The stock market continues to wallow in the muck of the bond market's festering wounds and a general malaise among buyers (and would-be buyers). Major indices again struggled to find equilibrium but enjoyed a bit of a bounce toward the close, with broader averages faring best.
Yesterday's postclose profit warning by
and its subsequent statement that its problems are
3Com-specific kept pressure on tech averages for much of the session. But some positive analyst commentary regarding
and strength among fellow tech bellwethers
reinvigorated the sector (for one afternoon, at least).
Nasdaq Composite Index
rose as high as 2280.79 early on but soon reverted to its recent slumping form. The tech-bedraggled index fell as low as 2239.03 before pushing higher toward the close to finish up 6.17, or 0.3%, to 2265.20.
3Com led big-cap decliners again, falling 9%. But Intel rose 4.5%, Dell gained 3.7% and Sun rose 3.5% to offset the damage; the
With Intel and
leading the way, the
Philadelphia Stock Exchange Semiconductor Index
Morgan Stanley Dean Witter
reiterated its strong buy rating on Intel while
BancBoston Robertson Stephens
made positive comments about the chip giant. Morgan also upped ratings on three analog chip makers --
Maxim Integrated Products
The sector was further enlivened by
The Wall Street Journal's
is preparing a full-blown proxy fight if
won't enter friendly negotiations.
The chip and equipment group's rebound was offset by a modest reversal for Internet stocks.
TheStreet.com Internet Sector
index fell 6.63, or 1.3%, to 521.13 while
TheStreet.com E-Commerce Index
slid 0.91, or 0.9%, to 95.99.
Dow Jones Industrial Average
, meanwhile, was stymied by renewed bond market weakness and the equity market's general malaise. The Dow rose as high as 9337 in its initial move but slipped as low as 9221.82, around 3 p.m. EST. The blue-chip proxy then slowly began climbing back toward break-even, finishing down 21.73, or 0.2%, to 9275.88.
was the Dow's biggest negative influence while
closed up 2.20, or 0.2%, to 1227.70, after trading as high as 1231.69 and as low as 1218.57. Small-caps could not stretch their recent run of outperformance; the
closed down 2.48, or 0.6%, to 391.95.
"I don't know what the reversal was, but I think there was some buy programs at the close," said Jim Volk, co-director of institutional trading at
in Portland, Ore. "There was no real news. But big players are on the sidelines. You can see that by the very light volume."
Volk said the news items trades were focused on -- "spooked by," actually -- were Japan's comments about reflating itself, plus
testimony that bond yields would go higher if Social Security funds were invested in the equity market, because funds would be siphoned away from fixed-income.
Regardless of the modest comeback, major averages are "precariously holding above short-term resistance levels," the trader observed. "People are waiting to see if there's any conviction or if they break down from here."
Volk's desk had "constant order flow," but "it's been considerably quiet over the last week-and-a-half," he said. "And it's not just here. I'm talking to major research houses and other regional firms that are pretty quiet, too."
In NYSE trading, 751.7 million shares traded while declining stocks led advancers 1,635 to 1,303. In
Nasdaq Stock Market
activity, 869.1 million shares were exchanged while losers led 2,332 to 1,557. New 52-week lows led new highs 95 to 25 on the Big Board and by 104 to 31 in over-the-counter trading.
Every Day ... Churn, Churn, Churn
The recent activity in major averages may not phase the average investor, but many market players say tension is building.
"Very simply, it looks like interest rates are going higher based on the fact the utility average broke down in January, and that is the greatest forecaster of higher interest rates," said Gary Kaltbaum, chief technical analyst at
J.W. Genesis Securities
in Boca Raton, Fla. "The market has to deal with the fact interest rates are going to stay up. People are saying we're going to come right back down, but you don't go from 5% to 5.6% without knowing there's a significant change."
Today, the price of the 30-year Treasury bond fell 1 2/32 to 93 20/32, its yield rising to 5.69%, its highest level since July 31.
A long-bond yield of 6% "looks like a lock," Kaltbaum continued. "Without a doubt that can affect the market. I'm surprised the market has held up as well as it had. It's amazing, given what's happening" with both tech stocks and bonds.
