The market these days is somewhat reminiscent of the old allegory about the blind men and the elephant. Pundits and players alike are groping about, trying to figure out what it is we're dealing with.
Yesterday and this morning, they were mainly asking, "What's wrong?"
Potential answers included (but were not limited to): The
tightening bias and
Mike Mayo's sell recommendation and Mary Meeker's musings over just what kind of queendom she rules; resurfacing worries about emerging (and mature) markets in Latin America and Asia; margin calls; and a combination thereof or some yet-undiscovered peril.
But by day's end, the correct answer (for those long stocks) was, "Nothing."
Overcoming some milk-curdling volatility in the early going, major stock averages rose impressively today. But that doesn't make our preamble null and it's certainly not void if you bought
at 244 or
at 55, or any of a host of other growth stocks that continue to trade light years from all-time highs.
As is their wont, tech stocks in general and Net stocks in particular were the focus of the most intense backing and forthing today.
TheStreet.com Internet Sector
Morgan Stanley Dean Witter's
Meeker said could fall a further 100 points from yesterday's close of 550.30, fell as low as 522.74 at midmorning. Then, as if
came back for one last
game and yelled "fumbllllle," investors pounced on DOT components and the index recovered to close up 21.72, or 4%, to 572.02.
Among Net leaders, the performance of Yahoo! most impressed. The portal slid as low as 120 1/2 -- or a half-point above its 200-day moving average -- before bouncing sharply to close up 10.7% to 140 7/8.
"These stocks remain the trading darlings of the market, whether it's institutional investors, professional traders or mom-and-pop online traders," said Scott Bleier, chief investment strategist at
. "With all the drubbing they've been getting, it was time for a bounce. When people panic, they bounce; when people are euphoric, they drop."
Still, new Net names posted a mixed performance.
(DIR:NYSE) gained 50% and
(STRM:Nasdaq) jumped 73.3% from their respective IPO prices, but
(ZIPL:Nasdaq) shed 11.6%,
(JWEB:Nasdaq) slid 10.6% and
(EDGR:Nasdaq) rose but a fraction.
Similar to the DOT, the
Nasdaq Composite Index
climbed 46.28, or 1.9%, to 2427.18 after trading as low as 2339.12. The
Dow Jones Industrial Average
gained 171.07, or 1.6%, to 10,702.16 after trading as low as 10,518.70, while the
closed up 20.36, or 1.6%, to 1304.76 after overcoming a decline as low as 1278.53.
added 0.96, or 0.2%, to 435.41, and the juggernaut that is the
Dow Jones Utility Average
rose 2.15, or 0.7%, to another all-time high, 330.63.
The Dow's rise was fostered in an excessive way by
, which soared 6.7% ahead of a scheduled 2-for-1 split tomorrow.
Additionally, one hedge fund manager observed "concentrated" buy programs hitting the market today. Discerning among the 30 Dow stocks, buying was focused on weakened groups such as technology, financials and drug makers, he said, while recent favorites such as cyclicals were simultaneously avoided.
Indeed, IBM was joined on the upside by
, as well as financials such as
, and drug maker
Johnson & Johnson
However, energy giants
also aided the blue-chip average.
Overall, the performance of Dow components mimicked broader trends. The
Morgan Stanley High-Tech 35
rose 2.5%, the
Philadelphia Stock Exchange/KBW Bank Index
climbed 3.7%, and the
American Stock Exchange Oil & Gas Index
climbed 2.3%. Meanwhile, the
Morgan Stanley Cyclical Index
underperformed, up 0.4%.
Interestingly, stocks moved inversely to bonds. The price of the 30-year Treasury bond tumbled 21/32 to 92 7/32, its yield rising to 5.80%. Sources said the
two-year note auction caused some players to unwind so-called curve-flattening trades, in which the long end of the market is bought while the short end is sold as a hedge against unfriendly action by the
The aforementioned hedgie, who happens to be net short equities, had a less complex explanation: "They had to pull the money for this rally from somewhere," he said.
Helping spur the S&P 500 -- as well as sentiment -- higher,
jumped 15.8% today. The catalyst for the move was a regurgitation of rumors pertaining to a potential merger between Merrill and
, as promulgated by Dan Dorfman, previously of
(among others), and now chief mouthpiece at
Some traders called the rumor "ridiculous" and
David Faber dubbed it "old" (vs., say, the footage of Chase Chairman Walter Shipley denying the combo?). Regardless, few complaints were heard (except from the shorts) about Merrill's bounce, for the stock is considered a key indicator of the broader market's health. The
American Stock Exchange Broker/Dealer Index
Notwithstanding the good tidings from Merrill, as well as major averages, market internals were still somewhat sickly.
New York Stock Exchange
trading, 876.9 million shares were traded while declining stocks edged advancers 1,485 to 1,459. In
Nasdaq Stock Market
activity, 1.1 billion shares were exchanged while losers led 2,086 to 1,833. New 52-week lows led new highs 57 to 30 in Big Board activity and by 67 to 31 in over-the-counter trading.
"This is a technical bounce," said Jim Volk, co-director of institutional trading at
in Portland, Ore. "It's a nice technical bounce, but breadth is still negative. We're finally getting an oversold bounce in Internet stocks
but I don't know if all the damage is done yet."
Volk, among others, noted
closed down 2.3% and
didn't exactly try to set the night on fire (cue
Among other indices, the
Dow Jones Transportation Average
rose 0.55 to 3453.88; and the
American Stock Exchange Composite Index
added 3.82, or 0.5%, to 782.66.
Elsewhere in North American equities, the
Toronto Stock Exchange 300
slid 14.59 to 6784.92 and the
Mexican Stock Exchange IPC Index
jumped 177.29, or 3.3%, to 5618.35.
