Mania, revolution or both? Whatever it is that's going on in Internet stocks, it subsided today, save for a few secondary names. The decline was all the more glaring because it came amid a solid rally for blue-chip stocks that sent the
sailing to a new all-time high.
The S&P 500 rose 16.28, or 1.3% to a new record of 1241.77, eclipsing its previous best of 1228.54, set Dec. 23.
With technology stocks mixed, the oft-unmatchable bogey of fund managers took its cues from telecom giants such as
as well as retailers such as
; each set a new 52-week high today.
Drug makers and consumer firms also aided the advance; the
American Stock Exchange Pharmaceutical Index
climbed 3.1% and the
Morgan Stanley Consumer Index
rose 1.9%. Mining stocks also enjoyed a rise as the
Philadelphia Stock Exchange Gold & Silver Index
Dow Jones Industrial Average
failed to surpass its all-time best of 9374.27 but enjoyed a solid rise and its eighth consecutive gain. The index rose as high as 9334.62 before closing up 94.23, or 1%, to 9320.98.
In addition to AT&T and Wal-Mart, the blue-chip proxy was fueled by gains for several components, including
, which set a new 52-week highs, as well as
Johnson & Johnson
Like the S&P 500, the
Nasdaq Composite Index
secured another record close, but in far less impressive fashion. After being in negative territory late in the session, the index closed up 1.47, or 0.1%, to 2181.77. Traditional tech bellwethers such as
stumbled, while Internet names suffered wider losses; the
slid 0.7% and the
Philadelphia Stock Exchange Semiconductor Index
Big Internet names such as
notably lagged broad market's rally;
TheStreet.com Internet Sector
index shed 14.13, or 3.1%, to 435.69.
Still, the speculative nature of online (and faux online) names was alive and well in secondary issues such as
, which rose 318% on nothing more than speculation it will follow the lead of
Active Apparel Group
and launch an online site. Active Apparel, meanwhile, rose a further 65%.
closed up 2.14, or 0.5%, to 410.41 although market internals were far from effusive.
New York Stock Exchange
trading, 586.5 million shares were traded while advancing issues bested declining stocks 1,752 to 1,233. In
Nasdaq Stock Market
activity, 920.8 million shares were traded while gainers led 2,171 to 2,007. New 52-week highs bested new lows 123 to 71 on the Big Board and by 121 to 119 in over-the-counter trading.
"People are going to call this an end-of-year mark-up on no volume but I'm sure this momentum is going to carry through," said Bob Basel, director of listed trading at
Salomon Smith Barney
. "Still, it's not like people are dancing in the streets."
Basel said the Dow could set a new high tomorrow -- as many expect -- but could also suffer from some profit-taking next week.
As for today, the trader said the action was sparse save for the retailers. "Some of these stocks are in outer space," he said, noting gains for
May Department Stores
in addition to the aforementioned Wal-Mart and Gap. The
American Stock Exchange Retailing Index
Beyond that "we finally got some profit-taking in Internet stocks which is news in itself," Basel said. "But the people playing those aren't necessarily traditional investors. I don't think the money was coming out of Amazon.com and into
Don't Believe the Hype
"I don't buy what's going on today is real market activity," said Jack Ablin, managing director at
Colonial Asset Management
. "My take is it's pretty much just light volume and a lot of flipping around. I don't take the trend too seriously -- it's just a lot of year-end window dressing."
Ablin, who manages about $170 million mainly for high-net-worth individuals, confessed to "not doing a heck of a lot" today but said other fund managers are under the gun as the year comes to a close.
"It's more or less hide the embarrassment time. The retail mutual fund investor is probably looking more at what you got than how you did," he said. "I would say a retail investor would be happy to see an AOL or
in there even if the fund did mediocre."
Ablin did far from mediocre this year, beating the S&P 500 heading into the final days of 1998. A big factor in the performance was a "sector call" on technology in the third quarter. Focusing on "the largest, most liquid names," Ablin invested cash reserves in Intel while putting new money to work in
. The portfolio also has holdings in AOL and Dell.
Still, the money manager is getting a little more cautious as the new year approaches.
"P/Es are stretched and there's going to be some general slowing" in the economy, he said. "We're not going to see the same level of gains we've seen this year. Still, there's a lot of liquidity out there -- all the money
invested in emerging markets has filtered back into safer havens."
Because of the liquidity, Ablin remains "pretty fully invested" in stocks, with about 65% to 70% of the portfolio in equities. Coincidentally, some of his favorite groups, such as grocers and drug makers, are defensive in nature. A favorite holding in the former is
, which rose 1.2% today. He recommends, but does not own,
, calling it a good pick for investors with a shorter time horizon.
Given his reticence about stocks but desire to stay invested, Ablin has been buying preferred shares. "We're doing it for defensive purposes as an alternative to going headlong into stocks," he said. "We can pick up some income and stability and names we like and continue to move forward. We can't afford to be out but can try to cushion" the exposure.
Among other indices, the
Dow Jones Transportation Average
rose 25.56, or 0.8%, to 3066.39; the
Dow Jones Utility Average
gained 0.30, or 0.1%, to 312.57; and the
American Stock Exchange Composite Index
climbed 5.17, or 0.8%, to 670.75.
