One, two, cha cha cha.
After posting a somewhat muted reaction to benign economic data
yesterday, the bond market seized the lead today and eventually dragged a somewhat reluctant equity market onto the dance floor.
The majority of stocks and major proxies finished with gains in the wake of fixed-income's explosion. But equities couldn't repeat the stellar gains registered yesterday.
Reminiscent somewhat of the scene in
William Wallace tells his legion to "wait, wait" before unveiling their long spears as the English cavalry charges, fixed-income players were restrained yesterday in reacting to the
Consumer Price Index
data. But after
put a few daggers in the multiple-rate hike scenario, bond bulls unsheathed tremendous buying power.
"At this moment, the underlying core cost structure of the economy is behaving, in my judgment, quite benignly," Greenspan said during the Q&A after
testifying before the
Joint Economic Committee
. "There is no immediate evidence that I can see that what we are dealing with is an incipient acceleration of core inflation."
The chairman reiterated the need for the Fed to be pre-emptive, but gave no indication a series of rate hikes is in the offing.
A notion the Fed may hike rates just once at its June 29-30, rather than at a string of meetings, "was the impetus for this market," according to one trader.
The price of the 30-year Treasury bond rose 1 13/32 to 90 6/32, its yield falling to 5.96%. That's the first close under 6% since June 8, and today's rally was the largest in more than three months.
Growth stocks, namely tech favorites, were again the prime beneficiaries of the decline in interest rates. The
Nasdaq Composite Index
rose 26.32, or 1.1%, to 2544.15 while
TheStreet.com Internet Sector
index gained 7.09, or 1.3%, to 555.73.
Dow Jones Industrial Average
rose 56.68, or 0.5%, to 10,841.63, off its session high of 10,870.44 but up from its low of 10,714.35. The
gained 9.49, or 0.7%, to 1339.90 after trading as high as 1343.54 and as low as 1322.75. The
climbed 2.18, or 0.5%, to 443.38.
Procter & Gamble
were among the Dow's best performers. The
Philadelphia Stock Exchange/KBW Bank Index
Within technology, Internet favorites outperformed traditional bellwethers.
led the way, rallying 8.3% after
BancBoston Robertson Stephens
initiated coverage with a buy rating.
ensured a positive session for the Comp while the
proved the greatest restraint on the tech-bespotted index, falling 2.8% after
Credit Suisse First Boston
lowered earning estimates. Like many chip and equipment makers, Intel enjoyed a stellar run of late and was thus ripe for profit-taking on any negative development. Still, the
Philadelphia Stock Exchange Semiconductor Index
overcame a decline as low as 453.43 to close up fractionally to 463.71, its third consecutive record.
Intel may have also reacted to the profit warning this morning from
, which rose 1.1% despite its red flag and a subsequent downgrade from
. Other PC makers were mixed as Compaq's woes were judged (rightly or wrongly) to be isolated.
rose 2.1% while
gained 2.5%. Conversely,
slid 3.3% and
declined 1.6%. The
Morgan Stanley High-Tech 35
"I think a lot of people were waiting to hear what Greenspan had to say," said Monty Hord, vice president of program trading at
. As headlines from Greenspan's testimony began around 10 a.m., "the futures immediately caught a bid."
As for how much tomorrow's concurrent expiration of stock options and futures and index futures effected today's session, Hord said it was "not huge, but there was upward pressure."
Open interest on the June S&P 500 futures contract totaled only 109,000 today heading into tomorrow's triple-witch, which is "normal to light," the trader noted. "On a four-star basis it's a two to three. It's to the buy tomorrow morning, but not huge."
Perhaps owing to the relatively light open interest in the June contract, "we've had lackluster volume all week," including today's session, Hord said. "Yesterday
the Dow was up 190 and we had just about 800 million shares. That's not impressive volume."
New York Stock Exchange
trading, 701.3 million shares were traded while advancers bested declining stocks 1,820 to 1,165. In
Nasdaq Stock Market
activity, 895.8 million shares were exchanged while gainers led 2,135 to 1,713. New 52-week highs bested new lows 75 to 54 in Big Board action and by 79 to 43 in over-the-counter trading.
