Grinding Day Yields Few Clues to Week's Course

The market slogged to a noncommital finish, with some market players nevertheless seeing near-term bullish signs.
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SAN FRANCISCO -- Market proxies mainly spun their wheels today in the uncertain path laid by the coming storm of earnings and economic data. But the

Dow Jones Industrial Average

managed to attain another record while its two biggest counterparts dipped only modestly from

Friday's historic levels.

Few complaints were heard about the relative lack of oomph, however. Most market players lauded the stock market's recent performance (especially by the Dow and big-cap techs) and mainly squared positions as they girded themselves for a heavy-duty news week.

A tumult in Argentina was the dominant force in financial circles today, although U.S. equity markets largely ignored the developments. Bonds, however, benefited from concerns about Argentina's commitment to pay its debts, political infighting and possible rating agency downgrades. As the Argentine bourse's benchmark measure, the

MerVal Index

, fell 8.7%, the price of the 30-year Treasury bond rose 1 7/32 to 90 27/32, its yield declining to 5.91%.

Some big financial stocks followed bonds higher but the remainder of the equity market was largely unfazed.

The Dow industrial average closed up 7.28, or 0.1%, to 11,200.98 after trading as low as 11,149.69, notching its second-straight new high.

Big Dow influences included

Kodak

(EK)

, up 2.4% after an upgrade from

Warburg Dillon Read

, and cyclical plays such as

Chevron

(CHV)

and

International Paper

(IP) - Get Report

.

General Electric

(GE) - Get Report

led Dow decliners, sliding 1.5%.

Despite worries about

Friday night's jury decision,

General Motors

(GM) - Get Report

rose 3.9%. Meanwhile,

Disney

(DIS) - Get Report

added 0.7% after announcing it will combine its

Buena Vista Internet Group

with

Infoseek

(SEEK)

and offer a tracking stock for the newly formed company,

go.com

.

Infoseek, however, dumped 10.8% as Net stocks in general declined and investors frowned upon the lack of premium in the Disney deal.

TheStreet.com Internet Sector

index shed 6.05, or 0.9%, to 658.79, with the biggest damage coming from bellwethers such as

Yahoo!

(YHOO)

and

Amazon.com

(AMZN) - Get Report

. Each fell more than 6%, while

America Online

(AOL)

lost 4.9%.

Outside the DOT,

eBay

(EBAY) - Get Report

fell 5.8% after another site outage this weekend.

Saddled by the slumping online names, the

Nasdaq Composite Index

dipped as low as 2774.77 and closed off 2.63, or 0.1%, to 2790.44 after trading as high as 2812.35.

Strength in traditional tech bellwethers kept the Comp from losing substantive ground. Most notably,

Sun Microsystems

(SUNW) - Get Report

gained 3.1% to an all-time high and

Dell

(DELL) - Get Report

rose 1.9% after an upgrade from

SG Cowen

. Additionally,

Microsoft

(MSFT) - Get Report

and

MCI WorldCom

(WCOM)

rose over 1% each. Still, the

Nasdaq 100

dipped 0.4%.

Among other tech notables,

Gateway

(GTW)

rose 3.1% in

New York Stock Exchange

trading after a favorable article in

The Wall Street Journal

.

The

S&P 500

closed off 4.15, or 0.3%, to 1399.13 after trading as high as 1406.82.

Despite mixed market internals, broader market averages advanced. The

Russell 2000

gained 1.32, or 0.3%, to 459.30 while the

American Stock Exchange Composite Index

gained 2.81, or 0.4%, to an all-time high of 815.54.

"This is still decent behavior in the market," said Barry Hyman, senior market strategist at

Ehrenkrantz King Nussbaum

. "Today was a quiet day, as it should be,

but with all the confusion, the Dow closed up."

Hyman believes the "background" is set for the market to continue to move higher -- noting prospects for strong second-quarter earnings and a recent decline in bond market yields. The strategist pegs "fair value" for the S&P 500 at 1425 (equivalent to roughly 11,400 for the Dow), while acknowledging "without the

Fed

taking away that red light, this rally wouldn't have been so vigorous."

Regarding today's action, "I like the fact tech is strong and leadership stocks are playing the role," he said. "Sun

Microsystems hit a 52-week high again, and, more importantly, the technical pattern of Dell has turned extremely positive. Tech is the leader.

Investors don't have to go way beyond to look for winners."

Given the strength of traditional tech bellwethers, Hyman was largely unconcerned by the downturn in Net names.

"Internet stocks have been performing well -- TheStreet.com Internet

Sector index had a tremendous move off the bottom and got overbought," he said. "The disappointment today is in how Disney is valuing Infoseek."

