-enhanced productivity in a

speech before the

National Technology Forum

in St. Louis. Internet Sector

index rose 37.59, or 3.7%, to 1053.02 as Internet favorites posted solid gains.

Outside the DOT, Internet incubator

Safeguard Scientific

(SFE) - Get Safeguard Scientifics, Inc. Report

rose 17.3% after

Prudential Securities

upped its recommendation and

Lehman Brothers

initiated coverage with a buy.

Other big gainers included 1999 tech darlings such as


(QCOM) - Get Qualcomm Inc Report


JDS Uniphase


as well as once -- and future? -- highfliers such as

Baltimore Technologies




(INSP) - Get Inspire Medical Systems, Inc. Report




In IPO action,

Saba Software


rose 124%.

The End of the Decline

While some viewed the tech sector's comeback with skepticism, Scott Marcouiller, market analyst at

A.G. Edwards

in St. Louis, believes the worst has passed.

"Tuesday was so climactic, we thought that was the peak in downside intensity and do not see the averages getting anywhere close to those lows on any sort of pullback," he said. "There's a pullback out there, but the more people saying we have to retest or make a modest new low -- I'm taking that as a positive contrarian indicator that we won't."

Marcouiller noted the Nasdaq never retested its lows after big swoons in October 1999 and 1998, or the spring of 1998.

"I think this

comeback will be a little more tempered because with each one the valuations levels are higher," he said. "But we're frankly looking to be back at Nasdaq 5000 in a matter of weeks vs. months."

It could be a matter of days if the momentum demonstrated today continues next week.

Meanwhile, the

Dow Jones Industrial Average

fell 2.79 to 11,111.48 after trading as high as 11,192.45.

Overshadowing strength in the Dow's tech components was weakness almost everywhere else, notably in

J.P. Morgan

(JPM) - Get JPMorgan Chase & Co. Report



(AA) - Get Alcoa Corporation Report



(XOM) - Get Exxon Mobil Corporation Report



S&P 500

was similarly restrained by weakness in industry groups such as financials, cyclicals and transports but got a bigger boost from tech to close up a solid 15.01, or 1%, to 1516.35. The

Russell 2000

leapt 10.43, or 2%, to 542.93.

Too Pooped to Pop


New York Stock Exchange

trading, 892.8 million shares were exchanged while advancers led declining stocks 1,510 to 1,394. In

Nasdaq Stock Market

action 1.5 billion shares traded while gainers led 2,573 to 1,585. New 52-week highs bested new lows 53 to 31 on the Big Board while new lows led 55 to 45 in over-the-counter trading.

In the wake of what one trader called a "brutal week," market players were loath to hang around Friday afternoon and discuss the action, and whether it suggests tech stocks will again benefit at the expense of seemingly everything else.

Observing the huge gain in the NDX, "it's like this week never existed," another market player observed: "You must buy the dips."

Among other indices, the

Dow Jones Transportation Average

fell 19.60, or 0.7%, to 2827.72; the

Dow Jones Utility Average

rose 0.43, or 0.1%, to 293.08; and the

American Stock Exchange Composite Index

climbed 8.89, or 0.9%, to 988.69.

The price of the 10-year Treasury note rose 20/32 to 104 25/32, its yield declining to 5.86%.

For the week, the Dow rose 1.7%; the S&P 500 gained 1.2%; the Nasdaq Comp lost 2.8%; the Russell 2000 added 0.7%; the DOT tumbled 4.9%; the Dow transports rose 2.3%; the Dow utilities average gained 0.4%; and the Amex Composite shed 1.6%.

For coverage of today's top stocks in the news, see the Company Report, published separately


Wrong! Rear Echelon Revelations: A Wee Ramp, but a Ramp Nonetheless


James J. Cramer

4/7/00 4:11 PM ET

It wasn't much of a ramp. It was more of a bump. Or a hillock. Maybe a promontory. Or a switchback. But

Todd Harrison


correctly call the direction of the



Now we look like milquetoasts for not backing the T-shirted Todd-o with his omniscient bet. He will probably now insist on doing his

Barton Biggs

imitation for the next hour and we will all have to feign laughter cause he has the hot hand.

In the meantime, we are thinking that next week will be another week of recovery as earnings season begins in earnest. We aren't worried about the first five days, when the organized companies tend to report.

Don't forget to call in to the

Fox News Channel

show tonight to ask me questions: 888-TELL-FOX. And please, don't inquire about penny stocks. You don't want me slamming you on a tired Friday after a fried week. I will show no mercy.

James J. Cramer is manager of a hedge fund and co-founder of At time of publication, his fund had no positions in any stocks mentioned. 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: Hewlett-Packard Sets Terms of Agilent Spinoff


Eileen Kinsella

Staff Reporter

4/7/00 7:09 PM ET



said it set a record date of May 2 for its spinoff to shareholders of its 84% stake in


(A) - Get Agilent Technologies, Inc. Report

to shareholders. The company said that 0.37 shares of Agilent will be distributed on June 2 for each H-P share

In other postclose news:

Earnings/revenue reports and previews

Alliant Energy

(LNT) - Get Alliant Energy Corp Report

said it will take a noncash charge of $25 million, or 31 cents a share, against its first-quarter net. The company said the charge will be taken to recognize an increase in its obligation relating to certain 30-year exchangeable senior notes it issued in February. The charge will not impact earnings from operations.

