Fear Spikes Higher and Stocks Do Otherwise
In one of the more horrific final hours of trading in recent memory, major market averages, led by the technology sector, went into an Olympian dive -- right into the toilet. And when it was all over, the Pink Panther clapped.
Yes, despite all the devastation, there was a bit of comic relief after the closing bell at the
New York Stock Exchange
as the Pink Panther (in his capacity as spokescharacter for
Owens Corning
(OWC)
) waved, and waved, and waved continually to specialists and brokers on the floor of the exchange. Thank you,
CNBC
.
The blue-chip
Dow Jones Industrial Average
swooned 205.48, or 2%, to 10,318.59, led on the downside by
Hewlett-Packard
(HWP)
, which reflected the whopping losses suffered in tech. Today's close was the lowest for the Dow since April 9.
The
S&P 500
gave up 29.74, or 2.3%, to 1280.77, its lowest close since March 24.
The 1300 level had been pegged as a key support level for the S&P 500 for some time, but that got wiped out today.
Dave Eberhart, analyst at
Optima Investment Research
in Chicago, pointed to the next support level for the S&P 500 at about 1267-1268. The S&P 500 traded intraday Aug. 10 at 1267.73, the index' six-month low.
After that he pegged support at 1256-1257.
The
Nasdaq Composite Index
shed 108.33, or 3.8%, to 2749.83. Semiconductor stocks and computer makers suffered horrendous losses in tech.
It was the fourth-largest point decline for the Nasdaq Comp, but not in the top 10 percentage declines.
Comp heavyweights
Microsoft
(MSFT) - Get Report
,
Intel
(INTC) - Get Report
,
Cisco
(CSCO) - Get Report
,
Dell
(DELL) - Get Report
and
MCI WorldCom
(WCOM)
all tumbled sharply. Intel was hurt on negative comments by
SG Cowen
analyst Drew Peck.
If you're watching for the generally accepted 10% correction level, the S&P 500 is now down 9.7% from its all-time high, with the Dow off 8.9% and the Nasdaq Comp down 4.7%.
Ballmer Blasts Tech Value 'Absurdity'
Market players placed much of the blame for the swoon on Microsoft President Steve Ballmer's comments at a Seattle conference, in which he said tech stock valuations -- even that of Mister Softee itself -- had reached "absurd" levels. Another reason cited for the tumble was a breakdown in the market's technicals.
Jay Suskind, head of institutional equity trading at
Ryan Beck
, was among those expressing that view. He pointed to the Dow's tumble through 10,500, which has been widely seen as a big support level for the gauge.
The stock market's loss was the Treasury market's gain as the 30-year Treasury bond soared. The long bond soared 1 8/32 to 101 21/32, yielding 6.01%.
As for sectors within tech, the
Philadelphia Stock Exchange Semiconductor Index
said farewell to 5.5%, while the
Philadelphia Stock Exchange Computer Box Maker Index
crumbled 5.4%.
The small-cap
Russell 2000
shed 7.32, or 1.7%, to 420.21, leaving it down slightly for 1999.
Suskind noted that lately what had been holding up the market were the big tech stocks, "and now they've cracked."
"I just think the market's nervous," the trader said.
Speaking of nervous, the
Chicago Board Options Exchange Volatility Index
, an overall measure of investors' level of fear, spiked up markedly beginning a little bit before the final hour of trading. The VIX closed at its highest level since March.
TheStreet.com Internet Sector
index tumbled 39.03, or 6%, to 611.65. Supercharged
BroadVision
(BVSN) - Get Report
sold off, reversing some of its recent run-up, and was the biggest loser in the DOT.
On the NYSE, decliners pounded advancers 2,142 to 892 on 882.4 million shares. On the
Nasdaq Stock Market
, losers beat up on winners 2,621 to 1,222 on 1.16 billion shares.
On the NYSE, 259 issues set new 52-week lows while 23 touched new highs. On the Nasdaq, 114 issues set new 52-week lows while new highs totaled 84.
On the Big Board,
Rite Aid
(RAD) - Get Report
was most active with 23 million shares changing hands. It slumped 2, or 14.3%, to 12. The
Florida Attorney General's Office
charged the company with deceptive trade practices, civil theft and racketeering.
On the Nasdaq, Intel was most active with 36.8 million shares changing hands. It fell 5 7/16, or 6.6%, to 77 1/2.
Among other indices, the
Dow Jones Transportation Average
fell 30.30, or 1%, to 2895.98; the
Dow Jones Utility Average
tumbled 5.62, or 1.9%, to 294.86; and the
American Stock Exchange Composite Index
slipped 4.95, or 0.6%, to 777.50.
Elsewhere in North American equities, the
Toronto Stock Exchange 300
dropped 74.18, or 1.1%, to 6812.10 and the
Mexican Stock Exchange IPC Index
slipped 17.83 to 4973.93.
