As a late-winter chill descended on Wall Street, stocks began the week on a slow burn. Following a tepid start, major market proxies began to simmer at midmorning but lately had been reduced to a slow boil as lunchtime beckoned.
Dow Jones Industrial Average
lately was up 61 to 9937, having traded as high as 9959.88.
was leading the Dow and threatening to best its all-time closing high of 108 11/16.
"They're going to make a run at
10,000," said Doug Myers, vice president of equity trading at
in Atlanta. "It smacks of artificial tape-painting, but someone is buying these stocks. I think once the numbers hit, people can breathe a sigh of relief and then everyone can go about their business of buying and selling stocks."
With an "absence of economic data today" and favorable recent reports such as Friday's
Producer Price Index
, "there's no potential bogeymen that're going to cause a hiccup in the engine," Myers said. "The money keeps flowing in."
The trader noted financial stocks are responding to more consolidation news and airlines to positive earnings developments. "The only thing really on the downside is oils and they've had a good run," he said. "This is probably a technical correction" in the energy sector.
was higher by 8 to 1302 and the
was up 1 1/2 to 400.
Nasdaq Composite Index
was higher by 29 to 2410 as the bulk of tech bellwethers (both traditional and Internet) were on the rise.
Dow 10,000 is 'one of those barriers that has to be touched, but it will be an anticlimax,' said CSFB's Christine Callies. 'The equity market is likely to fall back shortly thereafter.'
was beginning to recover from
Friday's undressing, while
were also solidly higher. The
was lately up 1.5%.
New York Stock Exchange
trading, Dow member
were following suit. The
Morgan Stanley High-Tech 35
was up 1.9%.
Internet stalwarts were also higher, led again by
, lately up 10.3%. CMGI managing director Peter Mills said "third parties" have expressed interest in acquiring
reported on the CMGI-Lycos-
hate triangle in a recent
TheStreet.com Internet Sector
index was up 22 to 590.
TheStreet.com E-Commerce Index
was up 4 to 109.
News of a $16 billion merger agreement between
had financial stocks higher.
, itself the subject of takeover rumors, was one of the Dow's best performers while the
American Stock Exchange Broker/Dealer Index
was higher by 3.2%.
Cash-Heavy Buffett Lacks Influence
(BRKA:NYSE) CEO Warren Buffett's disclosure in his annual
letter to shareholders the company had more than $15 billion in cash at year-end 1998 doesn't seem to be much of a restraining factor. Perhaps Buffett's admission to shareholders that "you would have been better off last year if I had regularly snuck off to the movies during market hours" and his less-than-spectacular returns in recent years reflect a diminished ability of the famed investor to influence daily trading. If, indeed, he's ever had it.
"The ability of individuals to move markets is overrated," said Christine Callies, U.S. investment strategist at
Credit Suisse First Boston
, when asked about the Buffett letter. "If you're managing as much money as Mr. Buffett and think future returns on equity relative to other asset classes are about as good as they're going to get, in all probability raising some cash would appear to make sense. But I don't think it should be read as a call on the market."
Meanwhile, transports are showing the kind of moxie needed to make Dow 10,000 a reality.
Dow Jones Transportation Average
was up 76, or 2.3%, to 3343, inspired by
forecast its first-quarter and full-year earnings will exceed expectations. UAL, the parent of
, lately was up 7.1%, helping the
American Stock Exchange Airline Index
In NYSE trading, advancers were squeaking past declining stocks 1,383 to 1,374 on 410 million shares. In
Nasdaq Stock Market
activity, losers were leading winners 1,823 to 1,747 on 487 million shares.
"The recovery the market has had remains quite narrow," Callies said. "Therefore, it's an unstable rally phase and I would not be chasing it at these levels." Dow 10,000 is "one of those barriers that has to be touched, but it will be an anticlimax. The equity market is likely to fall back shortly thereafter."