The fact market sentiment is turning more negative could prove a saving grace, he said, "but we're on the cusp. If these levels don't hold, it could be very nasty and the odds favor you don't hold."
Specifically, 1210, 9085 and 388 represent key support levels for the S&P, the Dow and the Russell 2000, respectively, the technician said. Because of its "parabolic move up" off the October lows, there is no comparative figure for the Nasdaq, he said.
"The next few days are going to be very important. This looks just like July again except interest rates are going up, not down, and that could put the nail in the coffin," Kaltbaum said, citing a litany of technical woes, including market breadth returning to lows of last August/September. "We're getting all the same activity as then, the average stock was going down while the big indices held up. Then one day, they went 'boom.'"
Do you hear something ticking?
Among other indices, the
Dow Jones Transportation Average
fell 30.37, or 0.9%, to 3248.69; the
Dow Jones Utility Average
rose 2.25, or 0.8%, to 292.97; and the
American Stock Exchange Composite Index
shed 4.76, or 0.7%, to 694.45.
Elsewhere in North American equities, the
Toronto Stock Exchange 300
fell 44.85, or 0.7%, to 6180.34 and the
Mexican Stock Exchange IPC Index
slumped 59.27, or 1.4%, to 4127.38.
Wednesday's Company Report
Earnings estimates from First Call; new highs and lows on a closing basis unless otherwise specified. Earnings reported on a diluted basis unless otherwise specified.
As noted above, 3Com, maker of the
handheld computer, stumbled down 2 7/16, or 9.1%, to 24 9/16, off its session low of 22 3/4, after
late yesterday warning it sees third-quarter operating earnings of 23 cents a share because of seasonal weakness and a slowdown in U.S. and Latin American markets. The 26-analyst outlook called for the network equipment maker to earn 36 cents.
Credit Suisse First Boston
downgraded the stock to buy from strong buy, Morgan Stanley Dean Witter lowered it to neutral from outperform and
BT Alex. Brown
cut it to market perform from buy. Electronics contract manufacturer
, of whom 3Com is a customer, lowered 1 to 30 3/4 in sympathy.
Mergers, acquisitions and joint ventures
hopped 2 1/4, or 10.3%, to 24 1/8 after agreeing with
to develop telephony and Internet server technologies. Dialogic rose 1 7/8, or 5.6%, to 35 13/16.
shot up 4 1/16, or 26.2%, to an all-time high of 19 11/16 after agreeing to be acquired by Canada's
in a stock deal valued at $400 million. Amdocs skidded 3 5/8, or 14%, to 22 3/16.
Concentra Managed Care
soared 3 3/16, or 27.7%, to 14 11/16 after agreeing to a merge with privately owned
. The roughly $1.1 billion deal includes $328 million of debt assumption and the right of all but 7% of Concentra's shareholders to receive $16.50 cash a share.
slipped 3 3/16, or 12.3%, to 22 3/4 after confirming it is buying
Nine West Group
for $885 million in cash and stock, plus $515 million in debt assumption. Morgan Stanley Dean Witter cut its recommendation on Jones Apparel to outperform from strong buy. Nine West kicked up 1/16 to 22 7/8.
expanded 2 5/8, or 5.9%, to 47 after
The New York Times
reported it is in merger negotiations with Dow member
. DuPont lost 1 1/16 to an annual low of 50 1/4.
VLSI grew 3/4 to 17 3/8 after
The Wall Street Journal
reported Philips Electronics is preparing a full-blown proxy fight if the chipmaker won't enter friendly negotiations. Philips, which added 3/16 to 68 1/2, made a $17 a share offer for VLSI Friday.