The price of the 30-year Treasury bond rose 28/32 to 102 7/32, sending its yield down to 5.10%.
Elsewhere in North American equities, the
Toronto Stock Exchange 300
rose 6.76 to 6472.16 and the
Mexican Stock Exchange IPC Index
fell 25.87 to 3916.80.
Tuesday's Company Report
John J. Edwards III
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.
As noted above, G-III rocketed 6 11/16, or 334.3%, to a nearly six-year high of 8 7/8. There has been no known news development with the company, which apparently rose on anticipation it will follow the lead set yesterday by Active Apparel and announce the launch of online offerings.
enjoyed a similar surge, thundering up 2 7/8, or 230%, to 4 1/8. The NYSE asked Starter to explain its move; the exchange said Starter cited the common policy of not commenting on market activity.
Proving yesterday's rise was no fluke (?) Active Apparel blasted up a further 7 9/16, or 65.8%, to an all-time high of 19. Another of yesterday's big e-commerce movers,
, jetted 5 3/16, or 14.6%, to an all-time high of 40 3/4.
Mergers, acquisitions and joint ventures
moved up 2 1/4 to an all-time high of 74 after telling
the company hopes to strengthen its services business with an acquisition worth up to $2 billion.
popped up 1 1/2, or 11.4%, to 14 5/8 after agreeing to sell its citrus business,
Lake Placid Groves
, to two individuals for undisclosed terms.
Earnings/revenue reports and previews
stumbled 5 5/16, or 19.6%, to 21 7/8 after announcing it will restate financial results for fiscal 1996, 1997 and 1998 amid an extensive ongoing review of accounting principles by the company and
. Adac said the adjustments will have a material adverse impact on its fiscal 1996 and 1997 financial results.
moved up 3/16 to 21 after trading down most of the day on its announcement of a fourth-quarter charge. The energy giant said it will take an after-tax charge of $50 million, or 8 cents a share, along with cutting 1999 capital spending by 21% and axing 975 jobs. Conoco cited the low level of crude oil prices. The six-analyst estimate calls for operating earnings of 6 cents a share in the fourth quarter; Conoco went public in October. The company's majority owner,
, dipped 1/8 to 56 1/2.
Halliburton fell 2 9/16, or 7.8%, to 30 3/8 after announcing last night it plans to take a fourth-quarter after-tax charge of $24 million, or 5 cents a share, to cover 2,750 additional job cuts in its energy services group. Halliburton expects to report net fourth-quarter earnings of 14 cents to 16 cents a share, including the charge and costs related to project losses. The 22-analyst First Call estimate calls for operating earnings of 36 cents a share vs. the year-ago 58 cents. The rest of the sector finished mixed, with
down 1/2 to 46 7/8,
down 1/4 to 24 5/8 and
up 5/8 to 24 1/4.
slumped 7/8, or 15.6%, to an all-time low of 4 3/4 after saying it expects to only be "marginally profitable" in its third quarter because of construction cost overruns on six drill barges. The seven-analyst consensus called for profits of 26 cents per share.
National Discount Brokers
bounded 17 1/2, or 125%, to an all-time high of 31 1/2 after reporting second-quarter profits of 42 cents a share, up from a profit of 16 cents a year ago. No estimates were available. Other online brokers rose in concert, notably
, up 3 1/2, or 6.2%, to 60 1/8; and
, up 3 1/4, or 9.8%, to 36 3/4.
National Record Mart
improved 3/8 to 8 5/8 after saying its Christmas-week same-store sales surged 27% year-over-year, mostly due to strong DVD sales.
Network Equipment Technologies
sledded 2 1/16, or 15.6%, to 11 3/16 after forecasting its fiscal third-quarter earnings would not meet the six-analyst consensus forecast of 20 cents a share.
hopped 5 1/8, or 82.8%, to a nearly five-year high of 11 3/8 after announcing December sales from its television home shopping network rose 70% vs. the same period a year ago.
Barnes & Noble
jumped 4, or 10%, to 44 1/16 after
Morgan Stanley Dean Witter
upped its price target on the bookseller.
gave up 1/8, or 6.7%, to an all-time low of 1 3/4 after
downgraded it to neutral from buy.
was slammed 6 3/4, or 18.6%, to 29 1/2 following some negative comments by
edged up 1/16 to 8 7/16 despite a downgrade to market perform from buy at
BT Alex. Brown
increased 1 9/16 to 43 after being named one of
top picks for 1999.
Offerings and stock actions
rose 1/2, or 7.4%, to 7 1/4 after expanding its buyback program to $5 million from $2 million.
lost 9 5/8, or 7%, to 127 and
skidded 6 5/16, or 10.8%, to 52 1/2 on word
is planning to sell portions of its holdings in each of the companies, according to
Securities and Exchange Commission
filings. Intel slipped 1 1/16 to 121 1/16.
advanced 2 7/8 to 62 on word it will be added to the Nasdaq 100 index tomorrow, replacing
Allied Waste Industries
. Allied Waste slid 7/16 to 21 1/16.
Senior writer Aaron L. Task contributed to Tuesday's Company Report