SAN FRANCISCO -- Cannons to the right of them (yesterday's
data). Cannons to the left of them (today's housing numbers). Cannons in front of them (the
meeting June 29-30). It wasn't quite
The Charge of the Light Brigade
, but investors stared down a potential world of hurt today, leading major proxies back from early losses.
Similar to yesterday's manufacturing data, a
new home sales
jumped 9.2% in April convinced traders the
will raise interest rates later this month. A hasty retreat in some individual stocks notwithstanding, growth stocks mounted a furious afternoon comeback in concert with bonds, leaving major equity proxies mixed.
The price of the 30-year Treasury bond rose 4/32 to 90 18/32, its yield falling to 5.93%.
Nasdaq Composite Index
fell as low as 2364.59 but improved throughout the afternoon to close up 20.38, or 0.8%, to 2432.41.
TheStreet.com Internet Sector
index dropped as low as 528.19 before closing down a scant 0.26 to 556.61.
best represented the action among tech leaders, sliding to as low as 130 1/2 before closing up 2.9% to 142 1/2 after agreeing to acquire
for about $80 million. Similarly,
fell as low as 73 before closing up 7.2% to 85 5/8; the firm set a 3-for-1 stock split last night. Elsewhere,
fell as low as 97 1/2 but recovered to end up 6% at 112 1/8.
was a standout among traditional bellwethers, rising 4% on news it will acquire software company
for $435 million. Chip equipment makers such as
were also solid performers, lifting the
Philadelphia Stock Exchange Semiconductor Index
The picture wasn't so rosy among certain secondary tech names.
shed 13.8% after parent
Barnes & Noble
scuttled its proposed $600 million acquisition of
Ingram Book Group
due to regulatory opposition.
tumbled 19% after
Morgan Stanley Dean Witter
initiated coverage with a neutral rating.
Weak financials helped prevent blue-chip proxies from rallying as smartly as tech proxies. The
Dow Jones Industrial Average
fell 18.37, or 0.2%, to 10,577.89, although well off its session low of 10,464.55. The
rose 0.55 to 1294.81 after trading as low as 1277.47.
slid 6.1% after
cut earnings estimates, citing the firm's planned online trading offerings. Downgrades from
CIBC World Markets
Paine Webber Group
scurrying 6.6% and
Morgan Stanley Dean Witter
down 3.8%. The
American Stock Exchange Broker/Dealer Index
Among many losing banking stocks, Dow components
also slouched; the
Philadelphia Stock Exchange/KBW Bank Index
The Dow was also hampered by cyclicals such as
, which fell 3.2%.
closed down 0.72 to 436.74.
"The market firmed up a bit. I saw some institutions bottom-picking, especially on the tech side," one New York-based trader said. "I think things got so beat up over last week, they caught some nice bids."
failed to sustain its bounce to as high as 115 13/16, but the trader noted it closed well off its intraday low of 105 1/16, down 2.4% to 110 3/8.
"I think tomorrow they may come out gunning them, provided the bonds hold," he continued. "You like seeing days like this. It seems like there was some good support. I was a little surprised myself."
However, the trader conceded the market is basically in limbo until Friday's
and thus susceptible to wild swings intraday or day-to-day until then.
New York Stock Exchange
trading, 732.9 million shares were traded while declining issues bested advancers 1,613 to 1,335. In
Nasdaq Stock Market
activity, 899.6 million shares were exchanged while losers led 2,229 to 1,639. New 52-week lows led new highs 53 to 35 in NYSE trading and by 62 to 55 in over-the-counter trading.
A report from Washington-based
Johnson Smick International
saying higher rates may not be a foregone conclusion was cited as a catalyst for the comeback. However, Johnson Smick declined to comment about whether such a report exists, much less send a copy to this reporter (or any other, I gather).
On the other hand, some market watchers say the inflation fears are (like) way overblown.
"The data over the next few weeks will confirm that a small amount of inflation is not a problem when examined realistically," Greg Smith, market strategist at
, wrote in a report today. "We expect to get more clarity regarding inflation over the summer months and hope that inflation doesn't remain too low to stunt the broadening profits story, which had begun in the first quarter."
(Yes, he's worried about inflation being too
"We feel that June will calm some concerns of inflation and that, barring any major earnings surprises from large companies, the month should be pretty good for both stocks and bonds," Smith continued.
Thomas McManus, equity portfolio strategist at
Banc of America Securities
, said as much yesterday in an interview with
"The earnings outlook is very good and therefore the broadening trend is evident," McManus said.
The strategist sees a window of about six months before the "cumulative effect" of rising long-term rates and any Fed tightening of short-term rates "will eventually have a moderating impact on the strength of the economy and trip away some momentum."
Until then, expect stocks of smaller-than-average market cap to do best, he said. Unable to name specifics, McManus said: "On average cyclicals are less attractive than growth" and recommended investors search for "stocks that behaved well" in the summer of 1997.
Among other indices, the
Dow Jones Transportation Average
fell 39.00, or 1.1%, to 3427.60; the
Dow Utility Average
declined 1.02, or 0.3%, to 324.40; and the
American Stock Exchange Composite Index
lost 4.88, or 0.6%, to 771.23.
Elsewhere in North American equities, the
Toronto Stock Exchange 300
slipped 1.63 to 6850.75 and the
Mexican Stock Exchange IPC Index
lost 36.22, or 0.7%, to 5400.20.
Wednesday'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.
