With the kind of elan (or ignorance?) that has typified the bull market for so long, the
Dow Jones Industrial Average
hit all-time highs today despite a macabre backdrop only
could love. The list of potential deterrents to the records featured rising oil prices, falling dollar and bond prices, and more concerns about big-cap technology stocks.
Nonetheless, the most public face of equities rose as high as 9776.16 before closing up 79.08, or 0.8%, at 9772.84, eclipsing the closing high of 9736.08 set last
After rising as high as 1287.03, the S&P 500 closed up 7, or 0.6%, to 1286.84, besting
Monday's closing high of 1282.73.
was the Dow's biggest gainer, rising 7.1% on news it will seek alliances with pharmaceutical companies to unleash the potential of its life-sciences unit.
Among Dow gainers, DuPont was followed by
. Energy plays gained along with crude prices, giving the S&P 500 a big lift. Speculation that
will slash output before its March 23 meeting pushed crude prices up 84 cents to $14.69, their first close above $14 since Nov. 4. In reaction, the
American Stock Exchange Oil Index
gained 4.8% and the
Philadelphia Stock Exchange Oil Service Index
Also partially in reaction to oil's rise, the price of the 30-year Treasury bond fell 9/32 to 95 19/32, its yield rising to 5.55%. The dollar fell to 119.73 yen, its fourth straight decline vs. the Japanese currency.
Higher oil prices will surely be welcomed by the long-suffering holders of energy stocks. But higher crude prices have potentially dire consequences for stocks with stretched valuations. Tech stocks, that is.
"More important than anything, maybe now the direction
of oil prices is no longer down, but stabilizing and up," said Buzz Hussey, managing director at
Dain Rauscher Wessels
in Dallas. "By the same token, tech stocks, particularly box makers, look like their day in the sun may have faded. What we have today is pretty fast rotation. With the fundamentals perhaps improving in the energy complex, a lot of money is pouring in."
Nasdaq Composite Index
gained 13.06, or 0.6%, to 2406.00, marking its first close above 2400 since Feb. 11. The index overcame early reticence thanks largely to strength in
and a host of Internet names.
But some traders focused on more signs of trouble in the group.
fell 12.7% after
Morgan Stanley Dean Witter
cut its recommendation to neutral from outperform.
PC makers tumbled amid ongoing worries about demand.
lost 3.6% and
forecast declining gross margins in a 10-Q filing with the
Securities & Exchange Commission
. Still, Cisco closed down just 0.9% at 104 3/8 after trading as low as 102 1/2.
Net stocks fared far better, led again by
, which rose 14.3%. The battle mounted
CEO David Wetherell over terms of Lycos' merger deal with
New coverage of
Henry Blodget also gave Net stocks a boost.
TheStreet.com Internet Sector
index closed up 18.79, or 3.3%, to 587.68.
TheStreet.com E-Commerce Index
gained 5.11, or 4.9%, to 109.52.
rose 1.92, or 0.5%, to 401.12, reflecting pleasant market breadth.
New York Stock Exchange
trading, a thick 845.3 million shares traded, while advancers bested declining stocks 1,651 to 1,336. In
Nasdaq Stock Market
activity, 940.8 million shares were exchanged, while gainers led decliners 2,058 to 1,910. New 52-week lows led new highs 67 to 60 on the Big Board but new highs led 89 to 64 in over-the-counter trading.
Oil Bull Sees Red (Flag)
"We're a little dubious as to whether OPEC's meeting will prove as promising as so many think," Hussey said. "We've been disappointed in the past. We view this with a good deal of jaundice, but it does reflect how cheap these stocks have been."
Hussey remains "very bullish" long-term on energy stocks and recommends investors with no exposure buy bigger names such as
. (Dain Rauscher Wessels has not done underwriting for either.)
However, a better opportunity to get into the group may emerge in the coming weeks, he said. "If there is some disappointment out of the OPEC meetings, these stocks will have a good selloff. As we talk to industry people, the fundamentals are still bad and getting worse."
