The market couldn't swallow the medicine of more warnings from and downgrades of technology leaders, despite some loving spoonfuls of corporate news and an improving bond market. Major proxies ended in arrears, having surrendered decent midday gains.
announcement it will split into two publicly traded companies, plus news of
agreement to buy
, initially rekindled hope all value hasn't been squeezed out of technology stocks. But the developments could not overshadow a profit warning from
, which fell 17.5% and sparked more weakness among tech bellwethers.
was another big deterrent to tech investors, sliding 12% amid
rumors the networking equipment maker would soon post a profit warning of its own.
cut its earnings estimates. After the market closed the modem maker said it expected to earn 23 cents a share for its third quarter, far short of the consensus view of 36 cents, on revenue of $1.4 billion.
Nasdaq Composite Index
lagged other major indices yet again, closing down 36.15, or 1.6%, to 2259.03 after rising as high as 2317.57. The tech-flushed index was restrained by
, which fell 6.3% after
NationsBanc Montgomery Securities
became the latest brokerage firm to downgrade the chip maker.
In addition to Intel and 3Com, weakness in
hampered the Nasdaq, the latter in direct sympathy with Micron Electronics.
New York Stock Exchange
, majority owner of Micron Electronics, slid 5.7% following a downgrade by NationsBanc Montgomery. PC makers
stumbled 4.8% and 3.6%, respectively.
fell 2.5%, the
Morgan Stanley High Tech 35
shed 2.8% and the
Philadelphia Stock Exchange Semiconductor Index
Internet names fared better, led by
TheStreet.com Internet Sector Index
rose 2.63, or 0.5%, to 527.76, while
TheStreet.com E-Commerce Index
slid 0.66, or 0.7%, to 96.90.
Dow Jones Industrial Average
dipped 27.17, or 0.3%, to 9297.61 after climbing as high as 9421.22 intraday. Weakness in
most damaged the index.
paced Dow gainers, while Hewlett-Packard rose 3.8%.
Hampered by technology's giants, the
closed off 10.64, or 0.9%, to 1225.96 after climbing as high as 1248.31 at its apex. The broad-market measure is now in the red for the year. The
, meanwhile, rose 0.04 to 394.43.
Also on the bright side, the
Dow Jones Transportation Average
rose 53.20, or 1.7%, to 3279.06. Airlines rumbled higher after
upgraded several carriers; the
American Stock Exchange Airline Index
"There was a rumor late in the day Intel is going to preannounce a negative quarter. That seemed to ignite some selling late in the day," said Bill Allyn, head of block trading at
, who claimed no knowledge of the rumor's veracity. "Again, we're in a very extended, tired phase of the market. Until we have a meaningful selloff and reassert the leadership of technology, we're going to be in this no man's land where we're pushing and pulling and not getting anyplace."
Conceding the major averages are "hanging in because our economy is pretty darn strong," Allyn predicted a serious downturn. "I definitely think this market has got 8600 to 8700 written all over it," he said. "There's just not the tremendous demand for U.S. equities as there was before. There's latent demand, but we have to have a meaningful selloff" before it re-emerges.
In NYSE trading, 750 million shares traded, while declining stocks led advancers 1,554 to 1,413. In
Nasdaq Stock Market
activity, 898.1 million shares were exchanged, while losers led 2,230 to 1,711. New 52-week lows led new highs 77 to 34 on the Big Board and by 78 to 60 in over-the-counter trading.
Follow What Leader? And Where?
"There is definitely a lack of leadership," said Charles Payne, president and chief analyst at
Wall Street Strategies
. "I've been saying this is sort of a consolidation phase and
I still hold to that. There have been many opportunities for the market to capitulate and it hasn't -- that's a good thing. But the majority of investors are waiting for a sign to us to take the next leg up and no one is really sure what it is."
Major averages, as well as leading stocks such as
continue to hold key support levels (with 96 being crucial for GE), the analyst observed. "The problem is they keep failing to break out at key resistance."
GE, which dipped 1.7% to 99 1/4 after rising as high as 101 3/4 today, has repeatedly found 104 to be "a huge nemesis on the upside," Payne said. Meanwhile, the S&P 500 "runs into trouble" at 1280. "Juxtapose GE's chart with the S&P 500 and you get the same picture," the analyst explained.
The Dow suffered a "double-top" at 9600, while 2400 is a "big, big test" for the Nasdaq, which "must hold" 2200 if downside pressure continues, he continued.
The broader market's ability to withstand the loss of leadership by tech bellwethers is a positive, the analyst said, adding that the next substantive move should be to the upside. However, stocks that have emerged, including retailers such as
, up 5.4% today, "don't have the sizzle to create broad-market excitement," he said.