Following yesterday's brokerage slaughtering, Paine Webber sank 2 15/16, or 6.6%, to 41 13/16 and Morgan Stanley Dean Witter sank 3 1/2 to 88 1/4, above an earlier low of 85 1/4, after CIBC World Markets analyst Steven Eisman cut both stocks to buy from strong buy. The analyst lowered his 2000 earnings estimate for Paine Webber to $3.45 from $4 a share and his view for Morgan Stanley to $6.40 from $7 a share. Also, Eisman dropped his 2000 earnings forecast for Merrill Lynch to $5 from $5.70 a share, sending that stock down 4 9/16, or 6.1%, to 70 11/16.
Spanish language Web portal
was among those that spent the session swimming in the overflowing Internet bloodbath. After recent gains from its IPO last week, the stock gave back 12 3/8, or 20.2%, to 48 15/16. But like most Net names, StarMedia closed above its intraday low -- the stock fell as low as 43 5/8 around noon.
dropped 5 1/8, or 13.2%, to 33 5/8, and barnesandnoble.com dropped 2 3/4, or 13.8%, to 17 3/16, below its IPO price of $18 a share. As mentioned earlier, Barnes & Noble tacked on 1 1/4 to 28 5/8, bouncing up from an earlier low of 26 5/8, after calling off its planned $600 million merger with Ingram Book Group because of opposition from the feds.
shed 3 13/16, or 7%, to 50 5/16 ahead of competitor
(ZANY:Nasdaq) initial offering, scheduled for tomorrow.
Mergers, acquisitions and joint ventures
Polish cable TV network
surged 5 9/16, or 44.7%, to an annual high of 18 1/16 on news that Europe's second-largest cable company,
United Pan-Europe Communications
, agreed to buy it for $1.15 billion.
has an 8% stake in UPC, which lost 1 1/8 to 58 7/8.
said it received a two-year contract from Microsoft for its SafeDisc PC CD-ROM copy protection program. Macrovision picked up 5 1/2, or 12.6%, to 49 1/4.
swelled 1, or 9.5%, to 11 5/8 after
agreed to take a 35% stake in the company's
Web site for $135 million in promotion and branding across CBS media properties. CBS closed flat at 42 3/4.
advanced 3 13/16, or 17.2%, to an annual high of 26 after the Dutch steel and aluminum firm
said it was in merger talks with the company.
flourished 2 3/8, or 7.5%, to an all-time high of 34 1/16 on plans to acquire
, a maker of polymer films for the auto and industrial markets. O'Sullivan shot up 2 13/16, or 30%, to an annual high of 12 3/16.
slipped 25/64, or 5.3%, to 6 59/64 while
rose 9/16 to 16 15/16 after the two agreed to merge. Halter Marine will exchange each share for 0.46 of a Friede Goldman share.
skidded 6 3/16, or 11.2%, to 49 3/4 after agreeing to be bought by
in a stock swap valued around $900 million. According to the deal, each Metro share will be converted into the right to receive 1.5 Westwood One shares. Westwood lost 1/8 to 34 7/8.
grew 1 1/8, or 7.5%, to 16 1/8 after receiving an 18-month contract to provide a diversity training program for about 30,000
Texas Instruments excelled 4 5/16 to 110 15/16 after announcing plans to buy Telogy Networks, a privately held Internet telephony company, for $435 million in stock.
Earnings/revenue reports and previews
American Home Products
stabilized after last night's
warning that second-quarter earnings would likely come in about 7 cents below the 25-analyst outlook of 41 cents a share. The drug maker also warned that full-year 1999 earnings would fall about 11 cents shy of the 27-analyst forecast of $1.89 a share. The stock dropped sharply in late composite trading yesterday but bounced back somewhat today, rising 1 13/16 to 53 13/16. AHP earned 39 cents in the year-ago second quarter and $1.78 in 1998. The company blamed a global slump in grain and livestock prices and said it was considering strategic alternatives for its agricultural product and livestock units. Today,
Warburg Dillon Read
cut the stock to hold from buy and
sliced it to buy from strong buy.
flew 2 9/16 to 75 1/16 after saying it expects to report second-quarter earnings slightly above its previously estimated range of 62 cents to 66 cents a share. The 11-analyst view called for 64 cents a share. Adobe also said it would take a $15 million restructuring charge to cut about 9% of its worldwide staff.
tanked 4 5/16, or 23.9%, to 13 3/4 after cutting its first-quarter earnings forecast to 35 cents to 37 cents a share, below the 12-analyst estimate for 45 cents. CKE cited weakness at its
chains for the news.
lowered 1/8 to 23 5/16 after posting third-quarter earnings of 34 cents a share, 2 cents higher than the eight-analyst outlook and above the year-ago 27 cents.
added 7/16 to 20 after reporting a first-quarter loss of 1 cent a share, a dime narrower than the four-analyst call and a penny wider than last year's break-even quarter.
plunged 7 3/8, or 25.7%, to 21 9/16 even after
started coverage with a buy. Rather understandably, investors cared more that the company lost its third largest customer: Yahoo!'s
Software company Marimba slid 10 7/8, or 19.1%, to 46 after Morgan Stanley Dean Witter started it with a neutral rating.
Metro Information Services
dropped 4 15/16, or 20.8%, to 18 1/2 even after
started coverage with an attractive.
added 1 3/4 to 50 7/8 after
raised it to buy from outperform. The firm said it expects the No. 2 U.S. retailer to unveil a more aggressive marketing strategy later this month emphasizing price value after narrowing its vendor base by about 15%.
N/A = not applicable or not available
slipped 1 1/4 to 62 13/16, off an earlier low of 60, on news the
Food and Drug Administration
issued a warning letter to the company saying it had made "unsubstantiated and misleading" safety and efficacy claims about its recently approved asthma drug