Earnings/revenue reports and previews
vaulted 6 3/8, or 39.5%, to 22 1/2 after forecasting fourth-quarter revenue of $33 million, up 307% from the year-ago period and up 40% vs. the third quarter.
slipped 3/16 to 17 1/2 even after recording fourth-quarter earnings of 65 cents a share, 4 cents ahead of the 16-analyst view and above the year-ago 50 cents.
tumbled 3 11/16, or 17.9%, to 16 15/16 after posting first-quarter earnings of 40 cents, up from the year-ago 37 cents but shy of the three-analyst view of 42 cents.
declined 5/8, or 21.7%, to 2 3/8 after recording a fourth-quarter loss of 12 cents a share, including one-time items. The three-analyst estimate called for earnings of 6 cents vs. the year-ago profit of a dime. The company also said it will restate downward earnings for the first three quarters of 1998 to correct errors identified during the year-end audit process.
plunged 5, or 35.1%, to an annual low of 9 5/16 after last night posting fourth-quarter earnings 12 cents a share below year-ago levels. Also contributing to investors' concerns was Modtech's lack of information about the financial terms of its recent merger with
Pacific Gateway Exchange
lifted 2 11/16, or 12.1%, to 24 15/16 after reporting fourth-quarter earnings of 25 cents a share, a penny ahead of the 11-analyst consensus and up from 19 cents a year ago.
advanced 2 1/16, or 6.9%, to 32 1/16 after posting fourth-quarter profits of 36 cents a share, 2 cents ahead of the 13-analyst view and up from 31 cents a year ago. BT Alex. Brown upped its recommendation to strong buy from buy.
sliced off 4 13/16, or 22.6%, to an annual low of 16 1/2 after it reported second-quarter earnings of 15 cents a share, 4 cents short of the eight-analyst outlook and below the year-ago 18 cents. The company said it sees full-year earnings about 10% to 15% below last year's 92 cents a share and that it will take an unspecified third-quarter restructuring charge. Analysts called for 1999 earnings of $1.02.
gave up 4 3/4, or 8.6%, to 50 5/8 after reporting its February same-store sales fell 4.5%. Most retailers will post sales figures tomorrow.
plummeted 4 5/16, or 34.9%, to an all-time low of 8 1/8 after warning its first-quarter and full-year earnings will not meet expectations. The 10-analyst views are currently for earnings of 35 a share in the first quarter and $1.89 a share for all of 1999.
cut its recommendation to neutral from buy.
dwindled 1 5/16, or 24.7%, to an all-time low of 4 1/8 after reporting a fourth-quarter loss of $1.08 a share, well in excess of the lone-analyst prediction of a 28 cent shortfall and reversing a profit of 7 cents a share a year prior.
slid 3 7/8, or 6.8%, to 53 1/2 after reporting fourth-quarter earnings of 14 cents a share. The results beat the eight-analyst consensus of 12 cents but fell well short of year-ago results of 38 cents.
lost 1 1/4, or 12.3%, to 8 15/16 despite reporting second-quarter profits of 24 cents a share, 4 cents ahead of the 11-analyst view but down from 76 cents a year earlier. The company said fiscal second-half earnings will be "nominal."
tanked 4 13/16, or 25%, to 14 1/2 after restating its third-quarter revenue figure, lowering it by $1.2 million. The company said the translation of a $1.2 million purchase order from its German unit was misinterpreted.
In other earnings news:
jumped 1 1/8, or 5.7%, to 21 after BancBoston Robertson Stephens raised its fourth-quarter earnings estimate for the company to 30 cents a share from 28 cents.
Intel popped up 4 15/16 to 114 11/16 after Morgan Stanley Dean Witter reiterated a strong buy on the chip maker, saying the stock is attractively priced because it's down around 23% from its Jan. 20 all-time high.
sank 6 15/16, or 43.7%, to 9 after
dropped it to neutral from buy, citing concerns about the software maker's performance in the current quarter.
Maxim excelled 2 1/8, or 5.2%, to 43 after Morgan Stanley Dean Witter upped it to strong buy from outperform.
climbed 1, or 8.3%, to 13 1/8 after BT Alex. Brown upped it to strong buy from buy.
Oil drilling and services firms jumped higher after the
American Petroleum Institute
reported an unexpected decline in inventories. Gainers included
, which rose 1 1/4, or 9.3%, to 14 3/4;
, which rose 1 1/2, or 7.3%, to 22;
, which rose 1 47/64, or 6.1%, to 30 27/64; and
, which rose 1 11/16, or 6.7%, to 26 3/4.
fell 3 3/8, or 8.7%, to 35 1/2 on word
filed a breach of contract suit against the company, alleging CheckFree isn't following the terms of an agreement for bill presentment. Intuit dropped 2 9/16 to 88.