The line "It's a stock picker's market now" should come with a warning label as long as your arm.
For the last three years, it's a phrase that's been intoned repeatedly -- usually by some poor sap who runs something like the
Adlai Stevenson Select Equity Fund
(SUX:NYSE). The subtext is always the same: "Buying that
-index fund won't work this time around. Better to put your money with me." And then the index outperforms the active manager again.
But the market's dynamic at this level, where the
Dow Jones Industrial Average
is just below 10,000, may mean that, for a while at least, it really will be a stock picker's market (really).
The fall-off in stocks as soon as they approached the 10,000 level on
Tuesday has gotten people on the Street pretty convinced that it's going to be difficult for the market to move through the milestone. "We will take another run at it, and we'll fall back again," said Bill Allyn, head block trader at
. "Until earnings come out I don't think we'll be able to sustain an above-10,000 level."
This resistance at the benchmark, said John Bollinger, president of
, is a natural turn of events. "The market has a long history of doing consolidations near century marks," he said. "From a purely psychological perspective, people need to get used to the new altitude. They've run a very long race, they've achieved that goal, and now they need to look around and reassess."
So there is resistance to the idea of the market running above 10,000. (No, the Dow is by no means the market, but we're talking psychology here.) There is not resistance to the idea of stocks running higher. Note the difference. It is not a belief in the market that will send the market above 10,000, but a belief in the stocks in the market.
"There are times when it's a stock market, and there are times when it's a market of stocks," said Bollinger. "As we butt up against a big psychological level like this, we become more of a market of stocks."
Bollinger cautioned, however, that this doesn't mean he sees that shift into small-caps people have been predicting for so long now. He does, however, think that there may be some movement out of the high-quality growth names that have dominated for so long.
The question is what the money's going to move into, and so far the market doesn't have any answers. "We're searching again for the leaders," said Allyn. "The advance/decline line on the big stocks is slightly positive, but not convincing enough to tell us there is a sustainable leadership out there."
If 10,000 is the top of the range that the market is going to trade in, stocks may have carved out the bottom of that range today. After an opening drop to 1295, the S&P 500 was up 9 to 1307 midday while the Dow was up 30 to 9909. Big tech stocks were doing well, propelling the
Nasdaq Composite Index
up 18 to 2447.
Internet issues, too, were putting in a good day --
TheStreet.com Internet Sector
index was up 9 to 618, easily staying above the psychologically important 600 level.
TheStreet.com E-Commerce Index
was up 6 to 115.
Today is the first session of TSC Internet Sector membership for
, lately down 1 3/4 to 75 1/2. It replaced
, which merged yesterday with
New to the E-Commerce Index is
, up 1 15/16, or 8.5%, to 24 13/16. It replaced
, which merged yesterday with
After a benign read on inflation in the February
Consumer Price Index
this morning, and a wider-than-expected January trade gap, the 30-year Treasury was up 16/32 to 96 23/32, dropping the yield to 5.48%. (For more on the fixed-income market, see today's early
Bond Focus.) The rebound in bonds spurred a recovery in financial stocks. The
Philadelphia Stock Exchange/KBW Bank Index
was up 1.8%.
Advancers were outpacing decliners 1,449 to 1,373 with 465 million shares trading on the
New York Stock Exchange
Nasdaq Stock Market
action, decliners were edging advancers 1,891 to 1,738, with 511 million shares changing hands. New 52-week lows were beating new highs by 40 to 31 on the Big Board and by 74 to 51 on the Nasdaq.
Thursday's Midday Movers
was up 14 5/16, or 8.2%, to 189 15/16 after last night setting a 2-for-1 stock split. Also,
The Wall Street Journal
reported that the company will allow the proposed merger of
to go to a shareholder vote instead of immediately proposing an alternative. Lycos was down 4 5/16 to 97 9/16; USA Networks was up 1/2 to 38 1/16.
