The bated breath with which Wall Street awaited today's key economic data proved ever so fresh and zesty for bonds, but took longer to filter through to equities.
Consumer Price Index
in line with expectations and a friendly
industrial production and capacity utilization
report helped the price of the 30-year Treasury bond rise 1 3/32 to 101 17/32, its yield falling to 6.02%. Still, neither CPI proper nor the bond's reaction seemed to provide much more than an initial inspiration to major stock gauges. But after overcoming some midday lassitude, equities rallied toward the close to finish with decent gains.
Dow Jones Industrial Average
traded as high as 11,111.69 early on then stumbled as low as 11,011.65. The index rebounded to finish up 70.29, or 0.6%, to 11,117.08.
was far and away the Dow's best performer, rising 2.9%. Financials were strong overall, tracking bonds; the
Philadelphia Stock Exchange/KBW Bank Index
The blue-chip index was hampered throughout by
, which fell 5.6% as investors interpreted the firm's quarterly earnings as not quite stellar enough to continue the stock's recent ramp.
"H-P has enjoyed a terrific turnaround, but we think the stock is a bit ahead of itself near term,"
analyst Steven Milunovich wrote in a research report today.
But H-P's dilemma did not materially affect other traditional tech bellwethers; the
Morgan Stanley High-Tech 35
gained 0.1% while the
The bigger focus in techland was a rumor
lowered DRAM prices, plus anticipation of earnings from
Micron lost 4.6%, dragging the
Philadelphia Stock Exchange Semiconductor Index
down 0.8%. Dell, meanwhile, slid 0.6%; after the close, the PC maker posted second-quarter earnings of 19 cents a share vs. the 30-analyst estimate of 17 cents (see below).
Nasdaq Composite Index
could not sustain its early impetus, which took the index as high as 2680.00. But thanks to gains in Net stocks such as
, the tech-engulfed index overcame its midday lassitude -- and its session low of 2631.34 -- closing up 25.94, or 1%, to 2671.22.
The Comp also got a lift from second-tier tech plays such as
, which rose 10.4% following an upgrade from
Donaldson Lufkin & Jenrette
TheStreet.com Internet Sector
index gained up 16.74, or 3.1%, to 557.86 while the
climbed 13.39, or 1%, to 1344.16 after trading as low as 1328.72.
edged up 0.48, or 0.1%, to 434.30.
Jim Herrick, managing director of trading at
Robert W. Baird
in Milwaukee, attributed the late-session rise to three factors. One, the benign economic data has "breathed some life into this market."
Second, rumors of better-than-expected earnings filtered through the market, causing some short covering. Like Dell,
beat the Street with third-quarter earnings of 61 cents, 8 cents ahead of consensus. (However, AMAT shares were reportedly lower in
trading amid concerns about their order rate, the trader noted.)
Speculation about earnings coupled with the third factor: light trading volume. "You did see some short-covering late in the day and with volume not overwhelming, that enhanced volatility, today to the upside," he said.
Today's rise had some market players talking about new highs for the major averages but Herrick believes "it is too early" for such discussions. "I think the only way we'll see new highs is if
doesn't do anything," he said. "In the meantime, we're still in a trading range and might be at the upper end now."
New York Stock Exchange
trading, 691.5 million shares were exchanged while advancers led declining stocks 1,834 to 1,144. In
Nasdaq Stock Market
action 902.3 million shares traded while gainers led 2,068 to 1,786. New 52-week lows bested new highs 87 to 46 on the Big Board while new highs led 81 to 68 in over-the-counter trading.
Fed Watch '99
Herrick's prediction may come to pass if a small, but growing, minority on Wall Street proves prescient. Equity and fed fund futures markets reflect otherwise, but recent economic data have some convinced higher interest rates are not necessarily in the offing.
"I don't expect the
to raise rates next week and am further emboldened by today's CPI report," said John Ryding, chief economist at
. "I realize our view is a bit out on a limb, but unless the Fed wants to give the market a sense it will also raise in October, I think they'll go with a tightening bias
next week and probably wait" until the October meeting to actually raise rates.
Frank La Salla, CEO of
, is in the same camp, believing the CPI was a "seminal event." He also suggested the
Federal Open Market Committee
will not hike rates next week, and "between the August and October meetings you'll get data to suggest the economy in the second half is going to moderate to 3% growth, perhaps less."
Nonetheless, the market watcher is cautious about the near-term outlook for stocks, while maintaining a year-end target of 11,500 to 12,000 for the Dow.
"You can't get a more sustained rally
in stocks until we're on the other side of the Fed meeting on the 24th," La Salla said. "The bias is toward the upside, but will be restrained until after the 24th."
