Wall Street looked at a gift horse of economic data and kicked it in the teeth today. The much-anticipated
report proved benign but nonetheless provided little solace to skittish investors in both fixed-income and equity markets.
Consumer Price Index
rose 0.3% in August, as expected, while the core rate -- which excludes food and energy -- rose 0.1% vs. a consensus estimate of a 0.2% increase. Stocks and bonds initially rose on the news but soon reversed course. After a relatively uneventful afternoon, stock proxies nose-dived in the final hour of the session.
"Stocks overreacted to a number that didn't mean that much, and people were waiting to make sales," one West Coast trader said of the CPI data. "It was lucky we stayed flat all afternoon. I don't know any news for the selloff
in the final hour, but there was no reason for stocks to be up" early on.
The trader, who requested anonymity, acknowledged the CPI was favorable but wasn't wildly so and "doesn't change the fact retail sales was bad"
Bonds labored under the dollar's continued weakness against the Japanese yen. The dollar was quoted at 104.67 yen in late New York trading after touching 103.25 intraday. After being up as much as 25/32 early on, the price of the 30-year Treasury bond closed up 6/32 to 100 9/32, its yield declining to 6.11%.
In addition to the bonds' lackluster performance, stocks fell amid disappointment in earnings posted
last night by
and profit warnings from names such as
, which fell 23.5%.
Oracle lost 6% after posting first-quarter earnings of 16 cents a share. That was in line with expectations but below so-called whisper numbers. Like Oracle, the majority of tech bellwethers have risen sharply in recent weeks, and so they retreated today in sympathy.
Nasdaq Composite Index
fell 54.12, or 1.9%, to 2814.17 after trading as high as 2888.90 (above its
Sept. 10 record close). Stalwarts such as
were notable followers of Oracle's lead. The
Internet favorites held up better, but
TheStreet.com Internet Sector
index still slid 8.32, or 1.3%, to 617.24.
Chip stocks, which have been among tech's most impressive performers of late, also suffered a comeuppance. The
Philadelphia Stock Exchange Semiconductor Index
shed 4.5% to 547.98 after trading as high as 579.68.
In addition to Intel, the SOX was hampered by
fell 5.3% after making official its much-rumored bid for
. General Instrument fell 6.4% after a downgrade from
Donaldson Lufkin & Jenrette
Dow Jones Industrial Average
closed down 108.91, or 1%, to 10,801.42 after trading as high as 11,013.86.
were the Dow's biggest drags.
declined 18.32, or 1.4%, to 1317.97 after trading as high as 1347.41. The
shed 1.91, or 0.4%, to 436.23.
"Today was a bit of profit-taking with especially heavy volume in stocks like Microsoft and Intel," said Brian Belski, chief investment strategist at
George K. Baum
in Kansas City. Meanwhile, "the broader market just sucks. A lot of stocks are way down in price, but are not really showing any signs of buying interest."
As buying interest has become "more narrowly focused," it's put the market "in a vulnerable state," he said, especially as it heads into a historically "scary period."
New York Stock Exchange
trading today, 784.1 million shares were exchanged while declining stocks led advancers 1,760 to 1,181. In
Nasdaq Stock Market
action, 1.05 billion shares traded, while losers led gainers 2,030 to 1,779. New 52-week lows bested new highs 180 to 43 on the Big Board, while new highs led 102 to 75 in over-the-counter trading.
"In spite of continually benign inflation data all summer, there's still probably some concern the
is going to monkey again with monetary policy on Oct. 5," said Alan Hoffman, senior portfolio manager at
. "Economic data we've seen have been consistently excellent. Still, the stock market attained a high valuation back in April and has been oscillating in a 1,000-point range since. We think that's going to be the market's temperature for the rest of 1999."
Hoffman put the probability of a Fed hike in October at 50/50 and noted some "inventory stocking" because of Y2k concerns that may push third-quarter
above expectations. If that comes to fruition, it might entice the Fed to take pre-emptive action in October or adopt a tightening bias, he said.
Notwithstanding the uncertainty, Value Line remains fully invested.
Value Line is long and recommends tech giants such as
, Microsoft, Intel,
"Given the fact valuations are pretty high, they would be vulnerable to profit-taking in the event of a major crisis," Hoffman said. "But we don't see a major crisis coming down the pike." Also, tech favorites have "been hit three or four times in the last few years and always come back. There's an investment thesis that supports high valuations."
At the same time, "it's a good environment to pick up things being punished unjustly," the fund manager said. In that light, he recommends (and is long) retailers such as
Similarly, he recommended two other recently out-of-favor groups for long-term investors. In financial services, he favors
Fifth Third Bancorp
, which recently agreed to merge with
. In pharmaceuticals, he likes
and the "full suite" of big drugmakers.