Mergers, acquisitions and joint ventures

Lottery systems operator



said it terminated its proposed $43 million acquisition of



after On-Point restated its fiscal 1997 and 1998 earnings. On-Point makes vending machines that sell lottery tickets, phone cards and other products.

Bond Focus: Mania for Treasuries Lives Another Day


Elizabeth Roy

Senior Writer

4/7/00 4:53 PM ET

Traders and analysts watched, dumbfounded, today, as the 30-year Treasury bond rocketed to a new high for the year, propelled by little more than unconfirmed rumors that the issue is on the verge of extinction.

Intermediate-maturity issues also posted nice gains, and those were no more comprehensible.

The March

employment report, released this morning, wasn't overly bearish. But nor was it bullish.

Fed Chairman

Alan Greenspan gave a

speech, but it was a cut-and-paste job taken from speeches given, most recently, on

March 6,

March 22, and


Still, there was frenzied buying of all but the shortest-maturity Treasuries, whose yields are closely linked to the

fed funds rate, which stands at 6% and is widely expected to rise to 6.25% when the Fed next meets on May 16.

"It makes no sense," said David Ging, Treasury market strategist at

Donaldson Lufkin & Jenrette

. "Who wants to buy

five-year Treasury notes five basis points through what's going to be the new fed funds rate in May? Who wants to buy twos 11 basis points above what's going to be the new funds rate?"

"We can't figure it out to save our lives," said Mark Mahoney, Treasury market strategist at

Warburg Dillon Read


The benchmark 10-year Treasury note was up 16/32 at 104 24/32 in late trading, trimming its yield 6.6 basis points to 5.857%, the lowest since Sept. 27. The five-year note gained 4/32 to 98 24/43, dropping its yield 3.1 basis points to 6.190%, well off its best levels of the year. The two-year note added 1/32 to 100 8/32, lowering its yield 1.8 basis points to 6.362%, also off its lows for the year.

And the 30-year bond soared 1 8/32 to 107 26/32, dropping its yield 8.4 basis points to 5.703%, a level it hasn't closed below since May 5, 1999. At the

Chicago Board of Trade

, the June

Treasury futures contract gained 26/32 to 99 11/32.

The bond's outperformance pushed its yield even further below the two-year note's yield. The bond's yield ended the day 65.9 basis points lower than the two-year note's, a degree of yield-curve inversion that hasn't been seen since March 1989.

The initial rush higher, which started a few minutes before 9 a.m. EDT, was fueled by rumors that one influential think-tank or another was promulgating the view that long-maturity Treasuries, already in short supply, would soon become even scarcer.

The supply of long-term Treasuries has been shrinking because the

Treasury Department

has simultaneously cut back on new issuance, and embarked on a program to use surplus funds to buy back outstanding bonds. One of the rumors that circulated this morning had a think tank suggesting that the buyback program would be accelerated. Another had it saying that new issuance of 30-year bonds would cease.

In wire reports, a Treasury spokesman declined comment on the rumors, but added that it is the department's longstanding policy to inform the markets in advance of major changes in its financing plans.

Still, most of the gains stuck.

Christopher Low, chief economist at

Tennessee Capital Markets

, sees two major forces at work. The first is continued fallout from recent developments affecting agency securities, bonds and notes issued by entities like

Fannie Mae



Freddie Mac


. Sellers of agency securities historically have presented them as first cousins to Treasuries.

But in recent weeks, federal officials have been characterizing the relationship as more distant, and that has hurt the prices of agency securities. To the point, Low noted, where a 10-year agency issue from Fannie Mae now offers a yield comparable to that of 10-year Bulgarian government bonds, in the neighborhood of 8%. Meanwhile, Treasuries are gaining at agencies' expense, thanks to "buyers who are committed to buying risk-free paper."

The second major force is momentum, Low says. "People are buying Treasuries for the same reason they buy a stock that doesn't have and has never had earnings -- because they think they can sell it to someone else at a higher price."

Economic Indicators

The March employment report was neither bullish nor bearish for the bond market. "It was a mixed bag," DLJ's Ging said. "Net-net, it was in line with expectations."

Nonfarm payrolls grew significantly more than expected, rising by 416,000 vs. a consensus forecast that they would rise by 376,000. But the

Bureau of Labor Statistics

took pains to point out that special factors including temporary hiring of Census workers and an unusually long time lag between the February and March survey periods inflated the number.

Average hourly earnings rose 0.4%, a tenth more than expected. But the annual pace actually slowed to 3.7% from 3.8%.

More importantly, the unemployment rate didn't drop, as had been expected. It remained at 4.1%. A tightening labor market increases the likelihood of outsized wage and price increases in the future.

But it's not clear the Treasury market action would have been much different even if the jobs report had been uniformly bearish, Warburg's Mahoney said. "When was the last time one of the numbers actually mattered?" he said. "We've been getting bearish data for the last three months, and the market just keeps going up."

Currency and Commodities

The dollar gained against the yen and the euro. It lately was worth 105.45 yen, up from 104.76. The euro was worth $0.9543, down from $0.9577. For more on currencies, please take a look at



Currency Watch column.

Crude oil for May delivery at the

New York Mercantile Exchange

fell sharply to $24.90 a barrel, nearly a three-month low, from $25.69.


Bridge Commodity Research Bureau Index

fell to 209.84 from 210.72.

Gold for June delivery at the


fell to $282.50 an ounce from $282.70.


Chat with John J. Edwards III on AOL's MarketTalk Monday, April 10 at 3:30 p.m. EDT. MarketTalk is hosted by Sage Online. (Keyword: PF Live).

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