Wall Street's rotation away from its big-cap darlings continued apace today, with the august
Dow Jones Industrial Average
skidding a bit as other major indices headed higher.
The incessant chatter about Dow 9000, muffled by
yesterday's pullback, quieted still further this morning as the Dow fell as much as 51.82 to 8820.98. The index slogged around underwater until after 3 p.m. EST, when it briefly poked above break-even and traded as high as 8892.98. More selling met that advance, and the Dow ended down 25.91 at 8846.89.
were the largest losers, with
Procter & Gamble
the upside standouts.
held out longer but crept back into negative territory near the close, finishing down 1.12 at 1100.80. Tech and small-cap stocks stayed positive but slipped from their best levels of the session, with the
Nasdaq Composite Index
up 4.03 to 1828.54, the large-cap
up 3.12 to 1217.94 and the small-cap
up 0.67 to 477.79.
Volume tailed off from yesterday's bang and clatter, and breadth was middling.
New York Stock Exchange
decliners outnumbered advancers by 1,506 to 1,453 on 603.9 million shares, with 131 new highs (down sharply from recent levels) ahead of 26 new lows. On the Nasdaq, 2,282 advancers led 2,069 decliners on 731.3 million shares. New Nasdaq highs topped new lows by 193 to 63.
The Dow's retreat from the vaunted 9000 mark is dampening few palms on Wall Street, where the pros tolerate the media's and the public's millennium fever from a pose of mild amusement.
"It's kind of funny, because up until two or three days ago we were seeing the early signs of what I call target inflation," said John Manley, equity strategist at
Salomon Smith Barney
. "If you thought it was going to 9500, I had to think it was going to 10,000. If you thought 10,000, I had to think 10,500. It was like a
Putting aside the auctioneering and other assorted noise, Manley said he's trying to take a cold-eyed look at the real factors affecting stocks. "Valuations are high, but valuations are a bad measure," he said. "They matter about three times every 30 years, and you don't know when that is. Earnings are better than valuations as a profit driver, but for the market it's still liquidity. We buy stocks with money, not earnings."
The other important puzzle piece is interest rates, and Manley finds reasons to smile there. With rates around 6% and inflation around 2%, the market can continue to rise despite the prevailing overoptimism about second-half earnings, he said.
"If rates go down, that clearly helps stocks," Manley said. "Any time the long-bond rate has been down more than 8% from its 52-week average, you've always made money." Right now, a yield of 5.92% on the 30-year Treasury bond would put it 8% below that average, he said. The 30-year sold off today, losing 6/32 to 102 8/32 and sending the yield up to 5.96%.
Even if stock prices drop sharply, the economic fundamentals are such that the dip shouldn't cause alarm, Manley said. "Eight to 12% is, to me, a correction you buy into rather than sell," he said. "Anything more than that would require significantly higher interest rates. What happens the next time the market's down 8 to 12%? Unless there are missiles on the dewline, there's a knee-jerk reaction back to stocks."
Elsewhere in North America, the
Toronto Stock Exchange 300
slipped 9.92 to 7569.29 and the Mexican
lost 10.91 to 4986.23.
Thursday's Company Report
Earnings estimates from First Call; new highs and lows on a closing basis unless otherwise specified
It seems like Wall Street was so consumed with Dow 9000 yesterday that today investors found themselves catching up on Wednesday's news.
vaulted 6 9/16, or 31.6%, to an all-time high of 27 5/16 on good feelings about its merger with a newly formed subsidiary of
Fidelity National Financial
, which was announced yesterday. Fidelity picked up 1 3/16 to 36.
Mergers, acquisitions and joint ventures
Data Transmission Network
sprang 3 13/16, or 12%, to an all-time high of 35 5/8 after announcing
late yesterday that it has received an unsolicited buyout offer from a group of investors led by Jerrold Pressman.
jumped 1 5/8, or 12.2%, to 15 on goodwill about the company's buyout of New Zealand's
rose 3 11/16, or 9.9%, to an all-time high of 40 15/16 after it agreed to acquire privately held
of Bermuda for $711 million in cash. ACE said it will offer up to 16.5 million shares to finance the deal.
NCI Building Systems
roared 2 3/4, or 6.9%, to 43 1/4 -- at one point hitting 44 7/8 -- after acquiring
, the American metal-building component of Britain's
vaulted 3 1/16, or 6.3%, to 52 after Connecticut lawmakers
yesterday defeated a bill that would have helped the company stop a hostile takeover bid from
. SPX fell 13/16 to 74 7/16. Echlin also reported second-quarter earnings of 42 cents per share, a penny above the seven-analyst estimate and a nickel above the year-ago figure, which the company said were enhanced by recent job cuts.
sailed 2 3/4, or 6.3%, to an all-time high of 46 5/8 after announcing that it will acquire privately held
of Boston for an undisclosed amount. In a separate pooling-of-interests, Snyder also will acquire
Publimed Promotions SA
of Paris for $43 million.
gained 15/16 to 40 after announcing that it will buy Netherlands-based Internet service provider
for $154.4 million in stock and cash.
