A Good Day for Rubin, a Bad Day for the Indices

The ex-treasury secretary found a new job and the Dow found some fresh new stocks, but the major measures couldn't find the win column.
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Arguably the biggest winner in the world of business and finance today was former

Treasury

Secretary

Robert Rubin

.

Because it sure wasn't the stock market, which rose early, fumbled and ended the day humbled. And forget about the bond market being a winner. Bonds stink.

As for Rubin,

Citigroup

(C) - Get Report

announced today that he has joined its team -- and a rational person would also assume that he's probably going to be compensated reasonably well for his services. Citigroup gained 11/16 to 48 1/2, trading as high as 50 5/16 intraday.

TheStreet.com

wrote about the Rubin hiring in a

story this afternoon.

The Rubin news battled for attention in the financial media with the announced revamping of the

Dow Jones Industrial Average

, which, beginning Monday will welcome four new members -- including tech titans

Microsoft

(MSFT) - Get Report

and

Intel

(INTC) - Get Report

. The other two additions to the Dow will be

Home Depot

(HD) - Get Report

and

SBC Communications

(SBC)

.

Saying goodbye to the Dow industrials will be

Sears

(S) - Get Report

,

Union Carbide

(UK)

,

Goodyear

(GT) - Get Report

and

Chevron

(CHV)

.

Major stock proxies spent a good portion of the day in positive territory as the long bond held steady. But stocks faded with bonds in the afternoon in part on some hawkish Fedspeak and ahead of some key economic data later this week.

"I think the market just has a negative tone to it," said Jay Suskind, head of institutional equity trading at

Ryan Beck

. The trader pointed out that stocks were "still keying off the bond market," which is technically weak, "if not broken."

As for the aforementioned economic data, on Thursday advance

gross domestic product

and the

Employment Cost Index

-- both for the third quarter -- are slated to be released.

Suskind said there would have to be some "unbelievable" economic news for the bond market to rally. He sees the Dow trading in a range from 10,000 to 10,500 going forward.

Even the

Nasdaq Composite Index

, which outperformed its peers throughout the day, and clung to positive ground until late in the day, couldn't manage to close higher. The Nasdaq Comp slipped 4.48, or 0.2%, to 2811.47, after trading as high as 2859.92 intraday.

The Dow fell 47.80, or 0.5%, to 10,302.13. The biggest loser in the gauge was -- brace yourself for a shocker -- Goodyear, soon to be gone from the Dow.

The

S&P 500

slumped 11.72, or 0.9%, to 1281.91.

Lucent

(LU)

was a notable S&P 500 star, gaining 4.8% after it posted earnings this morning that surpassed Wall Street's estimates.

The small-cap

Russell 2000

shed 1.97, or 0.5%, to 415.79.

TheStreet.com Internet Sector

index slumped 8.79, or 1.2%, to 723.15.

Meanwhile, in the Treasury market, the 30-year Treasury bond weakened. The long bond was off 11/32 to 96 20/32, yielding 6.38%.

Retailers stumbled badly. The

S&P Retail Index

swooned 4%. Drug stocks didn't exactly put on a great show either. The

American Stock Exchange Pharmaceutical Index

fell 2.4%.

Gold mining stocks were big losers as gold prices tumbled. The

Philadelphia Stock Exchange Gold and Silver Index

slumped 6.1%.

"We don't think the market has much potential on the upside," said Bruce Bittles, market strategist at

J.C. Bradford

in Nashville, Tenn., due to the fact that valuations are so high and that the Fed is poised to raise interest rates for a third time this year. Bittles did say, however, that the Dow could rally to 10,600 in the short term, but not much past that.

Bittles said he's been disappointed by how the market has reacted to third-quarter earnings. The strategist pointed out that so far 85% of companies reporting earnings have met or beat expectations. However, he noted that the Dow and S&P 500 are trading at about the same place they were trading at the beginning of the month.

Of the Dow's revamp, Bittles said he thought "it's going to be a change in how people perceive the Dow," pointing out that the Dow has been seen as "stodgy." Bittles said that the additions make the Dow more indicative of what's going on in the economy.