Among other indices, the
Dow Jones Transportation Average
fell 3.09, or 0.1%, to 3087.60; the
Dow Jones Utility Average
gained 0.07 to 310.98; and the
American Stock Exchange Composite Index
slid 4, or 0.5%, to 797.48.
Elswhere in North American equities, the
Toronto Stock Exchange 300
slid 60.89 to 7077.20 and the
Mexican Stock Exchange IPC Index
gained 12.59 to 4982.44.
Wednesday's Company Report
Earnings estimates from First Call/Thomson Financial; new highs and lows on a closing basis unless otherwise specified. Earnings reported on a diluted basis unless otherwise specified.
slipped 2 to 89 after it said it forged a deal with online health services company
that would connect its customers to healthcare providers via the Internet. The companies said they would create joint Web sites that would put AOL's customers in touch with their doctors, labs and pharmacies. The transaction calls for AOL to purchase $10 million worth of CareInsite preferred stock and an option to buy another $10 million worth of shares within a year. CareInsite fell 5 5/8, or 11.2%, to 44 1/2.
Microsoft slid 2 1/2 to 92 5/8 after it said it plans to buy diagramming and technical drawing software maker
in a stock swap valued at $1.3 billion. The deal calls for each Visio common share to be swapped for 0.45 Microsoft share. Visio soared up 6 3/8, or 19%, to 39 7/8.
Mergers, Acquisitions and Joint Ventures
hopped 2 5/8, or 17.5%, to 17 5/8 after it said it was negotiating a possible $21-per-share sale of the company.
bounced 4 3/16, or 8.5%, to 53 1/8 after denying a report in today's editions of
The Wall Street Journal
that it was in merger talks with
. For its part, the Pittsburgh-based ketchup-and-pickles concern advanced 1 7/16 to 44 5/8.
declined 9/16 to 17 3/16 after it agreed to merge with
Hudson United Bancorp
. Hudson United shares skidded 1 1/2 to 28 5/8.
Motorola plummeted 6 5/16, or 6.7%, to 86 7/8 after it confirmed that it will acquire General Instrument for about $11 billion in stock. The transaction calls for each General Instrument common share to be swapped for 0.575 Motorola share. Motorola expects the acquisition to "modestly dilute earnings" through 2000 but to strengthen earnings thereafter. Earlier today,
Donaldson Lufkin & Jenrette
downgraded General Instrument to a market perform from a buy. Shares of General Instrument stumbled 3, or 6.3%, to 47.
disclosed late Tuesday they have amended the terms of their pending merger. Under the new terms, each Halter share will be converted to 0.57 Friede share. The original terms of the merger, announced in June, called for each Halter share to be exchanged for 0.4614 Friede share. Friede Goldman shares declined 11/16, or 5.65, to 11 7/16 , while Halter Marine climbed 3/8, or 6.9%, to 5 3/4.
Earnings/Revenue Reports and Previews
rose 3/8 to 21 7/8 after it reported first-quarter earnings of 39 cents, in line with the eight-analyst estimate and up from 34 cents a year ago.
bounced 15/16 to 16 after it posted fourth-quarter earnings of 56 cents a share, beating both the three-analyst estimate of 45 cents and the year-ago 48 cents.
rose 3/16 to 9 5/16 after it said it expects to report a first-quarter 11-cent-a-share gain on the sale of assets included in its England-based
Camloc Gas Springs
Arvin Motion Controls
popped 1 1/8 to 29 5/16 after it posted second-quarter earnings of 4 cents a share, beating both the three-analyst estimate of 3 cents and the year-ago 1 cent-profit.
Oracle skidded 2 3/4, or 6%, to 42 11/16 after it posted first-quarter earnings of 16 cents a share, in line with the 30-analyst expectation and up from 13 cents a year ago. Earlier today,
U.S. Bancorp Piper Jaffray
downgraded the shares to a buy from a strong buy.
leaped 2 1/2, or 5.7%, to 46 1/4 after it posted second-quarter earnings of 20 cents a share, beating both the six-analyst estimate of 19 cents and the year-ago 10 cents.
advanced 7/8 to 34 after it reported third-quarter earnings of 43 cents a share, above the three-analyst estimate of 39 cents and 31 cents a year ago.
tumbled 3/8 to 65 9/16 after it posted August's advertising revenues of $150.6 million, a 12.7% increase from the year-ago $133.6 million.
