Greenspan Relief Turns to Meyer Agita as Market Watches Fed

The Fed chairman said nothing to rattle the rate-skittish markets -- but Fed Gov. Laurence Meyer did.
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"Over the past quarter-century I have appeared on many platforms with

President Ford

. He never seems to change, but I keep losing my hair." Thus did

Fed

boss

Alan Greenspan

begin his

speech on the economic impact of technology at an event today honoring former President Gerald Ford in Grand Rapids, Mich.

All things considered, an isolated case of baldness is more palatable to this market than hints of unsustainable asset valuations. Or it was, anyway.

Unfortunately for the longs, Greenspan isn't the only Fed official speaking today. Hawkish vibes sent out by Fed Gov.

Laurence Meyer

in a Philadelphia

speech to the

National Association for Business Economics

were lately helping to knock stocks off their midday highs. Salient among Meyer's comments was his reiteration of Greenspan's recent acknowledgement that the Fed must consider stock valuations when it forms monetary policy.

The

Dow Jones Industrial Average

remained up 51 to 11,085, despite the considerable drag of

Kodak

(EK)

, down 2 1/8, or 2.9%, to 71 15/16. The

Nasdaq Composite Index

was down 6 to 2832, while the

S&P 500

was unchanged at 1350. The

TheStreet.com Internet Sector

index was down 2 to 599, and the small-cap

Russell 2000

was off 1 to 437.

Things started off a bit rockier than that, however. At 7 a.m. EDT today, the

Bank of England

caught the markets by surprise when it announced that it was raising its key short term interest rate to 5.25%. The move, predicted by none of the 26 economists polled by

Reuters

last week, sent U.S. stock futures -- and, consequently, U.S. stocks themselves -- tumbling, along with the big European indices.

The early selloff was testimony to the market's extreme sensitivity to interest-rate concerns. "The Fed, the bond market and the equity market are all walking a high wire at this time," said Alan Ackerman, market strategist at

Fahnestock

. "Events overseas could affect what the Fed does. This is not a time to be adventuresome in the market."

The major proxies' subsequent improvement suggested that, for the moment at least, interest-rate fears were subsiding a bit. Despite Meyer's hawkishness, the 30-year Treasury remained up 12/32 to 101, its yield falling to 6.05%. And yesterday's whipping sector, the

Philadelphia Stock Exchange/KBW Bank Index

, was still up 0.2% in today's recovery.

"I'm a little surprised," confessed Bob Basel, director of listed trading at

Salomon Smith Barney

, "because there's really no reason to bring

the market back. The market just lacks direction. It's a coin flip -- 'Which way do you want to go today?'"

"I don't see a lot of players or a lot of liquidity even though vacations are over," Basel added. Volume was indeed moderate. The

New York Stock Exchange

had seen 464 million shares traded, while 614 million shares had changed hands on the

Nasdaq Stock Market

.

A lot of the morning's moderate upside momentum, then, could be described as a tepid snapback from a short-term oversold condition. News that

Goldman Sachs'

(GS) - Get Report

Uber-bullish strategist

Abby Joseph Cohen

has raised her 1999 S&P 500 target to 1380 from 1350 may also be helping sentiment a bit today, although it's hard to say exactly where sentiment in general stands in this Church-of-What's-Happening-Now.

Traders aren't taking anything for granted. "Even though the market was up 230 points on Friday -- and you've got to respect that -- there's a lot of indecisiveness out there," said Basel. If the

Producer Price Index

comes in too hot on Friday, he said, "they'll sell it off 150 points again. It's a daily event."

Strange days indeed. "We've had a surprisingly strange summer in the market," said Ackerman, noting the Dow's vicissitudes since May 31, during which period that blue-chip index has buzzed in a intraday range between 10,400 and 11,350. "Stocks have been all over the lot," he said. "In the meantime, we've had two rate hikes, and now we have the possibility of a third."

Que sera, sera, perhaps. Ackerman said he's looking for the market to stay in a tight trading range through the beginning of October, when the Fed next meets. "That range is likely to be an overlay of the market's performance since May 31," with lows near 10,330 and highs near the 11,300 level.