In

New York Stock Exchange

trading, 878.4 million shares were exchanged while declining stocks beat advancers 1,875 to 1,159. On the

Nasdaq Stock Market

, 1.06 billion shares traded while losers beat winners 2,056 to 1,896. New 52-week lows beat new highs 301 to 37 on the Big Board and by 152 to 98 in over-the-counter trading.

Among other indices, the

Dow Jones Transportation Average

fell 41.39, or 1.4%, to 2829.20; the

Dow Jones Utility Average

rose 0.77, or 0.3%, to 295.24; while the

American Stock Exchange Composite Index

gave up 1.33, or 0.2%, to 789.89.

Elsewhere in North American equities, the

Toronto Stock Exchange 300

crept up 6.61 to 7064.88 and the

Mexican Stock Exchange IPC Index

edged up 3.38 to 5134.96.

For more discussion of the new Dow, don't miss our

TV show this weekend on

Fox News Channel

. This week's guest is Charles Carlson, manager of the

Strong

(SDOWX)

Dow 30 Value fund. The show airs Saturdays at 10 a.m. and 6 p.m. ET, and Sundays at 10 a.m. ET.

Tuesday's Company Report

By Tara Murphy
Staff Reporter

(

Earnings estimates from First Call; earnings reported on a diluted basis unless otherwise specified. New highs and lows on a closing basis unless otherwise specified.

)

The stocks heading into the Dow Jones Industrial Average headed skyward for much of the session but ended mixed, with Microsoft unchanged at 92 3/8 (intraday peak: 95 1/4); Intel up 3/16 to 73 13/16 (peak: 74 5/8); Home Depot down 1 1/4 to 70 11/16 (peak: 74 1/2) and SBC up 1 5/16 to 45 9/16 (peak: 47).

Different story on the other side. Goodyear stumbled 3 15/16, or 8.3%, to 41 1/4 (intraday worst: 40 9/16) after it said it is disappointed to be cut from the Dow but said the deletion will not have a fundamental impact on its business. Elsewhere among the deleted stocks, Sears dropped 1 7/8, or 6.5%, to a four-year low of 27 (worst: 26 11/16); Chevron lost 2 to 88 (worst: 86 13/16); and Union Carbide, getting no help from an

ING Barings

upgrade to buy from hold, fell 1/2 to 59 (worst: 58 3/8).

Mergers, acquisitions and joint ventures

Ace

(ACL)

climbed 1/16 to 17 9/16 after it said it has upped its bid for

Capital Re

(KRE) - Get Report

to $14 a share, in attempt to compete with XL Capital's cash offer. According to Capital Re, Ace's rival bid came after a Delaware court rejected an injunction to prevent talks between Capital Re and XL Capital. The court's decision allows Capital Re to take XL Capital's all-cash offer if Ace did not launch a bid "at least as favorable." Both bids see Capital Re worth $511 million, reflecting on its 36.5 million outstanding share. Shares of Capital Re bounced 1/2 to 14 1/16, while XL gained 1/2 to 47.

Bamboo.com

(BAMB)

and

Interactive Pictures

(IPIX)

agreed to merge, creating a company with a market capitalization of $850 million. IPIX shareholders will get 1.369 shares of Bamboo.com for each IPIX share, with IPIX and Bamboo shareholders each owning about 50% of the combined company. Shares of Bamboo.com added 5/8 to 17, while Interactive Pictures mounted 1 1/8, or 5.2%, to 22 1/2.

Separately, each of the companies reported narrower-than-expected third-quarter losses. Bamboo.com reported a third-quarter loss of 63 cents a share, smaller than the two-analyst expectation of a 65-cent loss, but wider than a year-ago loss of 1 cent a share. Interactive Pictures reported a loss of 44 cents a share, narrower than the four-analyst estimated loss of 45 cents a share, and a year ago loss of 78 cents a share.