As far as sizzle today, Payne noted takeover rumors surrounding Union Carbide, which rose 7.5% while the
Morgan Stanley Cyclical Index
The analyst wasn't aware of a potential suitor, but said "a lot of people believe something is going on," judging by the stock's movement and the "heavy options activity."
Options traders, however, said the heated activity in Union Carbide took place two weeks ago (as reported
Feb. 18 by
: "You're a day late and a dollar short," one quipped.
Among other indices, the
Dow Jones Utility Average
fell 0.30, or 0.1%, to 290.72 and the
American Stock Exchange Composite Index
gained 0.92, or 0.1%, to 699.21.
The price of the benchmark 30-year Treasury bond rose 27/32 to 94 23/32, its yield easing to 5.61%.
Elsewhere in North American equities, the
Toronto Stock Exchange 300
tumbled 77.03, or 1.2%, to 6225.19 and the
Mexican Stock Exchange IPC Index
fell 31.09, or 0.7%, to 4186.65.
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.
As noted above, H-P excelled 2 3/4 to 68 5/8, off its session high of 73 1/2, after a midmorning announcement that it will break up into two separate publicly traded companies, one a measurement business, the other a computing and imaging firm. The company said Edward Barnholt, current executive vice president and general manager of the Measurement Organization, was named chief executive of the new measurement company. H-P sees an IPO of about 15% of the measurement company's shares by the end of the year, saying it would be the largest tech IPO in Silicon Valley history.
The new computing and imaging company will continue to operate under the Hewlett-Packard name. Lewis E. Platt will continue as chairman, president and chief executive of Hewlett-Packard until the separation is complete. A special board committee will then seek a new CEO for the computing and imaging company.
took a closer look at the news in a separate
story this afternoon.
Mergers, acquisitions and joint ventures
reeled in 3 1/16, or 10%, to 34 after entering an agreement calling for Microsoft to license the company's
server software. Dialogic will provide development services to Microsoft in exchange for $20 million. Also, Microsoft, which lost 3 1/8 to 148 9/16, made a $24.2 million equity investment in Dialogic. Microsoft rival
lifted 1 5/8 to 98 7/8 after
The Wall Street Journal
said the company plans to distribute chip designs free to outside developers.
were both halted this afternoon for news.
David Faber said Jones Apparel may announce an acquisition of the shoe retailer. Jones Apparel traded shortly before 2 p.m. down 1 3/8, or 5%, at 25 15/16; Nine West resumed trading on the Nasdaq a few minutes after the closing bell off 1/16 at 22 13/16.
Xylan soared 8 7/8, or 33%, to an annual high of 35 3/4 after France's Alcatel agreed to buy it for $37 a share, or $2 billion, in cash. Alcatel picked up 1/2 to 21 7/8.
Earnings/revenue reports and previews
added 1/8 to 33 after posting fourth-quarter earnings of 47 cents a share, beating the seven-analyst forecast of 44 cents and topping the year-ago 35 cents.
advanced 4, or 9.2%, to an all-time high of 47 11/16 after reporting fourth-quarter earnings of $1 a share, 7 cents higher than the nine-analyst view and above the year-ago 43 cents.
vaulted 3, or 12%, to 28 after last night topping fourth-quarter earnings estimates by a penny a share with a profit of 56 cents.
slid 2 1/4 to 61 7/8 even after reporting fourth-quarter earnings of 97 cents a share, above both the 15-analyst view of 90 cents and the year-ago 76 cents.
Federated Department Stores
rose 3/4 to 40 1/16 after recording fourth-quarter earnings of $1.88 a share, 6 cents ahead of the 17-analyst estimate and up from the year-ago $1.66. The company said same-store sales during the quarter rose 4.1%.
shot up 2 1/8, or 18.7%, to 13 1/2 after saying it sees fourth-quarter earnings of 24 cents to 26 cents a share. The five-analyst forecast called for 19 cents vs. the year-ago loss of 28 cents.
Micron Electronics plunged 2 1/2, or 17.5%, to 11 13/16 after last night warning it expects second-quarter earnings and sales to fall short of first-quarter figures because of slower PC sales. Today,
Credit Suisse First Boston
cut its second-quarter earnings outlook for the company to 8 cents a share from 12 cents.
lowered the stock to accumulate from strong buy and NationsBanc Montgomery Securities dropped it to hold from buy. Fellow chip maker Intel plunged 7 5/16, or 6.3%, to 109 13/16 after Montgomery lowered it to hold from buy.
received 13/16, or 10.3%, to 8 11/16 after reporting fourth-quarter earnings of 36 cents a share, a penny above the 19-analyst estimate and up from the year-ago 32 cents. The company said it plans to open at least 100 new superstores in the U.S. this year.
scored 1 1/8, or 6.3%, to 19 1/4 after last night topping first-quarter earnings forecasts by 2 cents a share with a profit of 30 cents.
