Oscar De La Hoya
can score a TKO with a (near-)broken left hand, it's not surprising to see some (relatively) healthy analysts inflict serious damage on the stock market in a preholiday week amid modest volume. A cadre of analysts took shots at two of the market's leaders -- financials and technology -- and with its head cut off, the market's body withered.
Technology stocks suffered the brunt of the damage today. The
Nasdaq Composite Index
fell 66.48, or 2.6%, to 2453.66.
TheStreet.com Internet Sector
index tumbled 46.70, or 7.5%, to 576.68 after Ralph Acampora, chief technical analyst at
issued some cautious comments on Net favorites.
"There's a lot of rotation going on," Acampora told
. "This morning was another group call. I said former leaders are under pressure and some Internet stocks look like they're rolling over."
Specifically, the technician said
could fall as low as 90 if it breaks through 112, which -- coincidentally -- is also the key support level for
. Plus, "I wouldn't want to see
below 41," he said.
AOL closed down 5.4% to 119 9/16, @Home shed 11.3% to 115 7/16, and Infoseek lost 5.7% to 42 7/8.
each breached Acampora's key levels of 146 and 130, respectively.
Yahoo! fell 8.8% to 137 7/8 and Excite closed off 11.2% to 118 1/16.
Other Net leaders, such as
, tumbled in concert, as did secondary plays such as
, the publisher of this Web site.
'Amazon.com, Yahoo! and CMGI are all 100 points off their highs,' said Gotham Capital's Ronny Kraft. 'Acampora downgrading the Internets now is like warning the guy that got run over by a train that the train is coming.'
jumped 26% and
gained a further 11%.
Still, some market players said Acampora's negative Net call is too little, too late.
"The Internets have been pulling back viciously since the end of April. Amazon.com, Yahoo! and CMGI are all 100 points off their highs," said Ronny Kraft, CEO of
Gotham Capital Management
, who is short AOL, CMGI and Amazon.com (among others). "Acampora downgrading the Internets now is like warning the guy that got run over by a train that the train is coming."
Kraft said "a lot of stocks are coming into major
support areas," citing
as prime examples.
"If Intel breaks 55 it's going to be ugly," he said, dubbing Dell's weakness "stifling."
Intel fell 1.9% to 55 15/16 while Dell slid 3.4% to 36 1/8.
Meanwhile, Thomas Galvin, chief investment officer at
Donaldson Lufkin & Jenrette
, issued some negative comments about tech stocks today (as reported in the
Tech leaders fell in near-unanimity, notably
, which fell 4.1% despite announcing a $2 billion stock buyback program
late Friday. The
Morgan Stanley High-Tech 35
fell 2.9% while the
shed 2.6% and the
Philadelphia Stock Exchange Semiconductor Index
IBM and H-P were the biggest drags on the
Dow Jones Industrial Average
, which fell 174.61, or 1.6%, to 10,654.67 after trading as high as 10,856.42 early on. The
shed 23.64, or 1.8%, to 1306.65 and the
dipped 8.75, or 2%, to 440.39.
In addition to flagging techs, the Dow and S&P were sideswiped by weakness in financials. Citing Y2K concerns, among others,
Credit Suisse First Boston
to the rarely used sell recommendation. The brokerage simultaneously downgraded
to hold from buy.
Citigroup and Chase each fell about 4%, leading the
Philadelphia Stock Exchange/KBW Bank Index
Seperately, airline stocks tumbled after
BT Alex. Brown
downgraded the group; the
American Stock Exchange Airline Index
Finally, energy stocks weakened amid a dip in crude prices; the
American Stock Exchange Oil & Gas Index
fell 2.3% while the
Philadelphia Stock Exchange Oil Service Index
Utilities were the lone positive standout today. The
Philadelphia Stock Exchange Utility Index
rose 1.3% while the
Dow Jones Utility Average
rose 2.28, or 0.7%, to 327.43.
New York Stock Exchange
trading, 754.7 million shares were traded while declining stocks whipped advancers 2,036 to 948. In
Nasdaq Stock Market
activity, 925 million shares were exchanged while losers led 2,638 to 1,368. New 52-week highs led new lows 55 to 43 in Big Board activity and by 88 to 53 in over-the-counter trading.