Breadth was not inspiring. Decliners were leading advancers 1,620 to 1,160 on the NYSE, where there were 52 new 52-week highs against 61 new lows. In Nasdaq action, decliners were beating advancers 2,082 to 1,530, with 119 new highs and 58 new lows.

In sector news, the

Dow Jones Transportation Average

was extending yesterday's 1.5% drubbing, lately off 22.73, to 0.7%, to 3086.76, though up from a session low of 3061.51. Meanwhile, oil stocks were romping higher, with the

American Stock Exchange Oil & Gas Index

up about 1%.

Wednesday's Midday Watchlist

By Eileen Kinsella
Staff Reporter

Global Crossing

(GBLX)

ascended 3 7/8, or 19.1%, to 24 1/8, and

Microsoft

(MSFT) - Get Report

slipped 5/8 to 93 5/8 after the companies announced a joint venture with

Softbank

called

Asia Global Crossing

, which will provide network-based telecommunications services throughout Asia. Responsibility for the management and operation of the network will fall on Global Crossing. Global Crossing will initially own 93% of the joint venture with Softbank and Microsoft each owning 3.5%.

Ingram Micro

(IM)

plunged 5 13/16, or 30.1%, to 13 1/2 after it said it expects to post earnings of 10 cents to 14 cents a share for the third quarter, falling short of the 13-analyst estimate of 41 cents. The company also said it has started a search for its next CEO to succeed Jerre L. Stead. Stead will remain chairman and CEO until a successor is in place and will then continue to serve as chairman.

Mergers, acquisitions and joint ventures

America Online

(AOL)

added 1 9/16 to 94 7/8 after it said

TV Guide

(TVGIA)

will supply television program listings to the Internet service provider. TV Guide rose 4 11/16, or 16.6%, to 33.

Lycos

(LCOS)

added 1/8 to 43 3/4 after saying it is acquiring privately held

Quote.com

for $78.3 million in stock plus the assumption of the company's stock option plan.

Medeva

(MDV)

, a U.K. pharmaceuticals concern rose 2 1/16,or 24.4%, to 10 1/2 after saying it is in talks, which could lead to a recommended cash offer for the company,

Reuters

reported.

Prodigy

(PRGY)

lost 1/4 to 16 3/4 after saying it would buy

BizOnThe.Net

from

VarTec Telecom

for $100 million in cash and stock.

Yahoo!

(YHOO)

slipped 7/8 to 154 1/16 after it announced it has struck a bill payment service deal with

CheckFree

(CKFR)

. CheckFree fell 3/16 to 37 9/16.

Earnings/revenue reports and previews

Carbide Graphite

(CGGI)

inched up 1/16 to 12 15/16 after posting fourth-quarter earnings of 32 cents a share, beating the two-analyst estimate of 30 cents but down from the year-ago 54 cents.

Esterline Technologies

(ESL)

lost 1 1/16, or 6.6%, to 14 15/16 after reporting third-quarter earnings of 34 cents a share, missing the two-analyst estimate of 39 cents and coming in below the year-ago 45 cents.

H.J. Heinz

(HNZ)

lost 3/16 to 45 1/4 after reporting first-quarter earnings of 65 cents a share, missing the 14-analyst estimate of 66 cents but beating the year-ago 60 cents.

Korn/Ferry International

(KFY) - Get Report

added 5/8 to 17 5/8 after it posted first-quarter earnings of 15 cents a share, beating both the two-analyst estimate of 11 cents and the year-ago 5 cents.

Movado

(MOVA)

slipped 15/16 to 26 1/2 after it posted second-quarter earnings of 34 cents a share, ahead of the two-analyst estimate of 31 cents and up from the year-ago 25 cents.

Salton

(SFP)

lost 1/16 to 32 1/2 after posting fourth-quarter earnings of 48 cents a share, beating the two-analyst estimate of 30 cents and up from the year-ago 16 cents.

Serologicals

(SERO)

slipped 1 1/32, or 16.8%, to 5 1/8 after saying it expects to post a third-quarter loss due to shipping delays and other problems.