Hussey noted the oil service index has only moved to the top end of its six-to-eight month range of between 47 and 60, closing today at 60.94. "There's no reason to suspect we'll bust on through," he said. "Because this thing has whipped up so quickly, it doesn't inspire companies to so quickly change drilling budgets."
Carl Bhathena, vice president at
Holland Capital Management
in Chicago, agreed, saying the inflationary implications of oil's recent uptick are muted.
"Oil prices may remind people there are inflationary forces in the system, but what will hold inflation back is globally we have slackened demand and there's quite a bit of excess capacity," Bhathena said. "This kind of movement upward is not necessarily the time to sound the inflation alarm."
Bhathena remains bullish on stocks, but mainly the large-caps Holland Capital is focused on (how convenient!). Noting the top 25 stocks in the S&P 500 account for roughly 40% of its market cap and have a 12-month return of about 24%, the fund manager concedes that "the remainder aren't contributing much. That is an area of concern."
"Until there's a catalyst to help relatively smaller-cap stocks gain attention, it's difficult to see this market continue upward," he continued. "We should see a period of consolidation."
If and when that consolidation comes, however, it will be from ever-higher levels on the major indices.
Among other indices, the
Dow Jones Transportation Average
fell 10.90, or 0.3%, to 3289.95; the
Dow Jones Utility Average
gained 3.62, or 1.2%, to 298.63; and the
American Stock Exchange Composite Index
closed up 3.69, or 0.5%, to 715.14.
Elsewhere in North American equities, the
Toronto Stock Exchange 300
jumped 84/25, or 1.3%, to 6572.62 and the
Mexican Stock Exchange IPC Index
rocketed 160.17, or 3.5%, to 4728.27.
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.
As noted above, oil and oil-services stocks rallied on speculation that OPEC will cut production, which in turn lifted oil prices. A Saudi oil minister said cuts could be announced before the organization's March 23 meeting.
rose 3 1/16, or 14.4%, to 24 5/16;
rose 1 13/16, or 11.2%, to 18;
rose 3 3/16, or 14.3%, to 25 9/16; Schlumberger rose 3 3/16, or 5.8%, to 58 1/2; and Halliburton rose 4 1/4, or 13.2%, to 36 1/2.
As mentioned above, Amazon.com scored 7 3/16, or 5.5%, to 137 1/8 and Yahoo! scored 6 3/8 to 173 5/8 after Merrill Lynch's new Internet analyst, Henry Blodget, initiated coverage of both stocks at near-term accumulate and long-term buy. Blodget also started coverage of America Online, which lifted 2 11/16 to 92 13/16, with a near- and long-term buy. The analyst participated in
Net Stock Summit.
Elsewhere in Netland, Lycos swelled 13 3/4, or 14.3%, to 110 following
yesterday's announcement that CMGI's CEO David Wetherell resigned from Lycos' board and will fight the proposed merger with USA Networks. CMGI, which tumbled 2 11/16 to 191 11/16, may even consider bidding to acquire Lycos and has hired Morgan Stanley Dean Witter to find suitors for Lycos,
The Wall Street Journal
BancBoston Robertson Stephens
reiterated its buy rating on Lycos, reporting the "most likely outcome" being the close of a Lycos-USA deal "under present or renegotiated terms."
Mergers, acquisitions and joint ventures
jumped 3 1/2, or 10.1%, to 38 3/8 after agreeing to buy
for $19.50 a share. Powerhouse shot up 3 1/16, or 20.8%, to an annual high of 17 7/8. The deal values Powerhouse at about $280 million, including $60 million in debt assumption.
Burnham Pacific Properties
picked up 9/16, or 5.5%, to 10 3/4 after teaming with the
California Public Employees Retirement System
to buy 28 shopping centers from
. AMB added 3/8 to 21 1/2.
DuPont, rumored to be in merger talks with
, excelled 3 13/16, or 7.1%, to 57 3/8 after, as mentioned earlier, announcing it will seek alliances within the pharmaceutical industry to unleash the value of its life sciences division.
Deutsche Bank Securities
upped its rating on DuPont to accumulate from hold. Monsanto lifted 1 to 47.