While forecasting a rally toward the end of the year, La Salla foresees tech stocks underperforming. He sees better investment values in autos such as
, drug makers such as
, and financials such as
Morgan Stanley Dean Witter
BHF Securities is long the aforementioned.
Among other indices, the
Dow Jones Transportation Average
slid 6.66, or 0.2%, to 3205.51; the
Dow Jones Utility Average
added 0.48, or 0.2%, to 313.06; and the
American Stock Exchange Composite Index
gained 3.09, or 0.4%, to 782.59.
Elsewhere in North American equities, the
Toronto Stock Exchange 300
added 7.35 to 7053.00 and the
Mexican Stock Exchange IPC Index
slid 20.57 to 5279.89.
Dell Smashes Expectations
earned $507 million, or 19 cents a share, in the second quarter ended July 30, beating the
consensus estimate of 17 cents a share. Dell's earnings were a 58% increase over its year-earlier period, when it earned $347 million, or 13 cents a share, on a postsplit basis. (Dell completed a 2-for-1 stock split March 5.) Revenue climbed to $6.1 billion from $4.3 billion one year ago, a 42% year-over-year increase and 11% sequentially from $5.53 billion in the company's first quarter.
This is the boffo quarter Dell investors have been looking for all year and Dell should move higher in after-hours trading. It was up 2 points by 4:30 p.m. EDT, according to Instinet.
For the first time in years, Dell investors in 1999 have stopped pushing this stock higher before earnings, a trend literally invented by the Dellionaires after nearly a decade of positive earnings surprises. Dell's stock was up only fractionally this week, closing today at 41 1/8, down 5/16.
So far this year, fears over continuing PC pricing deflation have outweighed the company's actual growth rate, which is still two times higher than that of the rest of the PC industry.
, which is in the same direct sales business as Dell, has seen its stock nearly double this summer because the Street likes the San Diego-based company's beyond-the-box strategy. Recently, Dell has announced it will enter the ISP and online auction arenas -- with more beyond-the-box thinking on the way, according to what Michael Dell said at last month's shareholder meeting.
Other highlights from Dell's earnings announcement: The company is now selling $30 million of products a day online, which equates to 40% of total revenue. The company said it plans to sell half of all its revenue online by next year. One important indicator, gross margins, came in at 22%, down only slightly from the 22.7% result Dell posted in last year's second quarter. Net income, unit shipments and cash on hand all increased and Asia/Pacific sales were up 52% year-over-year.
Tuesday'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.
leapt 3 3/8, or 12.5%, to 30 1/4 after it revealed plans to provided online trading after the close of the New York markets through Instinet, an electronic brokerage service. E*Trade says the postclose trading service will be available by September, allowing individual investors to trade from 4 p.m. to 6 p.m.
JB Oxford Holdings
beat E*Trade to the punch when it announced last Friday that it would offer extended trading hours via Instinet. JB Oxford today bounced 5/8, or 6.7%, to 10.
also said plans are in the works for to offer postclose trades that would be processed through its own electronic system.
Mergers, acquisitions and joint ventures
CEO Sergio Marchionne told
alliance will not interfere in
hostile takeover battle for
is acquiring algroup and French aluminum manufacturer
to form APA. Marchionne said the parties are focusing on their own pending deal. Reynolds skidded 7/16 to 68 1/2 and Alcoa was off 1/8 to 66 3/4. Alcan popped 7/16 to 35 1/16, while Pechiney declined 5/16 to 30.
advanced 13/16 to 63 13/16 after it said the
is questioning the effect of its potential acquisition of Honeywell on a "limited number of aerospace products." AlliedSignal spokesman Thomas Craine said that it does not expect complications in completing the merger.
was jumped 1 1/2 to 39 5/8 after it invested $15 million in
and will invest an additional $40 million, subject to regulatory approval.
subsidiary, announced an energy services pact with
that could potentially generate $1 billion in sales over five years. FirstEnergy Services will handle a variety of services for Republic including electric and natural gas supply and delivery, heating and ventilation. Republic, which is run by
, is the largest U.S. producer of special bar-quality steel products. Shares of FirstEnergy slipped 7/16 to 28 despite the positive news.
fell 1/8 to 32 1/4 on news that it has chosen French telecommunications company
to build a South American part of Global's fiber-optic network in a $700 million deal. Shares of Alcatel advanced 1/4 to 30 3/8.
