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A Hunt for Bargains Stems Market's Losses

Dell remains under pressure, and with it the Nasdaq, but there are bright spots in the market as well.

On this Ash Wednesday, it's looking like investors are coming to terms with the reality that they will have to give up the days when the buds and sprouts of that most germinating of growth stocks,


(DELL) - Get Free Report

, crushed analysts' earnings and revenue estimates like a bug.

And the scary part, stock players are realizing, is that it's probably not just that Dell got ahead of itself but that a broader PC slowdown is upon us, and that -- as investors keep being threatened -- big-tech leadership is in jeopardy. Alongside Dell's disappointing fourth-quarter revenue figures last night came less-than-stellar revenue numbers from



. Neither computer giant missed earnings predictions last night, and lately both were off session lows. Dell was down 7 1/8 to 81 11/16, off its intraday low of 77 3/8 but miles below its Feb. 2 closing high of 108 5/8. H-P was down 7/8 to 69 5/8, off its closing high of 81 15/16.

All this leaves us, as

The New York Times

might headline about the deceased


scandal, searching for heroes.

Despite the name, chip stocks may emerge as the Lent equivalent of skim milk to the given-up PC makers' chocolate -- what with


(INTC) - Get Free Report

readying to release its Pentium III Feb. 26, and

Advanced Micro Devices

(AMD) - Get Free Report

preparing for the Monday roll-out of its new chip. And

Applied Materials

(AMAT) - Get Free Report

was climbing 4.5% following last night's strong first-quarter earnings announcement.

"If there's any delay in Intel's shipping -- and I don't know that there will be -- it will really negatively impact sales of Dell,




Micron Electronics


," said Jim Volk, codirector of institutional trading at

D.A. Davidson

in Portland, Ore. "And AMD, which is supposed to have a great chip, could get some benefit."

Predictably unpredictable, the market was taking the Dell disappointment much better than expected, with the

Dow Jones Industrial Average

firmly in positive territory at lunchtime.

"I think there's already been some bargain hunting in Dell. ... And after yesterday and this morning -- the




futures just got crushed -- we're seeing something of an oversold downfare," Volk said around 10:20 a.m. EST, when the Dow first blipped above the flatline. "But it's more of a technical rally, more academic. The level of least resistance is still down. The market will try to rally and it will fail. I am still surprised at the market's resiliency -- I thought we'd be down 100."

The Dow lately was up 38 to 9335, off its session high of 9365.54 but well up from its session low of 9219.20. Pushing the blue-chip index higher were

American Express

(AXP) - Get Free Report


General Electric

(GE) - Get Free Report


General Motors

(GM) - Get Free Report


The broader

S&P 500

was up 4 to 1246, while the small-cap

Russell 2000

was down 1 to 395. The

Dow Jones Utility Average

was up 5 to 293. Thanks to strength among airlines, the

Dow Jones Transportation Average

was up 48 to 3169.

But the

Nasdaq Composite Index

was hurting, although not as badly as this morning. The tech-fattened proxy lately was down 15 to 2299, off its session low of 2276.28.

Despite the Nasdaq's bloodletting, Internet stocks were picking up steam. Thanks in part to another

America Online


deal and a bounce in the recently beaten up



, Internet Sector

index was up 3 to 475. The E-Commerce Index

, however, was losing 1 to 98.

Market internals remained negative. On the

New York Stock Exchange

, decliners were leading advancers 1,543 to 1,309 on 398 million shares. The downs had the ups 2,240 to 1,414 on 509 million shares in

Nasdaq Stock Market


The bond market was taking a rest from recent drama, with the 30-year Treasury up 9/32 to 98 28/32, sending its yield down to 5.33%. (For more on the fixed-income market, see today's early

Bond Focus.)

Robert Froehlich, chief investment strategist at

Scudder Kemper Investments

in Chicago, remains optimistic about tech leadership and bullish on the market at large. He sees the Dow reaching somewhere near 9500 or 9600 once first-quarter earnings reports begin. But for now, as the fourth-quarter earnings season winds down, the strategist sees more narrow, choppy trading but with an upward bias.

"It's difficult for me to get excited on the downside about a company that still has 40% revenue growth," Froehlich said about Dell. "I think we'll have a knee-jerk reaction out of tech, and then it'll go right back in. And no one should have been surprised. It all started when


(IBM) - Get Free Report

reported flat revenue and said most of their money came from the service area, where they worked extremely aggressively. Well, guess what? That's going to have an impact on Dell and H-P.

"With the way the market's been going the last two days," he continued, "it seems there's no way to draw any conclusions at midday. But that foreign flow of money is coming back into the market from the sidelines -- we're seeing it today, we saw it yesterday. I call it the start of the Clinton relief rally. And remember we look at economic indictors as much as earnings, and those

housing starts

were a blowout -- the best in 10 or 12 years. So I think this market has more legs than people thought. I think we'll see 15%

growth this year."

Wednesday's Midday Movers

By John J. Edwards III
Markets Editor

As noted above, Dell was suffering a loss of 7 1/8, or 8%, to 81 11/16 after late

yesterday reporting in-line fourth-quarter earnings and a disappointing, though huge, jump in revenue. But the PC giant was up from its intraday low of 77 3/8, set in the first minutes of trading. The response among brokerages has mainly been a full-throated endorsement of the status quo, with

Morgan Stanley Dean Witter


Credit Suisse First Boston


BancBoston Robertson Stephens

all reiterating their existing Dell ratings.