J. Ray McDermott
soared 3 3/4, or 15.4%, to 28 1/8 after
offered to buy the remaining shares of the company it doesn't own for $375 million. McDermott flew 1 5/16, or 5.7%, to 24 5/16.
, who foreshadowed the deal in a
Monday column, weighed in on the bid in an
extra column this afternoon.
expanded 4, or 6.9%, to 62 on word
is evaluating the company's
unit as a potential provider of advanced voice switching systems for AT&T's worldwide network. AT&T sliced off 1 9/16 to 84.
popped up 2 13/16, or 26.8%, to an all-time high of 13 3/8 on word it will be acquired by
SunGuard Data Systems
in a stock swap valued at $210 million. Sun Data gave up 7/8 to 39 1/16.
Earnings/revenue reports and previews
grew 2 3/8, or 5.1%, to 49 5/8 after topping fourth-quarter earnings estimates by a nickel a share last night with a profit of 47 cents.
PSS World Medical
skidded 2 9/32, or 19%, to an annual low of 9 3/4 after forecasting its fourth-quarter earnings will not meet the eight-analyst estimate of 24 cents a share. The medical supply concern said its fourth-quarter results will likely top 21 cents.
slid 7/16 to 38 15/16 even after posting first-quarter earnings of 22 cents a share, 3 cents higher than the six-analyst view and above its year-ago 15 cents.
dropped 1 9/16, or 10.5%, to 13 3/8 after warning its third-quarter profits will be 35% to 40% below second-quarter results of 32 cents. The three-analyst consensus is currently for earnings of 49 cents.
Toys R Us
sloughed off 9/16 to 17 3/8 after recording fourth-quarter earnings of $1.28 a share, 8 cents above the 16-analyst outlook but below the year-ago $1.32.
True North Communications
tacked on 11/16 to 24 3/8 after reporting fourth-quarter earnings of 75 cents a share, on target with the six-analyst expectation and above the year-ago 59 cents.
sank 1 3/8, or 9.6%, to 13 after reporting fourth-quarter earnings of 18 cents a share, 1 cent higher than the three-analyst view but behind the year-ago 25 cents.
slid 1/8 to 16 3/4 after announcing second-quarter earnings of 47 cents a share, missing the seven-analyst forecast by 4 cents and falling below the year-ago 75 cents. Merrill Lynch cut the stock to near-term neutral from accumulate while maintaining its long-term buy.
lowered 3/16 to 4 11/16 after posting fourth-quarter earnings of 21 cents a share, below both the four-analyst estimate of 23 cents and the year-ago 78 cents. Venator CEO Roger Farah on March 2 said he was comfortable with the 23-cent estimate, as
Offerings and stock actions
jumped 4, or 9.6%, to 45 13/16 after announcing it will repurchase up to $2 billion of its stock over the next two years.
vaulted 1 15/16, or 9%, to 23 7/16 after
ING Baring Furman Selz
initiated coverage at strong buy.
Computer Associates stumbled 5 1/16, or 12.7%, to 34 15/16 after Morgan Stanley Dean Witter cut its recommendation to neutral from outperform.
declined 4 5/16, or 12.6%, to an annual low of 30 after
cut its recommendation to market performer from market outperformer. Yesterday, Fluor said it will cut 5,000 jobs as part of a reorganization effort aimed at boosting profits.
shot up 18, or 60%, to an all-time high of 48 1/2 after Goldman Sachs and Morgan Stanley Dean Witter separately initiated coverage with market outperformer and outperform ratings, respectively.
tanked 2 5/8, or 27.8%, to an annual low of 6 13/16 after
dropped the stock to long-term buy from strong buy.
surged 7 1/16, or 20.1%, to an all-time high of 42 1/4 after ING Baring Furman Selz upped its recommendation on the Internet service provider to buy from hold.
Century Telephone Enterprises
flourished 3 13/16, or 6%, to 67 1/4 on last night's announcement it will replace
in the S&P 500 on a yet-to-be-determined date. Rubbermaid is merging with S&P 500 component