Buyout firm

Fox Paine

agreed to buy

Watkins-Johnson

(WJ)

for $41.125 a share in cash, or about $280 million. Watkins makes wireless communications equipment. Watkins-Johnson was soaring 6 1/8, or 19.3%, to 37 3/4.

Microsoft may invest billions over four years to develop and promote a home-game console, code-named X-Box, in an effort to compete with

Sony's

(SNE) - Get Report

forthcoming Playstation 2,

The Wall Street Journal

said. Microsoft was unchanged at 92 3/8, while Sony hopped 2 1/8 to 151.

Red Hat

(RHAT)

said

Intel

(INTC) - Get Report

will offer its Linux program. Red Hat soared 13 9/16, or 17.6%, to 90 5/8, while Intel gained 3.16 to 71 7/16.

Earnings/revenue reports and previews

Avery Dennison

(AVY) - Get Report

slipped 1 5/8 to 55 1/2 after it posted third-quarter earnings of 65 cents a share, beating the seven-analyst estimate of 62 cents and the year-ago 54 cents.

Burlington Northern Santa Fe

(BNI)

popped 1/2 to 29 1/2 after it reported third-quarter earnings of 70 cents a share excluding items, beating the 11-analyst estimate of 67 cents and the year-ago 66 cents.

Cardinal Health

(CAH) - Get Report

plummeted 7, or 15.7%, to 37 1/2 after it reported first-quarter earnings of 53 cents a share excluding items, in line with the 14-analyst estimate and up from the year-ago 43 cents including items.

CenturyTel

(CTL) - Get Report

fell 1 3/16 to 37 3/4 after it posted second-quarter earnings of 45 cents a share, beating the 12-analyst estimate by a penny and the year-ago 39 cents.

DaimlerChrysler

(DCX)

added 3/4 to 76 after it said third-quarter earnings beat expectations, rising 14%, and helped by strong sales of its Chrysler and Mercedes cars. The company earned $1.6 billion, or $1.65 a share, after adjustments for onetime charges and profits, compared with $1.41 billion or $1.45 a share, in the same period a year ago.

TheStreet.com

covered DaimlerChrysler's report in a

story today.

Friede Goldman

(FGI)

stumbled in early trading Tuesday after warning late Monday it expected a net loss of approximately 36 cents in the third quarter, due to charges related to a contract dispute.

Shares of Friede slid 3/8 to 9 7/16. The Jackson, Miss.-based company

warned in late September that its contract dispute with Norwegian firm

Ocean Rig

would lead to a charge. At that time, the extent of the charge was not known. Analysts polled by First Call/Thomson Financial expected Friede to earn 19 cents in the quarter.

International Multifoods

(IMC)

said its purchase of

Better Brands

would not effect fiscal 2000 but would boost its fiscal 2001 results by 3 cents. The six-analyst estimate forecasts the company to post fiscal 2000 earnings of $1.55 and $1.76 for fiscal 2001. Shares of International Multifoods slipped 15/16 to 21 1/8.

Loral

(LOR) - Get Report

skidded 5/8 to 15 after it reported a third-quarter loss of 8 cents a share, which includes a non-recurring gain. The results were narrower than the 10-analyst estimate of a 29-cent loss but matched the year-ago report, which included a gain from a sale of

Globalstar

(GSTRF)

common stock.

Lucent hopped 2 7/8 to 62 3/4 after it reported

fourth-quarter earnings of 31 cents a share, beating the 29-analyst estimate of 29 cents and the year-ago 7 cents. The company said that excluding acquisition-related charges, profits rose to $972 million from $647 million a year earlier, helped by strong growth in sales of wireless, data and optical networking equipment.

Lucent also announced it would restructure into four core businesses in order to focus on the fastest-growing equipment markets, such as data and optical networking, wireless and semiconductors. The four business units, which will operate under one brand and be supported by Bell Labs technology are: Service Provider Networks, Enterprise Networks, NetCare Professional Services and Microelectronics and Communications Technologies.

Newell Rubbermaid

(NWL) - Get Report

bounced 1 1/4 to 30 9/16 after it posted third-quarter earning of 44 cents a share, in line with the 13-analyst estimate but down from the year-ago 46 cents.

