The dollar did it. Investors looking for a culprit for today's setback need look no further than currency markets. Even if the relationship to equities is somewhat unclear, the dollar's decline vs. the Japanese yen overshadowed
earnings and favorable comments from an influential Internet analyst.
The latter initially helped tech gauges overcome the prevailing weakness in the
Dow Jones Industrial Average
. But a selloff in the final 30 minutes dampened the enthusiasm for techs, and major averages finished in retreat. In lieu of the greenback, some traders noted the market was simply due for a decline after its solid rally in the past five trading days.
The Dow fell 125.70, or 1.1%, to 10,991.38 after trading as low as 10,982.84. The S&P 500 slid 11.32, or 0.8%, to 1332.84 after trading as low as 1332.13.
led a broad retreat among Dow components. Meanwhile, weakness in cyclicals and retailers also contributed to the S&P 500's decline. The
Morgan Stanley Cyclical Index
fell 1.2% while the
American Stock Exchange Retailing Index
In late New York trading, the dollar was quoted down 1.88 to 112 yen, its lowest level since Jan. 11. The currency action initially dragged the bond market lower, but bonds were able to right themselves; the price of the 30-year Treasury bond rose 5/32 to 101 24/32, its yield falling to 5.99%.
Initially unfettered by the dollar's woes, the
Nasdaq Composite Index
rose as high as 2683.15. But the tech-massaged index was similarly unable to capitalize on the bond market's recovery and stumbled in the late going, closing down 13.49, or 0.5%, to 2657.73.
Dell gained 8.4% but the
fell 0.9% to 2317.39 after trading as high as 2351. Weakness in
and the chip sector were largely responsible for the losses.
Amid disappointment in orders booked,
fell 9.2% despite earnings that handily beat expectations. In AMAT's wake, the
Philadelphia Stock Exchange Semiconductor Index
The Comp got its biggest boost from Internet stalwarts, specifically
which rose 3.6% and 4.5%, respectively, after being upgraded by Henry Blodget of
While upping his outlook for the entire Net sector, Blodget also made positive comments about a handful of other names. Most notably,
rose 14.2% and
gained 12% following the bullish call.
Blodget's commentary seemed to inspire the entire Net sector, although it too failed to sustain intraday heights.
TheStreet.com Internet Sector
index rose 8.57, or 1.5%, to 566.43 after trading as high as 580.33.
fell 2.90, or 0.7%, to 433.10.
With about 45 minutes left in the trading session, Bob Basel, director of listed trading at
Salomon Smith Barney
, said he was most interested in how the final 30 minutes transpired, noting "buy programs" accompanied by a "lack of liquidity" had goosed stocks higher the previous two days.
Today, of course, the opposite occurred.
"It looked like there was some stocks to buy but today turned out to be a little bit of breather," Basel said after the close.
The dollar was "not that big of a factor," the trader argued, while similarly dismissing the late-session weakness as anything more than "a little bit of profit-taking and continued overall indecision going into Tuesday," when the
"It's been very unbusy," he continued. "We'll see volume up on Friday because of options expiration, but people are talking about being in a tight trading range until at least the
meeting next week."
New York Stock Exchange
trading, 682.8 million shares were exchanged while declining stocks led advancers 1,777 to 1,177. In
Nasdaq Stock Market
action 1.05 billion shares traded while losers led 2,164 to 1,721. New 52-week lows bested new highs 60 to 50 on the Big Board while new highs led 76 to 59 in over-the-counter trading.
Mulling the FOMC
yesterday, a small, but vocal, number of market players believe the Federal Reserve will stand pat next week.
"It depends who you talk to," Basel replied when asked about the sentiment in trading pits. "But I think people need to see them raise by 25 basis points because if they do nothing, then we'll get continued uncertainty" until the Oct. 5 meeting.
For perhaps different reasons, Donald Fine, chief market analyst at
Chase Asset Management
, also believes the Fed will tighten next week.
"I 'd be very surprised if they did not move," the economist said. "If you look at the trend,
is slowly inching up, it's true of the GDP price deflator and average hourly earnings. Is it threatening? No. But the direction is wrong. The economy may be slowing but it's kind of hard to find where the slowdown is."
Fine believes "there is plenty to point to as to why they should be pre-emptive," and he "would not rule out" another 25-basis-point move at the FOMC's October meeting.