Stewart Enterprises

(STEI)

climbed 1/4 to 6 1/4 after it reported third-quarter earnings of 26 cents a share, beating both the 10-analyst estimate of 25 cents and the year-ago 25 cents.

Value City

(VCD)

lost 3/16 to 12 3/8 after posting second-quarter earnings of 12 cents a share, in line with the five-analyst estimate of 12 cents and beating the year-ago 9 cents.

Offerings and stock actions

AnnTaylor Stores

(ANN)

rose 2 3/4, or 7.1%, to 41 3/4 after its board authorized a buy back of $40 million common shares or convertible debt and an $85 million capital spending plan for fiscal 2000. The clothing retailer said the spending plan would subsidize a 90-store real estate expansion.

Ditech Communications

(DITC)

has filed a 2.5 million share offering with the

Securities and Exchange Commission

.

Analyst actions

Alcatel

(ALA)

lost 3/4 to 28 15/16 after

Donaldson Lufkin & Jenrette

initiated coverage of the stock with a market perform rating.

Alltel

(AT) - Get Report

lost 2 1/16 to 69 after

Banc of America Securities

rolled out coverage with a buy rating and set a price target of 90.

Amresco

(AMMB)

slipped 5/16, or 5.6%, to 5 5/16 after

ABN Amro

dropped its rating to hold from outperform.

Apple

(AAPL) - Get Report

peeled off 3/8 to 75 3/4 despite a lift from

Warburg Dillon Read

, which raised its price target to 90 from 75 while maintaining a buy rating.

Ariba

(ARBA)

partied 6 1/16 to 153 after

SG Cowen

began coverage with a buy rating and a price target of 165.

Covance

(CVD)

shed 5 1/16, or 32.7%, to 10 7/16 after

Lehman Brothers

sliced its price target to 20 from 32. Late yesterday, the company said it expects to report third-quarter earnings of 21 cents a share, missing the analyst estimate of 26 cents.

Dal-Tile

(DTL)

slipped 1/8 to 8 7/8 after

Goldman Sachs

upped its rating to market outperform from market perform.

Hilton Hotels

(HLT) - Get Report

fell 3/8 to 10 13/16 after

Merrill Lynch

sliced its rating to long-term accumulate from a buy.

HomeStore.com

(HOMS)

moved up 1/4 to 48 3/16 after

Morgan Stanley Dean Witter

rolled out coverage with an outperform rating. Merrill Lynch stamped the stock with near-term accumulate, long-term buy ratings.

IMRglobal

(IMRS)

tumbled 5 1/2, or 33.6%, to 10 15/16 after Lehman Brothers chopped its price target to 20 from 28 and its fiscal 1999 estimates to 69 cents a share from 94 cents. The company late yesterday warned of a profit shortfall.

Mead

(MEA)

was unchanged at 39 3/8 after Warburg Dillon Read initiated coverage with a buy rating and a price target of 50.

Mortgage.com

(MDCM)

rose 1 13/16, or 11.7%, to 17 5/16 after

U.S. Bancorp

started coverage of the stock with a strong buy rating and set a price target of 28.

Nokia

(NOK) - Get Report

tacked on 1 7/8 to 88 3/4 after DLJ initiated coverage with a top pick rating.

Nova

(NIS)

lost 1/8 to 26 3/8 despite a hand from Goldman Sachs, which initiated coverage by placing the stock on its recommended list.

Provant

(POVT)

inched up 1/8 to 12 3/4 after Warburg rolled out coverage with a buy rating and set a 12-month price target of 23.

Viacom

(VIA.B)

climbed 11/16 to 47 5/8 after Merrill Lynch upgraded it to near-term buy from near-term accumulate.

Miscellany

Procter & Gamble

(PG) - Get Report

rose 1/4 to 103 1/8 after

The Wall Street Journal

reported that the company is preparing to launch an upscale hair-care brand called Physique.

Quixote

(QUIX)

was unchanged at 14 15/16 after it said Phillip Rollhaus would retire from his role as CEO on Sept. 30 but remain as the company's chairman. The highway safety products maker said Leslie Jezuit would replace Rollhaus as chief executive and will continue to act as president and COO.