Earnings reports and previews
plummeted 3 3/4, or 22.6%, to 13 after saying its fourth-quarter earnings won't meet the five-analyst estimate of 33 cents per share. The company blamed the shortfall on unexercised purchase options on leased equipment and an increase in its allowance for doubtful accounts related to certain international customers.
sank 1 3/4, or 15.1%, to 9 7/8 after saying yesterday that it will take a $13 million charge to third-quarter earnings, for which the single-analyst prediction is 20 cents per share, to close its manufacturing facilities. The company plans to outsource the production of its product lines to
, a unit of
, which added 1 to 21 9/16.
dropped 1 5/16, or 12.7%, to 9 1/16 after reporting fourth-quarter earnings of 15 cents per share, missing the five-analyst prediction of 23 cents and the year-ago 16 cents.
stumbled 2 13/16, or 11.8%, to 21 1/16 after reporting late
yesterday second-quarter earnings on target with analyst estimates.
picked up 4 5/16, or 6.6%, to 69 5/16 after late
yesterday reporting strong third-quarter earnings. The company noted that it expects its 1998 international results to be profitable but below 1997 levels.
skidded 7/8, or 5.7%, to 14 7/16 after reporting a fourth-quarter loss
slipped 1/2 to 15 1/16 after warning
last night that its first-quarter loss will be worse than expected.
Morgan Stanley Dean Witter
lost 2 9/16 to 73 1/8 even after reporting first-quarter earnings of $1.10 per share, 4 cents above the 13-analyst estimate and higher than the year-ago 91 cents.
lost 3/8 to 16 11/16 after announcing that it expects to report third-quarter earnings between 10 cents and 12 cents per share, slightly below the six-analyst estimate of 13 cents but above the year-ago 8 cents. The company said revenues will slip 6%, to $235 million, from year-ago levels due to the restructuring of European operations and currency fluctuations in Asia.
tacked on 1/8 to 7 1/16 after saying it expects to meet the two-analyst fourth-quarter earnings estimate of 8 cents per share.
Offerings and stock actions
slipped 1 3/8, or 5.9%, to 21 15/16 after announcing yesterday that it would sell up to 1.5 million shares in a public offering, including 500,000 beneficially owned by CEO Barry Ackerley.
climbed 6 3/8, or 12.9%, to an all-time high of 55 11/16 after
Bankers Trust Alex. Brown
raised it to buy from market perform. Yesterday,
Sumitomo Bank of California
-- which plummeted 12 1/2, or 24.8%, to 38 1/4 -- agreed to merge with Zions in a deal valued at $546 million.
added 3/4 to 33 1/4 after Morgan Stanley Dean Witter started coverage with a strong buy.
Marks Brothers Jewelers
tacked on 1/4 to 19 3/4 after
Salomon Smith Barney
initiated coverage with an outperform and a target price of 25.
gained 1 to 32 15/16 after Salomon Smith Barney began coverage with a buy. Yesterday, CIT set an initial cash dividend of 10 cents per share.
lost 1/4 to 57 3/16 even though Salomon Smith Barney initiated coverage with an outperform.
fell 15/16 to 72 1/16 even after Salomon Smith Barney raised its target price to 85 from 75.
lost 1/16 to 14 1/2 after
cut it to unattractive from neutral.
sailed 1 1/2, or 14.3%, to 12 5/32 after announcing it has received multiple production orders from
. Texas Instruments added 1/4 to 55 13/16.
sank 4 5/16, or 11.9%, to 31 7/8 after
The Wall Street Journal
quoted an analyst saying he feels the company's shares are overvalued and are a short possibility.
, also cited in the article, lost 2 1/4, or 5.9%, to 35 3/4.
McDonald's climbed 2 3/8 to 55 3/8 after announcing initiatives to improve restaurants, cut costs and enhance returns. The plans may also call for job cuts.
Credit Suisse First Boston
upgraded Mickey D's to strong buy from buy, and
began coverage at market performer.
added 2 1/16 to 78 3/16 after announcing that Craig Barrett will replace Andy Grove as CEO. Grove will remain the company's chairman. The chip manufacturer also announced that it is increasing its stock repurchase program by 100 million additional shares.
jumped 1/2 to 43 1/4 after CFO Karl Von Der Heyden resigned and the company named Michael White to the post. Von Der Heyden will remain vice-chairman.
added 5/16 to 82 5/16 after its
unit named Mark Begor CFO. Begor replaces Warren Jenson who is leaving to become CFO at
, which tumbled 2 3/8 to 117 3/16.
leapt 1 3/16 to 36 3/4 and
added 5/16 to 56 13/16 after settling a pending lawsuit about patent infringement. The companies agreed to cross-license each other's modem patents.
tacked on 5/16 to 35 3/8 after it was reported that the company is in talks with the trustees of the
Diana, Princess of Wales Memorial Fund
about producing a Diana doll.