Moreover, the Fed may raise the discount rate as well as the fed funds rate at its Tuesday meeting, he said, noting the central bank likes to maintain a "certain spread" between the two lending rates.
Fine did not think a higher discount rate would have a material impact on the market, just as he said the dollar's weakness will not impact the Fed's upcoming decision.
"The dollar is not a prime determinant of Fed policy, although they're always keenly aware of where the dollar is," he said. "I don't want to minimize the importance of the dollar but if the dollar were to suddenly weaken, the Fed wouldn't do something based solely on that."
In fact, the weak dollar might actually be welcome because it would encourage importers, Fine said, noting "we need the drag of the trade deficit to keep the economy from totally overheating."
Among other indices, the
Dow Jones Transportation Average
slid 19.15, or 0.6%, to 3186.36; the
Dow Jones Utility Average
shed 1.73, or 0.6%, to 311.33; and the
American Stock Exchange Composite Index
gained 1.41, or 0.2%, to 783.92.
Elsewhere in North American equities, the
Toronto Stock Exchange 300
fell 5.11 to 7047.90 and the
Mexican Stock Exchange IPC Index
slid 105.20 to 5174.69.
Tuesday'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.
Merrill's Blodget sent the Internet sector soaring with positive comments on eight industry names. Blodget upped ratings on Yahoo! and Amazon to near-term buy from accumulate. Yahoo! jumped 6 1/4 to 145 1/16, while Amazon shares leapt 3 15/16 to 113 1/8.
The analyst also expects eToys,
to be strong fourth-quarter performers with the Holiday season right around the corner. Blodget called the group "among the highest quality of stocks" and said "we like them year-round -- but we like them even more now that they are down 50% from their highs and we are headed into the busiest season of the year."
Excite@Home rose 7/16 to 40 1/16, while eToys leapt 4 13/16, or 11.9%, to 45 3/16. AOL jumped 1 11/16 to 99 3/16 and barnesandnoble.com hopped 2 3/8, or 14.2%, to 19 1/4. Lycos and Inktomi also reaped the benefits of Blodget's praises. Lycos climbed 2 5/8, or 6.2%, to 44 3/4, while Inktomi jumped 3 3/8 to 119.
Mergers, acquisitions and joint ventures
hopped 2 5/16 to 57 5/16 after it announced plans to acquire
Drax Power Station
, Western Europe's largest coal-fired power plant, from Britain's
for $3 billion.
said it has agreed to acquire
in a deal that calls for Olsten to split off its health services unit. Shares of Olsten advanced 1/2, or 5.2%, to 10.
was up 1/16 to 46 9/16 after it said it bought a 38% interest in online employment service
for $62 million in advertising. CBS, which is aiming to increase its online presence, has forged similar pacts with
. The network said it would give jobs.com $62 million worth of advertising and promotion through its media channels over the next five years.
skidded 7/8 to 63 5/16 after it announcing plans to invest $50 million in
, which produces technology that makes Web sites operate more quickly. Cisco will take a roughly 4% stake in the company.
soared 7 1/16, or 25.6% to 34 5/8 after
agreed to acquire it for $1.7 billion in stock. Lucent will issue 0.5580 share for each Excel share, or $37 a share based on Lucent's closing price yesterday. That's a 34% premium to Excel's Monday closing price of 27 9/16. Lucent slid 2 5/16 to 64 3/16.
In other Lucent news, the company has made a tender offer for all of the outstanding shares of
. Lucent extended the offer's deadline to midnight Aug. 24, from yesterday. Lucent said its $9 per common share offer has earned the company about 47% of SpecTran's outstanding shares. SpecTran was unchanged at 8.
fell 2 9/16, or 23.3%, to 8 after it agreed to buy
in a deal that could be worth as much as $4 billion. Food Lion also set a 1-for-3 reverse stock split and said it would form a holding company to facilitate acquisitions. This afternoon,
Salomon Smith Barney
lowered Food Lion to hold from outperform, and Hannaford Brothers to neutral from buy. Despite the downgrade, Hannaford Brothers rocketed 9 1/16, or 14.2%, to 72 3/4.