Thursday's Company Report
By
Eileen Kinsella
Staff Reporter
(
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.
)
Amid a dive in the technology-laced Nasdaq Composite Index, a number of dot-com debuts stood out strongly on the plus side.
eGain
(EGAN) - Get Report
surged 10 15/16, or 91.2%, to 23, after being priced at $12.
Interactive Intelligence
(ININ)
looked sharp as well, up 11, or 84.6%, to 24 1/16 after being priced at $13 a share.
Other newcomers turned in solid but more muted performances.
Cybergold
(CGLD)
gained 3, or 33.3%, to 12, after being priced at $9.
Yesmail.com
(YESM)
improved 2, or 18.2%, to 13 1/16 after being priced at $11.
Ashford.com
(ASFD)
takes first prize for the most boring first day of trading ever. The stock closed flat at its $13 offering price, after climbing as high as 19 1/2.
Merger news from
EarthLink
(ELNK)
and
MindSpring
(MSPG)
was initially greeted with some enthusiasm-- at least for EarthLink-- but by late afternoon the $1.7 billion deal's well-wishers had vanished. EarthLink fell 1 1/8 to 42 3/8 after enjoying an earlier pop of 5%, while MindSpring closed down 5 1/2, or 16.7%, to 27 3/8.
Mergers, acquisitions and joint ventures
Global Crossing
(GBLX)
edged up 3/4 to 25 1/16 after yesterday announcing voter approval for its proposed merger with
Frontier
(FRO) - Get Report
.
Standard & Poor's
said Global would take Frontier's place in the S&P 500 index.
Interpool
(IPX)
slipped 3/16 to 9 1/2 after saying it offered to negotiate to buy
Cronos Group
(CRNS)
lately up 15/16, or 26.8%, to 4 7/16. Interpool said it was prepared to solicit proxies from its shareholders in a bid to overpower Cronos' board.
ITT Industries
(IIN) - Get Report
fell 2 1/8, or 6.3%, to 31 7/8 after announcing plans to acquire
Stanford Telecommunications'
(STII)
space division for $191 million. Stanford moved up 2 9/16, or 8.7%, to 32.
Jakks Pacific
(JAKK) - Get Report
jumped 4 1/4, or 13%, to 37 after it said it would acquire the
Flying Colors
business of privately held
Colorbok Paper Products
.
Smurfit-Stone
(SSCC)
slipped 1 1/16 to 21 3/8 after the company said it would sell its Oregon newsprint mill for $220 million.
Textron
(TXT) - Get Report
lost 7/16 to 74 13/16 after saying it plans to pay $24.50 a share to buy
Litchfield Financial
(LTCH)
which leapt 6 3/16, or 34.9%, to a record 24.
Tradepoint Financial Networks
said
Credit Suisse First Boston
,
Dresdner Kleinwort Benson
and
Merrill Lynch
(MER)
joined a consortium of banks and brokerages which own more than half of the London-based electronic stock exchange. Shares of Merrill lost 2 9/16 to 68 1/4.
Unicom
(UCM)
slipped 13/16 to 36 1/4 after forging a solid agreement with
Peco
(PE) - Get Report
, a merger that would generate $12.4 billion in revenue. Peco fell 1 11/16 to 36 7/16.
Earnings/revenue reports and previews
Allegheny Teledyne
(ALT) - Get Report
lost 1 3/16 or 6.8%, to 16 5/16 after warning investors it would post third-quarter earnings between 17 cents to 21 cents a share, greatly missing the nine-analyst estimate of 28 cents. The company blamed the disappointing results on softness in oil and gas markets.
ASI Solutions
fell 2 9/32, or 32.6%, to 4 23/32 after warning that second and third-quarter profits may fall below the year-ago period due to slack revenues.
The U.S.-vs.-Europe banana war can't take the smile away from the Chiquita senorita.
Chiquita Brands
(CQB)
climbed 1/8 to 5 5/8 despite saying it would take a third-quarter charge of 6 cents a share and eliminate 200 positions in an effort to reduce costs. The company said, excluding the charge, earnings per share would be in the range of analyst estimates.
Bed Bath & Beyond
(BBBY) - Get Report
lost 3/8 to 31 9/16 despite
last night posting second-quarter earnings of 23 cents a share, beating both the 17-analyst estimate of 22 cents and the year-ago 18 cents.
Lehman Brothers
(LEH)
fell 1 7/8 despite after posting third-quarter earnings of $2.20 a share, beating both the 11-analyst estimate of $2.01 and the year-ago $1.10.
CIBC World Markets
raised Lehman to strong buy from buy.
Texas Industries
(TXI)
added 3/8 to 32 7/8 after reporting first-quarter earnings of 75 cents a share, easily beating the five-analyst estimate of 49 cents but down from the year-ago $1.17.