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.
O Net IPO, Net IPO! Wherefore art thou Net IPO?/Deny thy reason, and refuse thy correction./Or if thou wilt not, be but the cause of my Caribbean-vacation cancellation.
A Veronese village's worth of investors were reciting this little modern poem (or something like it) as a clump of Internet names failed to rake in the outlandish Net IPO gains of yore in their initial offerings today.
Donaldson Lufkin & Jenrette's (DLJ) online brokerage unit, shot up 10, or 50%, to 30 after its 16 million-share IPO priced top-range at $20 a share. DLJ, meanwhile, added 2 7/8 to 67 1/2.
Web provider of corporate regulatory filings Edgar Online tacked on 1/16 to 9 9/16 after its 3.6 million-share IPO priced at $9.50 a share.
Mini-AOL and free email provider Juno Online Services dropped 1 3/8, or 10.6%, to 11 5/8 after its 6.5 million-share IPO priced top-range at $13 a share. (
TheStreet.com focused on DLJdirect in a story
this morning and wrote about Juno in a story
ZipLink shed 1 5/8, or 11.6%, to 12 3/8 after its 3.5 million-share IPO priced top-range at $14 a share.
The big exception was Latin American online giant StarMedia, which rocketed 11, or 73.3%, to 26 1/16 after its 7 million-share IPO priced top-range at $15 a share.
barnesandnoble.com (BNBN:Nasdaq) grew 2 7/8, or 12.5%, to 25 5/8 in its second day of trading.
Mergers, acquisitions and joint ventures
vaulted 2 7/8, or 11%, to 29 after
last night said it cut a deal with the
to complete its $3.5 billion purchase of the mainframe software firm. The department is requiring Computer Associates, which added 1/2 to 45 1/4, to sell six of its mainframe systems management software products and some related assets.
Security First Technologies
, a provider of Internet services for financial institutions, lost 1 3/4, or 5.2%, to 32 1/8 in the wake of last week's announcement it will buy
, which dipped 1/8 to 9 13/16, and Brussels-based
picked up 2 1/16 to 48 7/8 after Intel said last night it will invest $200 million in the company's
Earnings/revenue reports and previews
Far from Silicon Alley and deep in the heart of Texas,
tanked 13 1/2, or 51.4%, to 12 13/16 on the heels of Monday's lackluster earnings report and a report in
The Wall Street Journal's
Texas Journal section focusing on the company's bloated market capitalization.
lowered 13/16 to 25 11/16 after reporting fourth-quarter earnings of 66 cents a share, 5 cents ahead of the four-analyst view but below the year-ago 81 cents.
slipped 1/4 to 37 1/16 after posting second-quarter earnings of 62 cents a share, 1 cent below the eight-analyst view and behind the year-ago 67 cents.
advanced 9/16 to 12 15/16 after recording first-quarter earnings of 16 cents a share, beating both the six-analyst estimate of 10 cents and the year-ago 13 cents.
gave up 1/8 to 10 3/8 after announcing fourth-quarter earnings of 17 cents a share, 1 cent behind the three-analyst forecast but 1 cent above the year-ago figure.
declined 1/2 to 58 7/8 after reporting second-quarter earnings of 77 cents a share, topping the three-analyst outlook by a penny and moving ahead of the year-ago 65 cents.
excelled 1 5/8 to 40 after late yesterday posting first-quarter earnings of 29 cents a share, 2 cents higher than the five-analyst prediction but a penny shy of the year-ago figure.
Take Two Interactive
swelled 7/16, or 5.3%, to 8 5/8 after recording second-quarter earnings of 8 cents a share, double the 13-analyst view and ahead of the year-ago 2 cents.
flew 15/16 to 21 5/8 after posting second-quarter earnings of 59 cents a share, 8 cents higher than the 10-analyst view and above the year-ago 41 cents.
Offerings and stock actions
expanded 4 9/16, or 6.6%, to 73 9/16 after last night announcing a 2-for-1 stock split.
Morgan Stanley Dean Witter lowered three real estate investment trusts holding suburban office properties to neutral, citing a recent rise in share prices and weaker fundamentals for the group going forward. In reaction,
fell 3/4 to 25 3/16;
fell 1 1/8 to 25 1/4; and
fell 1 1/16 to 24 1/16.
Fiber-optic cable maker
popped up 5 5/16, or 11.1%, to 53 5/16 after
Salomon Smith Barney
reiterated its buy and said yesterday's sell-off in the stock provided a good buying opportunity.
grew 7/8, or 7.3%, to 12 15/16 after
Credit Suisse First Boston
started coverage with a buy and a price target of 19 a share.
rose 2 3/16, or 6.6%, to 35 3/8 after
initiated coverage with an outperform and a 12-month price target of 42 a share.
skidded 5/8 to 23 7/16 after Credit Suisse First Boston slashed its fourth-quarter earnings estimate for the company to 30 cents from 33 cents a share and its full-year 1999 estimate to 82 cents from 85 cents.
lowered the stock to buy from strong buy.
hopped up 15/16, or 5.2%, to 19 1/8 after
upped it to strong buy from accumulate and raised its price target to 25 from 23.
sank 12 5/8, or 13.2%, to 83 3/8 after Prudential Securities removed its "single best idea" designation for the stock but maintained its strong buy rating.
lowered 2 1/2, or 8.6%, to 26 1/4, returning some of the gains from its two recently announced contracts with the
Defense Advanced Research Projects Agency
plunged 5 1/16, or 9.2%, to 50 after a
Wall Street Journal
report highlighting the patent litigation surrounding its pulsating excimer lasers.