For roughly the past year, the investment strategist has maintained an equity allocation recommendation of 60% stocks, 30% bonds and 10% cash. In addition to the narrowness of the recent advance, Callies is concerned about the direction of interest rates.
"The cyclical environment for bonds has change noticeably for the worst," she said. "Inflation at the consumer level has stopped going down, production has accelerated and durable goods orders have been stronger than anyone thought."
Noting the long bond yield has risen as much as 100 basis points from its recent low, Callies declared a "direction change" has taken place in rates, with 6% a likely possibility. "We're definitely not calling for a major increase
from current levels but it doesn't take a major increase to put the brakes on a stock market this richly valued," she said. "Interest rates have started to go up. If interest rates are up, P/Es have to go down."
The price of the 30-year Treasury bond lately was down 1/32 to 95 27/32, its yield at 5.54%. (For more on the fixed-income market, see today's early
Monday's Midday Movers
Fleet was losing 2 1/8 to 42 5/8 after agreeing to buy BankBoston for $16 billion in stock. BankBoston was up 15/16 to 47 7/8. The deal, announced
last night, values BankBoston shares at $53 each. Under the agreement, BankBoston shareholders will receive 1.18 Fleet shares for each BankBoston share held. The new company will be called
and will become the nation's eighth-largest bank.
In other news:
was down 1 1/2 to 43 after ending its merger agreement with
. Chancellor Chairman Thomas O. Hicks, who is also chairman and chief executive of
Hicks Muse Tate & Furst
, was appointed to the additional role of Chancellor chief executive following the resignation of Jeffrey A. Marcus.
BT Alex. Brown
resumed coverage of Chancellor with a strong buy.
was down 1 5/8, or 6.1%, to 25 1/16 after saying it sees $13 million in expenses from its $980 million purchase of two private optical communication companies:
El Paso Energy
was down 3 5/8, or 10.1%, to 32 1/8 after agreeing to acquire
for $6 billion, including the assumption of $2 billion in debt. Under the deal, each Sonat share will be converted into one share of El Paso Energy stock. Sonat was down 11/16 to 29 3/8.
Lycos was up 5 3/4, or 5.8%, to 104 11/16 after Peter Mills, general partner in CMGI's investment arm, said a confederation of third parties that could include CMGI was looking to buy Lycos. Last week, CMGI CEO David Wetherell quit the Lycos board to protest the merger of the company with USA Networks. CMGI, which will become a component of the Nasdaq 100 at the close of trading Wednesday, was up 16 13/16, or 10.3%, to 181. CMGI will replace
, which is being acquired by
. AOL was up 3 11/16 to 99 13/16; Netscape was up 4 3/4, or 5.6%, to 89 5/8; and USA Networks was down 7/16 to 37 1/2.
was flying 15 1/4, or 55.7%, to 42 13/16 after CEO and Chairman Brent Frei appeared on
this morning. The stock surged 55% Friday after
Credit Suisse First Boston
initiated coverage with a buy.
was up 3 3/16, or 9.3%, to 37 1/2 after
agreed to buy the 80% of the company it doesn't already own for $7.7 billion -- 45% of which will be in cash and the rest in DuPont stock. DuPont was off 1 5/16 to 56 7/16.
was up 3 1/2, or 5%, to 73 3/16 after
Morgan Stanley Dean Witter
upgraded the stock to strong buy from outperform.
United Airlines parent UAL was up 4 3/4, or 7.1%, to 71 13/16 after saying it expects first-quarter and full-year earnings to beat Wall Street estimates. The company sees quarter earnings around $1.35 a share, above the 10-analyst estimate of $1.12. For 1999, UAL expects to earn $10 to $12 a share, which would top the 11-analyst consensus for $9.12. BT Alex. Brown reiterated its market perform on the stock.
was up 2 3/8 to 66 3/8, and
was up 2 15/16, or 5.1%, to 60 15/16.
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