Abby J. and the Mathematicians
In addition to Greenspan's testimony equities were (probably) aided by (more) positive comments from Abby Joseph Cohen, market strategist at
"Happily, current economic and corporate data appear to support our assumptions," Cohen wrote in a research report distributed this afternoon. The assumptions include: "inflation will drift only modestly higher
and core inflation remains quiescent; S&P 500 operating earnings per share will rise 7% to 8% this year and next
and our profit assumptions may be too cautious"; and markets will "easily tolerate an
-delivered flu shot."
Still, some players with a decidedly technical bent were looking for more from the best-known market average today.
"If the DJIA reaches 10,900, the odds are very strong that the
June 7 peaks
of 10,917 will be exceeded and a test of the
May 13 peak will occur
between June 18 and 21,"
Ermanometry Research said in an email to clients this morning. "We believe this test will fail and the decline will resume. We believe the decline will end during the first three weeks in July."
Reached after the close, William Erman, founder of Ermanometry Research, said the Dow's passing 10,900 today was not a prerequisite for the forecast.
"I'm sure we'll take that out in the next few days but I'm also sure the top from May 13 will hold," he said, noting the S&P 500 eclipsed its June 7 high of 1336.42 today. But as with the Dow, he sees the S&P failing in its attempt to best its all-time high of 1367.56, also reached May 13.
Among other indices, the
Dow Jones Transportation Average
fell 38.04, or 1.1%, to 3373.24; the
Dow Jones Utility Average
slid 0.54, or 0.2%, to 332.91; and the
American Stock Exchange Composite Index
added 3.77, or 0.5%, to 768.69.
Elsewhere in North American equities, the
Toronto Stock Exchange 300
nudged up 3.75 to 6929.06 and the
Mexican Stock Exchange IPC Index
added 32.13, or 0.6%, to 5660.66.
Thursday'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.
Compaq managed to pick up 1/4 to 22 1/2 with 36.2 million shares traded following this morning's warning the company expects to lose up to 15 cents a share in the second quarter. The 30-analyst forecast called for earnings of 20 cents vs. the year-ago 2 cents. The boxmaker, whose
warning last quarter crushed the stock like a gnat, blamed PC pricing pressure and said "operational issues that affected Compaq in the first quarter continue to influence our business this quarter." Compaq, which set a $2 billion cost-cutting plan, also cited inadequate revenue growth and a noncompetitive cost structure.
Merrill Lynch lowered its recommendation on the stock to long-term accumulate from buy while maintaining a near-term neutral. Elsewhere in the sector, Dell rose 3/4 to 36 1/2 while Gateway rose 1 5/8 to 67 1/16. (
took a closer look at Compaq's warning in a
piece this afternoon.)
Mergers, acquisitions and joint ventures
Cisco added 1 3/16 to 117 3/8 after saying it will acquire privately held
for about $407 million in stock. Under the terms of the deal, 3.15 million to 3.85 million shares of Cisco stock will be exchanged for all outstanding shares and options of TransMedia.
tacked on 3/4 to 48 13/16 after the
Nihon Keizai Shimbun
reported the company and Japan's
will jointly establish a telecom network linking Japan with other countries in 2000.
soared 2 9/16, or 44.1%, to 8 1/2 after announcing distribution alliances with
, a division of
hopped up 2 1/8, or 17%, to 14 5/8 after agreeing to license its rapid drug discovery technology to
for $27 million over a three-year period.
, owner of
, grew 3/16 to 35 5/8 after agreeing to buy
from closely held
for an undisclosed amount.
flew 2 3/4, or 20.1%, to 16 7/16 after setting a pact calling for
to provide the majority of the content for theglobe.com's health theme, scheduled for launch later this month. theglobe.com said it will divide the health theme into three sub-themes dedicated to health-care issues related to men, women and children. drkoop.com added 3/8 to 12 5/16.
, the publisher of this Web site, rose 15/16 to 26 9/16 after signing a one-year marketing pact with
Donaldson Lufkin & Jenrette's
. The deal calls for DLJdirect, which added 5/8 to 28 9/16, to offer
subscriptions and financial coverage to its online traders.