, a telecommunications company, climbed 5/8 to 14 3/8 after it announced plans to buy privately owned
Earnings/revenue reports and previews
slumped 1 3/4 to 35 7/8 despite reporting second-quarter earnings of 42 cents a share, ahead of the 12-analyst estimate of 41 cents and up from the year-ago 27 cents.
rose 1 1/4 to 71 3/4 before reporting stellar third-quarter earnings of 61 cents a share, beating both the 29-analyst estimate of 53 cents and the year-ago 13 cents.
increased 3/16 to 13 3/8 after it announced that third-quarter earnings would be lower than expected, citing declining profits from its
Astron Building Systems
and U.S. stampings operations. The company anticipates third-quarter earnings of 38 cents to 41 cents a diluted share, short of the two-analyst estimate (and year-ago figure) of 48 cents.
fell 3/8 to 42 11/16 even with second-quarter earnings of 8 cents a share, a penny ahead of the 11-analyst estimate and up from the year-ago 1 cent.
dropped 1/4 to 43 after it reported third-quarter earnings of 29 cents a share, ahead of the 20-analyst estimate of 25 cents but down from the year-ago $1.19.
advanced 3/16 to 35 1/8 after it posted third-quarter earnings of 70 cents a share, in line with the single-analyst estimate and up from the year-ago 36 cents.
Hewlett-Packard plunged 5 3/4, or 5.2%, to 104 1/2 despite yesterday's sound earnings report of 85 cents a share, ahead of the 21-analyst estimate of 80 cents and up from the year-ago 58 cents. This morning,
raised its fiscal 2000 estimates for H-P to $4 a share from $3.95.
hopped 2 5/16 to 71 3/4 before posting better-than-expected earnings of 27 cents, beating both the 17-analyst estimate of 24 cents and the year-ago 19 cents.
skidded 7/16 to 44 3/8 after it posted second-quarter operating earnings of 26 cents a share, in line with the 19-analyst estimate and up from the year-ago 13 cents.
fell 3/8 to 17 1/8 despite its positive fourth-quarter earnings of 40 cents a share, better than both the single-analyst estimate of 38 cents and the year-ago 35 cents.
soared 6 5/16, or 13.5%, to 53 after it reported strong second-quarter earnings of 31 cents a share, ahead of the 15-analyst estimate of 24 cents and up from the year-ago 19 cents.
Offerings and stock actions
Mass email service provider
said it has filed with the
Securities and Exchange Commission
for an IPO. The company did not provide a possible price range or specific size for the potential offering in its preliminary prospectus, stating that the $57.5 million worth of common stock noted was a mere gauge to tabulate the SEC registration fee. Exactis has applied to trade on Nasdaq under the symbol XACT.
Thomas Weisel Partners
are underwriting the deal.
Price ranges for
were cut today because of continuing market uneasiness. Online printer Imagex, dropped its 4 million-share offering price range to $8 to $10 from $12 to $14. The deal is lead by underwriter
Volpe Brown Whelan
. DLJ said the laser vision correction firm NovaMed Eyecare bumped its range down to $9 to $10 from $11 to $13, while online music network Tunes.com sliced its range to $9 to $11 from $13 to $15.
Salomon Smith Barney
is serving as the 4 million- share deal's lead underwriter.
leaped 15 7/16, or 96.4%, to 31 1/2 in its trading debut.
Morgan Stanley Dean Witter
priced the 3 million-share IPO after yesterday's close above-range at $16 a share.
slumped 5/8 to 24 15/16 after
downgraded the stock to a market perform from market outperform.
Merrill Lynch financials analyst Judah Kraushaar gave
a boost, calling the stock one of his top picks. Shares of Citigroup popped 1 5/16 to 47 5/8.
Deutsche Banc Alex. Brown
initiated coverage of
with a buy rating. Insight declined 3/16 to 28 1/16.
CIBC World Markets
Kansas City Southern Industries
to hold from strong buy. Shares of Kansas City Southern plunged 4 13/16, or 9%, to 48 3/16 on the news.
Banc of America Securities
maintained its buy rating on
. Despite its positive rating, the stock skidded 2 13/16 to 57 3/4.
climbed 11/16 to 49 9/16 after Lehman Brothers upped 1999 earnings estimates to $1.90 a share from $1.88.
Tricon Global Restaurants
hopped 1 9/16 to 41 3/4 after
Credit Suisse First Boston
initiated coverage with a hold rating.
DLJ Web analyst Timothy Weller stamped
with an initial buy rating. Despite Weller's positive outlook, Voyager shares slipped 15/16 to 10 1/2.
America Online jumped 2 9/16 to 97 1/2 after it said worldwide membership of its AOL service has exceeded 18 million.
said it will seek bankruptcy protection. The Hollywood theme restaurant chain, partially owned by film stars, said it has obtained a "conditional $30 million cash injection" and will pre-negotiate with lenders in an attempt to keep the chain open. The stock was unchanged at 3/4.
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Corrections and Clarifications.