Pulte

(PHM) - Get Report

gained 13/16 to 17 13/16 after it posted third-quarter earnings of $1.08 a share, beating the nine-analyst estimate of 97 cents and the year-ago 64 cents.

Service Corp.

(SRV) - Get Report

advanced 1 1/16, or 12.4%, to 9 5/8 after posted third-quarter earnings of 12 cents a share, beating the nine-analyst estimate by a penny but down from the year-ago 32 cents.

Sherwin-Williams

(SHW) - Get Report

was unchanged at 20 1/2 after it reported third-quarter earnings of 66 cents a share, beating the 10-analyst estimate of 64 cents, and the year-ago 58 cents.

Thomas & Betts

(TNB)

tumbled 7/8 to 45 5/8 after it reported third-quarter earnings of 82 cents a share, in line with the five-analyst estimate and up from a year-ago loss of 66 cents.

Unocal

(UCL)

retreated 1 1/4 to 34 1/4 after it reported third-quarter operating net of 18 cents a share, in line with the 21-analyst estimate and up from a year-ago 2 cents.

Offerings and stock actions

IBM

(IBM) - Get Report

bounced 1 5/8 to 95 1/2 after it said it added $3.5 billion worth of stock to its existing repurchasing program. The addition comes after a recent decline in stock price. The company also said it set its regular quarterly dividend of 12 cents a share, or an annual 48 cents. Last week, IBM cautioned that its fourth-quarter 1999 and first-quarter fiscal 2000 profits could be dented by slow sales due to Y2K fears.

TheStreet.com

reported on the expanded buyback plan in a

story today.

Shares of Internet software maker

Viador

(VIAD)

jumped 2 1/8, or 23.5%, to 11 1/8 in their trading debut.

Analyst actions

PaineWebber

upped its price target on

American Express

(AXP) - Get Report

to 160 from 150. Shares of American Express were bouncing 1 3/8 to 144 3/4.

Salomon Smith Barney raised its rating on

ATMI

(ATMI)

to buy from neutral. ATMI advanced 2 5/8, or 11.7%, to 25 1/16.

Morgan Stanley Dean Witter

upped its 1999 earnings estimate on

AT&T

(T) - Get Report

to $2.18 a share from $2.13. AT&T shares fell 11/16 to 44.

Lehman Brothers

sliced its price target for

Computer Sciences

(CSC)

to 75 from 80. Computer Sciences leaped 4 13/16, or 6.9%, to 64 3/8.

Morgan Stanley Dean Witter started

Digital Insight

(DGIN)

with an outperform rating. Digital Insight lost 3 3/4, or 11.3%, to 29 1/4.

Donaldson Lufkin & Jenrette

sliced its rating on

Hearst-Argyle Television

(HTV)

to market perform from buy. Hearst-Arygle edged down 1/16 to 22 15/16.

Morgan Stanley started

Internap

(INAP) - Get Report

with an outperform rating and set a price target of 105. Internap popped 1 3/8 to 81 3/4.

Wachovia Securities

said it rolled out coverage of

Office Depot

(ODP) - Get Report

with a strong buy rating. Shares of Office Depot were unchanged at 11 5/8.

Credit Suisse First Boston

cut its rating on

Park Place Entertainment

(PPE)

to buy from strong buy. Park Place Entertainment skidded 1/4 to 13 1/2.

Salomon Smith Barney

initiated coverage of

Radware

(RDWR) - Get Report

with a buy/speculative rating and set a price target of 60. Radware shares slipped 5/16 to 40 3/4.

Merrill Lynch

lowered its intermediate-term rating on

Semco Energy

(SMGS)

to neutral from accumulate. Semco Energy slid 3/16 to 14 5/8.

PaineWebber raised its price target on

VoiceStream Wireless

(VSTR)

to 120 from 80. VoiceStream shares nevertheless plummeted 5 9/16, or 6.1%, to 85 1/4, in reaction to poor results released last night.