Offerings and Stock Actions
slipped 1 9/16 to 62 3/16 after it said it has decided not to finish its $2 billion share buyback because of its upcoming merger with
. The company did not say how many shares remained outstanding since the repurchasing program's approval in December 1997.
leaped 5 3/8, or 76.7%, to 12 3/8 after making its trading debut.
priced the shares below its $8-to-$10 range at $7.
fell 1/4 to 21 1/4 after it said it will issue a tracking stock for its e-commerce unit. The company also expanded its share-repurchase plan to $300 million from $200 million.
mounted 3/4 to 20 1/4 after
upped its rating on the stock to a strong buy from a buy.
jumped 3 1/4, or 27%, to 15 5/16 after BancBoston Robertson Stephens upgraded the stock to a strong buy from a buy and set a price target of 31.
skidded 2, or 6.1%, to 30 7/16 after
Banc of America Securities
sliced its fiscal 2000 earnings estimate to $2.14 a share from $2.42.
Boston Scientific cratered 8 15/16, or 23.5%, to 27 after
cut the shares rating to attractive from buy and
lowered its rating to neutral from outperform. In addition,
sliced its rating to neutral from buy, while Banc of America Securities downgraded it to a buy from a strong buy. Yesterday, Boston Scientific said it would report third-quarter revenue of about $690 million, missing its initial estimate.
stumbled 1 3/8, or 9.1%, to 13 1/2 after Lehman Brothers cut its fiscal 2000 earnings estimate to 70 cents a share from 87 cents and lowered its price target to 22 from 25.
advanced 1/2 to 21 13/16 after
Deutsche Bank Alex. Brown
rolled out coverage of the stock with a buy rating.
Great Plains Software
fell 1 1/4 to 54 after U.S. Bancorp Piper Jaffray upped its price target to 60 from 55.
fell 1 1/4 to 49 3/4 after
lowered its opinion to near-term accumulate from buy.
rose 1/8 to 42 1/2 after Merrill Lynch upped its rating to near-term accumulate from neutral.
rose 7/16 to 31 11/16 after Banc of America analyst David Goldman lowered his rating on the shares to market perform from buy.
advanced 1/8 to 35 after Merrill Lynch analyst Ed Spehar raised his rating to near-term accumulate from neutral.
sunk 3, or 13%, to 20 after Lehman Brothers sliced its third-quarter estimates to a 31 cent-share loss from a 20 cent-loss.
fell 2 5/16 to 65 11/16 after Merrill Lynch raised its rating to a near-term buy from accumluate.
tumbled 2 3/16, or 7.9%, to 25 7/16 after
CIBC World Markets
cut it rating to a hold from a buy.
bounced 13/16 to 57 15/16 after Banc of America raised its fiscal 2000 earnings estimate to $1.48 from $1.24 and set a price target of 74. The company posted first-quarter earnings of 32 cents a share, greatly beating both the analyst estimate of 16 cents and the year-ago 10 cents.
mounted 3/16 to 19 7/16 after BancBoston Robertson Stephens rolled out coverage of the stock with a buy rating.
declined 5/8 to 17 after it unveiled plans to launch a $200 million advertising campaign to draw new business. The company will promote its new "Believe in Yourself" slogan on network and cable television, newspapers and magazines and outdoor advertising. Two television commercials are set to premiere during this weekend's college and professional football programming.
advanced 1/8 to 44 5/8 after it announced plans to extend broadband services to businesses.
slid 2 9/16 to 72 after it said it was hopeful it can reach a deal on a new employment pact with the
United Auto Workers
without further work stoppages in the wake of unauthorized strikes at key plants yesterday, according to a
fell 4, or 6%, to 62 1/8 after it announced plans to abandon or halt $600 million worth of ventures in the Asia-Pacific region, in an attempt to realign its nylon business. The company said it would take a third-quarter charge of 35 cents a share for its departure from the projects.
Johnson & Johnson
skidded 3/4 to 97 3/26 after its
division received the stamp of approval from the
to sell its
laser-cut coronary stent.
rose 7/16 to 38 3/8 after it said it would realign its business into four operating groups: home appliances, commercial appliances and worldwide and emerging business. The company said the move would allow it to streamline decision-making and brand focus.
rose 7/16 to 38 1/2 after its
subsidiary said it would up its systems spending this year to $900 million from $800 million as a result of the Chicago area's power outages. The company said it would initiate an improvement plan based on results from a $20 million evaluation of its transmission and distribution systems.
The federal government said
paid $7.6 to the United States and 25 states to resolve allegations that it filed phony subscription claims for state Medicaid and other programs. Despite the allegations, Walgreen shares popped 1 1/16 to 25 1/16.