SoundView Financial Group

reportedly trimmed Dell to buy from strong buy.

Elsewhere in the PC biz, Hewlett-Packard, which yesterday reported stronger-than-expected earnings, nevertheless was down 7/8 to 69 5/8.



was down 3/16 to 42 11/16,


(AAPL) - Get Free Report

was down 7/16 to 38 and IBM was up 1 3/8 to 173 7/8.

Internet stocks were enduring a mixed-to-downbeat session. Stalwarts such as Yahoo!, down 1/4 to 133, and

(AMZN) - Get Free Report

, down 5/8 to 97 7/8, had abandoned their recovery from yesterday's losses, and online brokers were suffering.



was down 2 7/16, or 5.4%, to 43 1/8;


(AMTD) - Get Free Report

was down 2 1/4 to 89 1/2;

National Discount Brokers


was down 7/8 to 23 9/16; and

Siebert Financial

(SIEB) - Get Free Report

was down 2 1/4, or 9.6%, to 21 5/8.

Meanwhile, recent IPO



was finally showing the weakness many industry watchers predicted for it all along, off 4 5/16, or 8.8%, to 44 5/8.

Earnings/revenue movers

Applied Materials

(AMAT) - Get Free Report

was up 3 1/16 to 70 5/8 after late yesterday reporting stronger-than-expected first-quarter earnings.

Donaldson Lufkin & Jenrette

upgraded the stock to top pick from buy.

CBRL Group

(CBRL) - Get Free Report

was down 2 9/16, or 11.8%, to 19 1/8 after warning that it expects to report 1999 earnings of $1.35 to $1.45 a share. The 19-analyst outlook calls for profit of $1.65, matching the 1997 figure. CBRL also reported second-quarter earnings of 28 cents a share, in line with estimates but down from the year-ago 32 cents.


(FLR) - Get Free Report

was down 9/16 to 36 after reporting first-quarter earnings of 68 cents a share, a cent short of the seven-analyst

First Call

estimate but up from the year-ago 66 cents.

Fruit of the Loom


was down 1/2 to 14 1/16 despite reporting a fourth-quarter loss of 15 cents a share, 2 cents better than the five-analyst forecast and up from the year-ago loss of $5.56 on charges.

H.B. Fuller


was up 1 7/8 to 41 1/8 after late yesterday issuing a positive first-quarter forecast.


(MAS) - Get Free Report

was down 1/2 to 30 1/8 despite reporting fourth-quarter earnings of 36 cents a share, a penny ahead of the 11-analyst estimate and up from the year-ago 31 cents. The company said it should post record results in 1999 if the economy remains at least moderately strong.


(MDT) - Get Free Report

was down 4 5/16, or 5.3%, to 76 11/16 after late

yesterday warning that third-quarter revenue from freshly acquired

Arterial Vascular Engineering

fell short of expectations.

Micro Warehouse


was down 1 7/16, or 5%, to 27 3/16 despite late yesterday reporting better-than-expected fourth-quarter earnings.

Orbital Sciences


was up 1/2 to 30 1/8 after

yesterday reporting a fourth-quarter loss on charges. Morgan Stanley Dean Witter downgraded the stock to neutral from outperform.

In other news:

AmSouth Bancorp

(ASO) - Get Free Report

was up 4 9/16, or 10.2%, to 49 5/16 on last night's news that it will replace



in the S&P 500.


(T) - Get Free Report

is acquiring TCI.



was down 3 1/16, or 6.2%, to 46 7/16 on confirmation of a deal with


(COMS) - Get Free Report

, anticipation of which sent BellSouth's shares leaping yesterday. The companies are working to offer high-speed Internet access to BellSouth customers. 3Com was up 1 1/4 to 33 1/16.


(EBAY) - Get Free Report

was up 7 13/16 to 239 on a

Wall Street Journal

of talks between the auction site and America Online. AOL was up 3/4 to 160 1/4.



was down 1 3/16 to 19 7/8 after

questioned the company's high valuation in a

story yesterday.



was up 1 15/16, or 58.5%, to 5 1/4 after late yesterday bought 7% of the company for $5 million.

Great Lakes Chemical


was up 3 13/16, or 10.7%, to 39 7/16 after

Deutsche Bank Securities

upped it to buy from accumulate.



was down 1 1/16 to 54 9/16 after announcing a restructuring plan designed to achieve 10% to 12% annual earnings growth over the next four years. The company plans to expand 13 to 15 factories while closing 15 to 20 others and downsizing 10 more. Well, just as long as it all still adds up to 57 varieties.


(MTEX) - Get Free Report

was up 20 3/4, or 91.2%, to 43 1/2 in its second day of trading.


(NAV) - Get Free Report

was pulling back 2 1/4, or 5.3%, to 40 1/8 after running up yesterday on speculation of a takeover by



. Volvo was off 9/16 to 26 5/16.

Public Service Co. of North Carolina


was up 6 11/16, or 29.4%, to 29 7/16 after



agreed to acquire the company for about $900 million, including debt. Scana was down 7/16 to 26 3/8.



was down 1 9/16 to 32 3/16 despite yesterday's announcement of a boost in its stock buyback plan. Others in the disk-drive group were lower as well, with

Western Digital

(WDC) - Get Free Report

off 5/8 to 10 9/16 and



down 1/2 to 11 11/16.