Staying the Course of 1000 Points of Light
Despite the selloff, most market players were largely undisturbed.
Acampora, for one, said cautiousness on Net leaders is "not a market call," predicting the Dow will be trading well above 10,000 six months hence.
"I'm long-term bullish and have been for some time," he said. "The market today around 11,000 is completely different than when we crossed 10,000 and everyone was moaning and saying the market was too narrow."
Portfolio managers are now coming to the realization the shift to small- and mid-cap stocks, as well as cyclicals, is "for real," Acampora said. "Portfolio managers are starting to sell older leadership, which is causing weakness in leading averages. This is a normal, long-overdue pause for old leaders and an opportunity
for investors to shift horses. It's tweaking time."
Even Kraft, largely bearish in recent weeks, described the session as a "healthy correction in the context of a strong market over the last few months."
The hedge fund manager predicted the market will be "range-bound" for the next few months. But while the 9100-to-9500 trading range earlier in the year was "resolved to the upside," he expects the current range will be "resolved to the downside."
Speaking of ranges, Scott Bleier, chief investment strategist at
, noted the S&P 500 broke through its recent 1320-to-1365
trading range. Furthermore, it's "obvious" the market is undergoing a fairly serious correction, Bleier said.
Since markets rarely do as expected, the strategist is looking for a near-term reversal.
"I think we're going to bounce at some point and rally into the Memorial Day weekend," he said. "The market loves to rally into flag-waving holidays."
Among other indices, the
Dow Jones Transportation Average
fell 77.46, or 2.2%, to 3473.80 and the
American Stock Exchange Composite Index
added 9.96, or 1.3%, to 785.41.
The price of the 30-year Treasury bond rose 4/32 to 92 25/32, its yield steady at 5.76%.
Elsewhere in North American equities, the
Toronto Stock Exchange 300
slid 8.89 to 6965.97 and the
Mexican Stock Exchange IPC Index
tumbled 140.71, or 2.5%, to 5498.79.
Monday'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.
Wall Street today was kind of like that
All Summer in a Day
. Except a) it was New York, not Venus b) everyone, not just Margot, felt the bitter cold of the rain, and c) it didn't seem like anybody anywhere was happy or enjoying any sun. But the bleak gray despair? Check, had that baby covered.
Most notably caught in the rain were the financial stocks, which felt reverberating pressure from an aforementioned downgrade to sell from hold on four bank names. The culprit? Michael Mayo, a bank analyst at Credit Suisse First Boston, who cited Y2K worries for his slashing. Bank One fell 1 5/16 to 58 1/2, off an earlier low of 56 5/16; Citigroup fell 2 11/16 to 65 1/8, off an earlier low of 64 1/8; Chase Manhattan fell 3 1/16 to 75 7/8; and J.P. Morgan fell 1 15/16 to 136 3/4, off an earlier low of 135 1/2. BankBoston, lowered by Credit Suisse to hold from buy, fell 1 11/16 to 46 3/4.
Mergers, acquisitions and joint ventures
tanked 7 3/8, or 20.9%, to 28 on word it's acquiring
vehicle-management and fuel-card businesses in a deal valued at $1.8 billion. Cendant added 11/16 to 19 7/8.
Bank of Ireland
picked up 4, or 5%, to 83 1/2 after confirming merger talks with
Alliance & Leicester
skidded 9 13/16, or 9%, to 99 3/16 after
sliced it to near-term accumulate from buy. Following
successful takeover agreement with the company Saturday, Italian Prime Minister Massimo D'Alema said Olivetti seemed willing to examine a merger with
. That's not what Olivetti seemed to be saying
yesterday, though. DT lowered 5/16 to 39 3/16.
swelled 1 1/2, or 32.4%, to an all-time high of 6 1/8 after
agreed to acquire it in a stock swap valued at about $115 million. Texas Micro shareholders will exchange four shares for one RadiSys share. RadiSys slipped 3 1/4, or 9.6%, to 31.
slid 1/4 to 37 1/16 after privately held
began a $35-a-share tender offer for the company.
dropped 2 1/4, or 9.2%, to an annual low of 22 3/16 after saying it's considering selling
ZD Market Intelligence
, its technology sales and marketing services unit. The company has hired
Morgan Stanley Dean Witter
as an adviser.