Elsewhere in Netland,
Barnes & Noble
was up 5 5/16, or 18.4%, to 34 1/16 after it and Germany's
filed a registration statement with the
Securities and Exchange Commission
for an IPO for
, which will trade on the Nasdaq Stock Market under the symbol BNBN.
was up 6 13/16, or 5.2%, to 138 after
Salomon Smith Barney
started coverage with a buy and a price target of 175 a share. Also,
, a privately held online pharmacy in which Amazon.com has a 40% stake, announced an agreement with
promoting drugstore.com on select Excite portions of Netscape's
. Excite was up 1 3/8 to 110 1/4; Netscape's new parent, America Online, was up 6 9/16, or 6%, to 115 5/16.
was up 1 1/8 to 83 1/2 on a
Wall Street Journal
report that Chairman and Chief Executive Walter V. Shipley has made informal overtures to potential merger partners on Wall Street in the past year and that he has offered senior execs the possibility of a CEO slot in the merged firm. Among the firms approached, according to the
Morgan Stanley Dean Witter
In other news:
Advanced Lighting Technologies
was up 3 3/16, or 44%, to 10 7/16 after last night saying
agreed to buy a $20.6 million stake in the company. Advanced Lighting said it plans to issue preferred shares to GE which convert into about 3 million Advanced Lighting shares at a $6.75 conversion rate. GE was up 11/16 to 109 1/8.
was up 4 15/16, or 14.5%, to 38 15/16 after naming James R. Tobin president and chief executive. Tobin has served as president and CEO of
. Yesterday, the
Food and Drug Administration
allowed the company to market the
mapping catheter, which is used to diagnose abnormal heart beats. Today,
Credit Suisse First Boston
upgraded the stock to buy from hold.
was up 3 7/16, or 5%, to 72 15/16 after unveiling a new line of digital personal communications products and promising Internet-browsing capability across its entire digital mobile phone range in the year 2000 at the
exhibition in Hannover, Germany.
was down 1 1/4, or 16.7%, to 6 1/4 after last night warning of lower first- and second-quarter earnings due to weak conditions in the semiconductor industry. The company expects to post a net loss of 22 cents to 24 cents a share for the first quarter. The four-analyst view called for a loss of 13 cents vs. the year-ago profit of 27 cents. Aetrium also said it cut its workforce by about 10%.
was up 3 3/8, or 5.9%, to 60 7/8 despite last night's first-quarter earnings warning. Apparently the stock was moving on the company's other announcement, that it will repurchase of up to $500 million in stock. Blaming its 10-day pilot sickout, the airline said it sees earnings of 30 cents to 35 cents a share. The 11-analyst forecast called for 65 cents vs. the year-ago $1.62. Today,
BT Alex. Brown
lowered its first-quarter estimate for the company to 30 cents a share from 70 cents.
was down 2 9/16, or 7.5%, to 31 11/16 even after last night reporting fourth-quarter earnings of 31 cents a share, 2 cents above expectations.
was down 1 3/8, or 7.5%, to 16 7/8 after last night saying it sees first-quarter earnings of about 28 cents a share because of difficult year-ago comparisons in its volatile platinum operations. The three-analyst estimate called for 32 cents vs. the year-ago 30 cents.
was up 6 5/16, or 6.8%, to 99 1/4 after posting third-quarter earnings of 52 cents a share, including costs from contingency plans related to the
pilot negotiations and merger expenses related to its acquisition of
. That's higher than the 12-analyst forecast for 41 cents but below the year-ago 65 cents. FDX also set a 2-for-1 stock split.
was down 2 11/16, or 21.6%, to 10 after last night warning it expects to report first-quarter earnings of 15 cents to 17 cents a share due to pricing pressure in the building wire market. The four-analyst view called for 37 cents vs. the year-ago 54 cents. Today,
lowered the stock to intermediate-term accumulate from buy, while maintaining its long-term buy.
Warburg Dillon Read
dropped it to buy from strong buy.
was up 5, or 7.6%, to 70 5/8 following a partial earnings announcement for its fiscal year ended Jan. 31. The release, previously scheduled for Monday, said the company's 1999 net profit was $195 million, up from $175.5 million in 1998.
was off 2 5/16 to 74 1/16 after executives said the dollar's rally could mean that the nine-analyst consensus calling for first-quarter earnings of 93 cents a share is too high. The company made 98 cents in the year-ago period.
was down 3 7/16, or 32.5%, to 7 3/16 after last night reporting second-quarter earnings of 11 cents a share, including $300,000 in research and development costs. The four-analyst outlook called for 17 cents vs. the 18 cents. The company also warned its second-quarter sales could come in flat.
was up 1 1/4, or 8.6%, to 15 7/8 after beating fourth-quarter earnings estimates by 6 cents a share last night with a profit of 20 cents.