Earnings/revenue reports and previews
expanded 1 3/16 to 29 after reporting first-quarter earnings of 16 cents a share, beating the four-analyst forecast for 12 cents but falling below the year-ago 47 cents. The company also announced plans to sell a minority interest in its electronic marketing division,
, in an IPO later this year.
shed 1/2 to 47 5/8 after posting second-quarter earnings of 33 cents a share, beating the 23-analyst estimate of 31 cents and moving up from the year-ago 27 cents.
declined 5/8 to 18 9/16 after reporting second-quarter earnings of 36 cents a share, matching the three-analyst view and beating the year-ago 32 cents.
skidded 13/16, or 13.5%, to an all-time low of 5 1/4 after last night saying it sees second-quarter earnings of 7 cents to 9 cents a share, below expectations for 16 cents. Today,
cut the stock to hold from strong buy.
slipped 1 5/16 to 29 3/16 after warning it sees second-quarter results of break-even to earnings of 2 cents a share. The four-analyst forecast called for 14 cents this quarter. The company, which earned 22 cents a share in the year-ago period, blamed a shift in product releases at its
unit and weaker average room rates at the
Intel gave up 1 11/16 to 58 after Credit Suisse First Boston cut its earnings estimate for the chip maker to $2.25 from $2.32 a share for fiscal 1999 and to $2.55 from $2.65 for fiscal 2000. The firm said it's keeping its 12-month price target of 75. Intel "should report in the lower end of its guidance" for the second quarter of 1999 due to both "lower processor
average selling prices and lower unit shipments," First Boston said. "While costs reductions and a higher gross margin percentage had mostly outweighed this effect earlier, we believe this trend and its impact will persist into" the fourth quarter.
dwindled 3/4 to 21 3/8 after posting first-quarter earnings of 24 cents a share, 2 cents higher than the six-analyst call for a repeat of the year-ago 22 cents.
picked up 1/2 to 56 1/2 after announcing first-quarter presplit earnings of 54 cents a share, in line with the 13-analyst outlook and above the year-ago loss of 5 cents.
tacked on 1/8 to 17 1/8 after recording first-quarter earnings of 16 cents a share, 6 cents above the five-analyst estimate and higher than the year-ago 8 cents.
tumbled 3 1/4, or 20.2%, to an annual low of 12 13/16 after saying it expects to report earnings of 25 cents to 30 cents a share for the second quarter, below the current 11-analyst outlook for 33 cents vs. the year-ago 26 cents. The company attributed the expected shortfall to lower-than-anticipated occupancy in nursing facilities and a diminished acuity level among residents of the facilities.
cut the stock to attractive from buy, and Merrill Lynch dropped it to near-term accumulate from buy.
advanced 1/8 to 10 15/16 after posting second-quarter earnings of 23 cents a share, topping the four-analyst prediction by 1 cent and moving ahead of the year-ago 17 cents.
Offerings and stock actions
vaulted 4 1/2 to 119 1/2 after shareholders approved two transactions that bring Microsoft co-founder
stake in the company to 34%, totaling his investment at $426 million.
jumped 6 1/2, or 14.9%, to 50 1/2 after Credit Suisse First Boston changed its estimate for the company's 1999 results to a loss of 39 cents a share from a loss of 40 cents.
flourished 1 1/8 to annual high of 30 3/4 after Prudential pushed up the stock to strong buy from accumulate.
flew 2 3/8 to 61 13/16 after Merrill Lynch raised it to near-term buy from accumulate.
surged 2 9/16, or 6.8%, to 40 after Merrill Lynch started coverage with a near-term accumulate and a long-term buy.
tanked 4 1/16, or 21.5%, to an annual low of 14 13/16 after saying changes in Medicare may have a larger negative impact on its newly acquired
unit than anticipated.
Circus Circus Enterprises
excelled 1 1/4, or 6%, to 22 3/16 after shareholders approved changing the company name to
Mandalay Resort Group
. The stock will begin trading Monday under the symbol MBG.
shaved off 3/16 to 33 13/16 after saying it's considering closing part of its cereal plant in Battle Creek, Mich. Up to 700 of the current 1,100 hourly and salaried positions at the plant would be cut as early as the first quarter of 2000, the company said.
gave up 5/16 to 48 15/16 following yesterday's news of a lawsuit alleging the company charged customers for automobile tire service but didn't do the work. Today, CEO Arthur Martinez told analysts in New York that the retailer's plans to improve sales and profits in the second half of the year remain on track.
popped up 6 1/8, or 10.8%, to 63 1/8 after management outlined at a meeting with analysts the company's plans for a summer launch of its SFX.com site. The site will allow for ticket purchases and provide event information.