In NYSE trading, a modest 672.1 million shares were exchanged while declining stocks led advancers 1,631 to 1,371. In

Nasdaq Stock Market

action 985.5 million shares traded while gainers led 2,065 to 1,923. New 52-week highs bested new lows 115 to 51 on the Big Board and by 231 to 32 in over-the-counter trading.

Different Perspectives

An email last week from William Erman, founder of

Ermanometry Research, identified July 9 (plus or minus one day) as an "Ezone" for the stock market. According to Ermanometry, the market is like an 18-wheeler steaming along a highway and can only change direction at a major interchange, or Ezone.

Ermanometry uses intraday highs as its indicators vs. closing highs. The Dow set an intraday high of 11,236.76 Tuesday while the S&P's intraday best was set today, Erman noted in a phone interview today. Thus, Thursday is the "balance point" between the two averages and "assuming neither makes higher highs tomorrow," Friday remains the "focus day" for the Ezone, he said.

It's a bit complicated (if not arcane) but the basic message is Erman is "bullish for the next five to six weeks," or until the next Ezone occurs, likely in the last week of August or first week of September. Until then, expect "nothing more" than a 4% "reaction area" (or retrenchment) for the major averages, he said.

Among other indices, the

Dow Jones Transportation Average

rose 4.57, or 0.1%, to 3431.89 and the

Dow Jones Utility Average

slid 1.41, or 0.4%, to 320.30.

Elsewhere in North American equities, the

Toronto Stock Exchange 300

lost 4.96 to 7193.21 and the

Mexican Stock Exchange IPC Index

fell 119.50, or 2%, to 5769.37.

Monday's Company Report

By Heather Moore
Staff Reporter

(

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.

)

Infoseek sliced off 5 9/16, or 10.8%, to 45 15/16 following news Disney will combine its Buena Vista Internet Group with Infoseek and offer a tracking stock for the newly formed company, to be called go.com. Infoseek shareholders will receive 1.15 shares of go.com for each share held. Disney, which currently owns a 42% stake in Infoseek, will have about a 72% stake in go.com. The Mouse added 3/16 to 27 13/16. (

TheStreet.com

wrote about

rumors of such plans from Disney last month.)

Separately,

InfoSpace.com

(INSP) - Get Report

lowered 1 15/16 to 52 3/4 despite word Infoseek will use the company's private-label white pages as the

Go Network's

directory service.

Mergers, acquisitions and joint ventures

Baxter International

(BAX) - Get Report

, a medical-products maker, grew 3 5/16, or 5.4%, to 64 3/16 after saying it plans to spin off its cardiovascular business, creating a new publicly traded company with sales of nearly $1 billion.

J.P. Morgan

raised the stock to buy from market performer with a 12-month price target of 77.

Merrill Lynch

upped it to buy from accumulate.

Central Garden & Pet

(CENT) - Get Report

dropped 1 3/8, or 13.4%, to an annual low of 8 7/8 after

Scotts

(SMG) - Get Report

said it will change its distribution system for some products, altering its pact with the company. Central Garden will take an unspecified charge in 1999 to realign its distribution operations. Scotts lowered 3 1/8, or 7.1%, to 41 1/16.

Goldman Sachs

(GS) - Get Report

picked up 1 1/8 to 68 3/8 on word it's buying Chicago-based market maker

Hull Group

for $531 million in stock, options and cash.

IBM

(IBM) - Get Report

tacked on 7/16 to an all-time high of 137 13/16 after announcing it would buy

Sequent Computer

(SQNT)

for $810 million in cash. Sequent gave up 3/16 to 17 9/32. Rumors of the takeout emerged in the options market in

mid-June.

Separately, online computer retailer

Cyberian Outpost

(COOL)

shot up 1, or 10.3%, to 10 7/8 after saying it will sell IBM's full line of PCs.

Orion Capital

(OC) - Get Report

flew 6 9/16, or 16.1%, to 47 5/16 after Britain's

Royal & Sun Alliance Insurance Group

agreed to buy it for about $1.4 billion in cash.

Peoples Bank Corp. of Indianapolis

(PPLS)

rocketed 23 7/8, or 51.9%, to an all-time high of 69 7/8 after

Fifth Third Bancorp

(FITB) - Get Report

agreed to acquire it for $73 a share. Fifth Third, which shaved off 7/16 to 66 9/16, will exchange 1.09 shares for each share of Peoples Bank.

Red Roof Inns

(RRI)

flourished 4 1/4, or 23.2%, to an all-time high of 22 9/16 on news

Accor

, a French hotel group and owner of

Motel 6

, is acquiring the company for $1.1 billion, including debt.