Earnings/revenue reports and previews
cratered 6 5/8, or 9.2%, to 65 1/16 despite yesterday's third-quarter earnings report of 61 cents a share, 8 cents ahead of the 29-analyst estimate. Analysts reportedly were disappointed with Applied's order growth.
cut the stock to buy from strong buy, but
Morgan Stanley Dean Witter
upped its earnings estimates on the company.
was unchanged at 5 1/8 after it reported a second-quarter loss of a nickel a share, in line with the three-analyst estimate.
declined 5/16 to 16 3/8 after it posted a break-even second quarter, in line with the two-analyst estimate.
stumbled 3/8 to 17 11/16 after it reported a second-quarter loss of 4 cents a share, in line with the 14-analyst estimate.
Dell hopped 3 7/16, or 8.3%, to 44 9/16 after late yesterday reporting second-quarter earnings of 19 cents a share, 2 cents ahead of the 30-analyst estimate.
slumped 2 1/2 to 48 9/16 despite reporting fourth-quarter earnings of 18 cents a share, in line with the 10-analyst estimate and up from the year-ago 16 cents. The company saw higher sales in each product category.
advanced 1 5/8 to 50 7/8 after
Warburg Dillon Read
upped its 1999 and year 2000 profit estimates to $5.67 a share from $5.52 and $5.94 a share from $5.86 respectively.
Morgan Stanley started coverage of retailer
99 Cents Only Stores
with an outperform rating and a $46 price target. Shares of 99 Cents Only Stores were of 1/8 to 35 7/8.
plunged 5 15/16, or 25.6%, to 17 3/16 after late yesterday warning that its 1999 earnings will fall well short of analysts' expectations. Downgrades flew fast and furious, coming from Merrill,
Banc of America Securities
climbed 3/4 to 25 13/16 after it reported second-quarter earnings of 11 cents a share, in line with the 18-analyst estimate.
was unchanged at 21 5/8 after Lehman Brothers started coverage with an outperform rating and a 12-month price target of $25.
popped 1 15/16, or 6.3% to 32 9/16 after it posted second-quarter earnings of 12 cents a share, in line with the 12-analyst estimate.
Offerings and stock actions
Internet services provider
said it filed with the
Securities and Exchange Commission
to sell $50 million worth of common stock in an IPO. The company did not provide a possible price range or specific size for the potential offering in its preliminary prospectus, stating that the $50 million worth of common stock noted was merely a gauge to tabulate the SEC registration fee.
Lead underwriter Salomon Smith Barney reiterated that the 11.5-million share IPO for
would price in its initial range of $15-17. Earlier today,
reported that the deal's price range had been cut, based on erroneous information from
said it anticipates an initial price of $8 a share, lower than its previous range of $10 to $12. The email and online direct marketer said its upcoming 5 million-share IPO stands to rake in $36.2 million in net proceeds, a decline from last week's estimate of $50.2 million.
advanced 3/4, or 9.3% to 8 3/4 in its first day of trading.
Donaldson Lufkin & Jenrette
priced the 4 million-share IPO at $8 a share last night, below its already lowered pricing range of $9 to $11 a share. The IPO was originally scheduled for 7.1 million shares at an expected $11 to $13.
was unchanged at 6 3/8 after it said it would initiate a 5%, or 5.6 million-share, repurchasing program. The buyback will only include the funeral and cemetery service provider's Class A common stock and will be transacted in the open market or in private negotiations.
slipped 2 3/16, or 7.2% to 28 1/16 after
dropped its fourth-quarter loss estimate to 14 cents a share from 12 cents.
was unchanged at 10 after Morgan Stanley Dean Witter initiated coverage with an outperform rating and set a price target of 12.
Procter & Gamble
was off 5/8 to 94 3/4 after
added the company to its Global Recommended Portfolio.
was up 1/16 to 26 7/8 after Merrill Lynch downgraded it to a near- and long-term neutral from an accumulate rating.
said it is filed complaints with regulators in five Western States, accusing
U S West
of providing poor local telephone service. Shares of AT&T were skidded 1 1/8 to 48 5/8.
The New York Stock Exchange said it has suspended trading of
(PHL:NYSE) and will take steps to have the stock delisted. Planet Hollywood said yesterday it had secured a $30 million injection and had negotiated with lenders before filing for Chapter 11 bankruptcy protection. According to the exchange, the theme-restaurant chain said it plans to cancel its common stock and swap the shares for new warrants for new common stock exercisable for three years.