Offerings and stock actions
R.R. Donnelly & Sons
(DNY)
rose 1/8 to 29 1/4 after the company approved a stock buyback of up to $300 million in the next year.
Network Associates
(NETA)
slipped 1 11/16, or 7.8%, to 20 after it said its
McAfee.com
division has filed an IPO for $57.5 million of Class A common shares.
NetZero
, raised the pricing range of its 10-million share IPO to $14 to $16 from $9 to $11. The company, which offers free Internet access and free email, generates revenue by selling advertisements and sponsorships.
Rouse
(RSE)
failed to stir up any enthusiasm with its announcement of an up to $250 million stock buyback. The stock was unchanged at 22 13/16.
Southwest Airlines
(LUV) - Get Report
climbed 3/8 to 15 after the company set a $250 million share buyback.
Tricon
(YUM) - Get Report
jumped 5 1/16, or 13.1%, to 43 3/4 after the company set a $350 million share buyback and said its third-quarter profit will rise about 20%, topping analyst estimates.
Analyst actions
A number of oil service companies barely budged on news that
Banc of America Securities
cut earnings estimates:
Baker Hughes
(BHI)
rose 1/8 to 28 9/16;
Halliburton
(HAL) - Get Report
slipped 5/8 to 42 1/8;
Schlumberger
(SLB) - Get Report
inched down 5/16 to 59 13/16;
Smith International
(SII)
lost 1 1/16 to 42 11/16, and
Weatherford International
(WFT) - Get Report
lost 1/2 to 33 3/4.
R&B Falcon
(FLC) - Get Report
added 1/4 to 14 9/16 after its loss estimates were nudged modestly lower.
Blockbuster
(BBI) - Get Report
inched up 13/16, or 5.9%, to 14 5/8 after
Goldman Sachs
added the stock to its recommended list.
Cordant Technologies
(CDD)
fell 1 7/8, or 5.4%, to 33 after
Credit Suisse First Boston
cut its rating to buy from strong buy.
Howmet
(HWM)
lost 11/16 to 14 11/16 after
Lehman Brothers
trimmed its 1999 earnings-per-share estimate to $1.24 from $1.27 and its 2000 estimate to $1.35 a share from $1.42. Lehman also dropped its price target on the stock to 22 from 25. Yesterday the company warned it would miss analyst estimates for 1999 earnings.
Starbucks
(SBUX) - Get Report
was feeling a buzz, and it wasn't the caffeine. The stock rose 2, or 9.5%, to 23 after Goldman Sachs boosted the company to its recommended list from market outperform.
Harken Energy
(HEC)
slipped 3/16, or 13%, to 1 1/4 after
PaineWebber
sliced its rating to neutral from attractive.
Warburg Dillon Read
upped its average oil-price estimate to $17.60 per barrel for 1999 and to $18.50 from $17 per barrel for 2000.
Philip Morris
(MO) - Get Report
was unchanged at 34 1/2 after
Morgan Stanley Dean Witter
upped its rating to strong buy from outperform.
Miscellany
Amkor
(AMKR) - Get Report
fell 1 3/8, or 7.1% to 18 1/8 despite saying this week's earthquake in Taiwan won't hurt its operations. The company said its manufacturing hubs were in the Philippines and South Korea.
DaimlerChrysler
(DCX)
dropped 3 15/16, or 5.6%, to 66 1/4 after saying its supervisory board would convene Friday to devise a restructuring plan that would include axing four of its 17 board members. The automaker would let go of North American President Thomas Stallkamp while retaining CFO Manfred Gentz, a source confirmed in an interview with
Reuters
.
FDX
(FDX) - Get Report
fell 1 1/8 to 35 1/4 after
The Wall Street Journal
reported that the carrier unveiled plans to broaden its intra-European services, adding more cargo flights and a new overnight delivery service. According to the
Journal
, FDX plans to centralize its operations in Paris.
Johnson & Johnson
(JNJ) - Get Report
lost 2 1/8 to 91 1/8 despite a report in
The Wall Street Journal
which said the company received kudos from 10,830 online survey participants as the U.S. company with the best corporate reputation.
Microsoft dropped 4 15/16, or 5.1%, to 91 3/16 after saying it will spin off
Expedia.com
, its Internet travel service, as a public company, raising an estimated $75 million . Microsoft said it will hold a majority stake in Expedia. Microsoft also said it launch a new Web site targeted at small businesses.
Rite Aid lost 2, or 14.3%, to 12 after the Florida Attorney General's Office yesterday charged it with deceptive trade practices, civil theft and racketeering for allegedly billing patrons different prices for the same prescription drugs.
Raymond James
cut its rating on the stock to accumulate from buy citing the suit.