Rogers Communications

(RG)

added 13/16 to 20 7/8 after

Microsoft

(MSFT) - Get Report

said it will invest $400 million in the company. Mister Softee rose 1 to 94 3/16.

St. Paul

(SPC)

climbed 1 1/8 to 30 1/4 after agreeing to sell its personal insurance operations to

MetLife Auto & Home

, a subsidiary of

Metropolitan Life Insurance

, for about $600 million.

Schlumberger

(SLB) - Get Report

picked up 1/2 to 64 13/16 after announcing it will spin off its contract drilling business and combine it with

Transocean Offshore

(RIG) - Get Report

. Transocean Offshore jumped 7/8 to 29 7/8. Schlumberger shareholders will have a majority stake in the resulting company, called

Transocean Sedco Forex

. The deal, which should close by year's end, is expected to be modestly dilutive to Transocean Offshore's 2000 earnings but accretive after that.

World Color Press

(WRC)

advanced 5 3/16, or 17.4%, to 35 on word

Quebecor Printing

(PRW)

will take over the Greenwich, Conn., firm in a stock and cash deal valued at $2.7 billion, including debt. Quebecor Printing slid 177/256 to 22 255/256.

Earnings/revenue reports and previews

Ameritrade

(AMTD) - Get Report

tumbled 2 1/8, or 5.6%, to 36 1/16 after posting third-quarter earnings of 5 cents a share, beating the 11-analyst estimate of 3 cents and moving up from the year-ago 3 cents.

Gannett

(GCI) - Get Report

rose 13/16 to 72 1/4 after reporting second-quarter earnings of 87 cents a share, a penny above the 13-analyst consensus and up from last year's 78 cents.

Greenbrier

(GBX) - Get Report

, a supplier of transportation equipment and services to the railroad industry in North America, slipped 1/16 to 10 15/16 after reporting third-quarter earnings of 43 cents a share, in line with the six-analyst estimate and up from the year-ago 38 cents.

In other earnings news:

Analyst actions

Actuate Software

(ACTU)

stormed up 6 7/8, or 24.7%, to an all-time high of 35 after

Credit Suisse First Boston

lifted it to strong buy from buy.

CBT Group

(CBTSY)

swelled 1 11/16, or 7.7%, to 23 9/16 after

Morgan Stanley Dean Witter

upgraded the stock to outperform from neutral with a price target of 30.

Comverse Technologies

(CMVT)

added 2 5/16 to an all-time high of 79 1/4 after

Salomon Smith Barney

initiated coverage with a rating of strong buy with medium risk.

Consolidated Papers

(CDP)

excelled 1 3/4, or 6.2%, to 29 7/8 after

Donaldson Lufkin & Jenrette

raised it to buy from market perform.

Dell rallied 13/16 to 43 5/8 after SG Cowen pushed up the stock to strong buy from buy.

ESPS

(ESPS)

zoomed up 2 7/8, or 31.1%, to an all-time high of 12 1/4 after

BancBoston Robertson Stephens

and

Hambrecht & Quist

started coverage with buys.

U.S. Bancorp Piper Jaffray

initiated coverage with a strong buy.

Kodak hopped up 1 11/16 to 72 13/16 after Warburg Dillon Read raised it to buy from hold.

SBA Communications

(SBAC) - Get Report

popped up 1 5/16, or 9.8%, to an all-time high of 14 13/16 after

Lehman Brothers

,

Deutsche Banc Alex. Brown

and DLJ initiated coverage with buy ratings.

Synetic

(SNTC)

expanded 5/8 to 88 1/8 after Merrill Lynch raised it to buy from accumulate.

Wells Fargo

(WFC) - Get Report

slouched down 1 1/2 to 43 11/16 after Deutsche Banc Alex. Brown cut it to buy from strong buy.

Miscellany

Dow component General Motors revved up 2 9/16 to 68 11/16 despite Friday's after-the-close news that a California jury ordered the company to pay $4.9 billion to six people burned when the fuel tank of their

Chevy Malibu

exploded after getting rear-ended. It seemed investors are confident the ruling will be revised, if not overturned completely.

Northeast Optic Network

(NOPT)

shot up 12 1/2, or 71.4%, to an all-time high of 29 7/8 after it was called a "pioneer" in deploying

Lucent's

(LU)

AllWave fiber in the

Gilder Technology Report

, an influential tech newsletter.

Pfizer

(PFE) - Get Report

picked up 3/8 to 37 3/8 after the

Food and Drug Administration

approved the company's

Revolution

drug. It will be the first topical drug sold to prevent heartworm disease in dogs and cats.