Red Roof Inns
slipped 1/4 to 13 5/8 after reporting fourth-quarter earnings of 24 cents a share, beating the three-analyst outlook by 3 cents but falling below the year-ago 26 cents.
skidded 1, or 5%, to 19 1/16 despite last night topping fourth-quarter earnings by a penny with a profit of 24 cents a share.
grew 1 15/16, or 7.5%, to 28 after last night posting fourth-quarter earnings of 50 cents a share, 2 cents above estimates.
added 1/8 to 27 3/16 after posting fourth-quarter earnings of 66 cents a share, a penny shy of the three-analyst view and up from the year-ago 55 cents.
slouched 1 9/16, or 12.8%, to 10 13/16 even after beating fourth-quarter earnings forecasts by 1 cent a share last night.
flew 7/16 to 9 3/8 after posting fourth-quarter earnings of 35 cents a share, in line with the 11-analyst outlook but behind the year-ago 44 cents.
brought in 5/16, or 6.3%, to 5 1/4 after saying it sees fourth-quarter and full-year 1998 earnings meeting analysts' targets. The four-analyst estimate calls for quarter earnings of 23 cents a share and 1998 earnings of $1.58. The limping retailer also announced plans for an e-commerce and direct marketing subsidiary called
looked at the news in a
story and at some of Venator's other efforts and challenges in an earlier
rallied 18 3/4, or 31%, to an all-time high of 79 3/4 after last night saying it expects to record first-quarter earnings of 51 cents to 55 cents a share because of strong demand. The four-analyst view called for 36 cents vs. the year-ago 23 cents. Today,
BancBoston Robertson Stephens
upgraded the stock to buy from long-term attractive and
Warburg Dillon Read
upped its price target for the stock to 110 from 76 a share. Warburg also lifted its 1999 earnings estimate for VISX to $2.05 from $1.47 a share.
jumped 1 3/4, or 8.4%, to 22 1/2 after reporting fourth-quarter earnings of 78 cents a share, on target with the 11-analyst expectation and above the year-ago 61 cents.
hopped 2 3/4, or 6.7%, to 43 3/4 after last night saying its first-quarter and full-year earnings will be at "record" levels and that it approved the repurchase of $250 million in stock. The company also said it will restructure its Brazilian operation's balance sheet to lessen the impact of fluctuations in the Brazilian real. Today,
Brown Brothers Harriman
pushed up its rating on Whirlpool to near-term buy from neutral and set a 12-month price target of 50 a share.
Offerings and stock actions
@Home swelled 8 7/16, or 7.9%, to 115 9/16 after its board declared a 2-for-1 stock split and Credit Suisse First Boston initiated coverage with a buy. Elsewhere in Netland, eBay popped up 8 3/4, or 8.1%, to 117 1/16 following yesterday's 3-for-1 stock split.
Airline stocks flew after Goldman Sachs upgraded several names based on yesterday's National Association of Purchasing Management news:
, upped to trading buy from market perform, lifted 15/16 to 37;
, kept at market perform but receiving a 1999 earnings estimate boost, lifted 1 1/4 to 31 3/8; and
lifted 1 3/4 to 57 7/8 and
lifted 2 11/16 to 65 5/8 after the firm upped both stocks to market outperform from perform.
added 3/16 to 76 7/8 after announcing a 2-for-1 stock split.
Morgan Stanley Dean Witter
began coverage of the stock with an outperform.
climbed 1 11/16 to 48 1/16 after saying it will buy back up to $200 million in stock.
Lernout & Hauspie
advanced 3, or 10.9%, to 30 1/2 after last night saying its founders will buy up to $40 million in company stock.
jumped 6 1/8, or 12.4%, to an all-time high of 55 1/16 after
began coverage with an outperform.
vaulted 1 5/8, or 5.6%, to an all-time high of 30 7/8 after investment house
George K. Baum
started coverage with a buy.
expanded 3 1/8, or 13.8%, to 25 7/8 after Prudential raised it to strong buy from accumulate.
rose 1 7/8 to 41 1/8 after Morgan Stanley Dean Witter upgraded it to outperform from neutral.
climbed 1 7/8 to 39 13/16 after Goldman added the stock to its recommended list.
hopped 13/16 to 40 5/8 after
The New York Times
said the company is about to unveil a new program,
, aimed at rival
. Last year, Quark launched an unsolicited takeover bid for Adobe.
skidded 6 5/8, or 12.2%, to 47 3/4 on market rumors a patent-infringement lawsuit was filed against the company.
Also hurt by the rumor mill was
, which fell 4 5/8, or 10.4%, to 40 1/16 on worries that one of its units,
, will be less profitable in the near-term.
St. Jude Medical
lowered 9/16 to 24 5/16 after naming Terry L. Shepherd president and chief executive, effective May 5.