Earnings/revenue reports and previews
American Medical Security Group
collapsed 4 7/8, or 35.5%, to 8 7/8 after saying it will post a second-quarter charge of $6 million, or 36 cents a share, to strengthen its medical claims reserves. American said it expects full-year earnings to fall below the four-analyst forecast of $1.11 a share.
closed flat at 13 3/8 after posting second-quarter earnings of 34 cents a share, in line with the five-analyst forecast and above the year-ago 27 cents.
closed unchanged at 16 1/16 after reporting first-quarter earnings of 12 cents a share, a penny ahead of the single-analyst estimate but down from the year-ago 15 cents.
Motorcar Parts & Accessories
plunged 4 1/16, or 36.9%, to an all-time low of 7 after saying it sees a "significant" loss for its fourth quarter and possibly for the entire fiscal year. The single-analyst view called for earnings of 37 cents for the fourth quarter, vs. the year-ago 29 cents, and $1.07 for the year, vs. the year-ago $1.16.
dwindled down 6 1/8, or 41.5%, to 8 5/8 after saying it expects to post second-quarter earnings of 10 cents to 14 cents a share due to an increase in general and administrative expenses. The six-analyst forecast called for 18 cents vs. the year-ago 7 cents.
tacked on 1/8 to 8 1/8 after recording third-quarter earnings of 15 cents a share, missing the eight-analyst estimate by 1 cent but beating the year-ago dime.
Offerings and stock actions
IPC Information Systems
grew 8 1/2, or 17.5%, to an all-time high of 57 after its
unit late Friday announced plans to raise $185.4 million in an IPO. IXnet provides managed communications services to the global financial community and hopes to trade on the Nasdaq under the symbol IXNT.
flew 4 3/8, or 19%, to 27 1/2 on word it plans to sell 20% of its e-commerce unit through an IPO and that it plans to sell its project support business.
added Metamor to its recommended list from market outperform.
As was the case with bank names, an analyst downgrade was to blame for painting airline stocks red.
lost 2 1/4 to 72 1/8,
lost 2 1/8, or 5.3%, to 38 1/8 and
lost 5/8 to 19 5/8 after
BT. Alex Brown
cut them to market perform from buy.
lost 2 3/16 to 64 3/16 after the firm cut it to market perform from strong buy.
lost 1 1/8 to 40 after the firm cut it to buy from strong buy.
lost 3/8 to 23 9/16, seemingly torn between paying attention to BT Alex. Brown's dropping its stock to buy from strong buy and a solid earnings report. SkyWest posted fourth-quarter earnings of 45 cents a share, topping the nine-analyst outlook by 10 cents and moving ahead of the year-ago 26 cents.
CustomTracks shot up 16, or 26.3%, to an all-time high of 76 after
set a one-year price target of 230 a share.
slid 1 1/2 to 29 1/2 after
raised it to buy from hold.
gave up 3 1/2 to 109 1/2 even after Prudential Securities lifted it to strong buy from accumulate.
declined 1 3/8 to 47 and
declined 2 15/16 to 76 1/8 after resolving a lawsuit filed last March. Neither party will make a payment in the out-of-court settlement.
vaulted 5/16, or 11.1%, to 3 1/4 after saying it discovered a new gene code that prevents inflammatory disease, such as rheumatoid arthritis and chronic bowel diseases.
jumped 2, or 29.6%, to 8 13/16 after this weekend
said the company, which had been hurt by slowing sales and missed design cycles, is turning its business around under the direction of David Bolender.
rose 1 3/8, or 11.6%, to 13 3/16 after announcing plans to support
Magellan Plus 3D Motion Controller. The stock's options also were highly active, indicating traders were taking bullish positions.
skidded 1 11/16, or 5.7%, to 27 3/4 after beginning to sell its wireless Palm VII hand-held computer for $599.