Once again, a tech heavyweight managed to pack a punch that kept the major indices soaring in positive territory at midsession.
was strengthening the
Dow Jones Industrial Average
and, along with its freshly traded spinoff,
, adding fuel to the tech sector. The action shows just how one tech large-cap can cause make or break a day on Wall Street.
"There is a lot of focus on Hewlett-Packard and its spinoff," said Bill Schneider, head of equity block trading at
Warburg Dillon Read
. "It's breathing new life into the tech sector. There is very strong buying coming back into the tech sector, with earnings and the
behind us, there aren't any clouds on the horizon and the market is celebrating that."
Hewlett-Packard: Join the discussion on
Across the board, Wall Street investors agreed that H-P had the spotlight. However, not all insiders thought those better-than-expected fourth-quarter earnings alone were responsible for its big gains.
"Hewlett-Packard is the story," said Ronny Kraft, CEO of
Gotham Capital Management
. "It is the biggest influence on the Dow." Indeed, H-P was contributing about 73 points of the Dow's midday gain of 114, or 1%, to 10,997. "But if it is because of its earnings last night, I would call the move suspect," added Kraft, who attributes H-P's jump to its spinoff of Agilent. "A $13 movement isn't warranted based on the numbers we saw last night. In the IPO market that we are in, stocks like H-P can go up on a mere spinoff."
As Wall Street moves further into a bull resurgence, it comes closer to Y2K D-Day. And as Kraft notes, with the event's uncertainty comes skepticism. "Right now, we're looking for the market to move higher over the next couple of weeks and we would not be surprised to see the Dow and the
hit all-time highs, with continued strength from the
. However, the one ungaugeable event that alerts us to be cautious is the last two weeks of the year. Y2K is an unprecedented event, but it is our opinion that we'll see some selling in the last two weeks," added Kraft.
The Nasdaq Composite Index was advancing 39, or 1.2%, to 3308. In Nasdaq trading, application server products supplier
was soaring 16 9/16, or 20.3%, to 98 1/4 thanks to a price-target boost from
Credit Suisse First Boston
wasn't getting a lift from H-P. At midday, Applied Materials was off 3 1/4 to 106 13/16 despite beating fourth-quarter consensus earnings estimates.
TheStreet.com Internet Sector
index was just gushing with gains, jumping 31, or 3.4%, to 934, with
leading its components.
In other market news, the oil sector was making some noise thanks to its inflating prices and low production. "With the continued production cuts by
, coupled with the continued decreases in oil inventories, we believe that oil can go to the low 30s in the next couple of months," Kraft said, referring to oil's rising price.
Kraft noted that even the oil stocks can't escape the Y2K woes. "One of the issues that could really accelerate an upward move in oil would be Y2K fallout from Russia," he said. "Our research leads us to believe that Russia is extremely unprepared for the millennium date change and, considering their presence in the oil industry, any disruption in the delivery or production could result in higher prices."
American Stock Exchange Oil & Gas Index
was lately down 0.6%.
New York Stock Exchange
, the airlines were looking sluggish on concerns that rising fuel prices will make for future turbulent earnings.
was losing 2 7/8 to 57 1/2, while
was falling 15/16 to 48 15/16.
American Stock Exchange Airline Index
was lately down 1.9%.
The Dow, the Nasdaq and the DOT weren't the only major indices in the green, with the broad
bouncing 6 to 1417 while the small-cap Russell 2000 was gaining 3 to 460.
On the bond front, the benchmark 30-year Treasury was 21/32 to 99 7/32, with its yield at 6.18%. (For more on the fixed-income market, see today's early
Breadth was mixed, with volume heavy.
New York Stock Exchange:
1,418 advancers, 1,500 decliners, 619 million shares. 76 new 52-week highs, 101 new lows.
Nasdaq Stock Market:
2,159 advancers, 1,633 decliners, 904 million shares. 180 new highs, 46 new lows.
Thursday's Midday Watchlist
Computer giant Hewlett-Packard was hopping 12, or 14.8%, to 93 after late yesterday posting fourth-quarter earnings of 75 cents a share, beating the 16-analyst estimate of 73 cents and the year-ago 72 cents.
increased its rating on Hewlett-Packard to attractive from neutral.
Shares of spinoff Agilent Technologies also began trading today. (See IPO table below.)
For more on H-P, check out additional
coverage from the
Mergers, acquisitions and joint ventures
rose 11/16 to 68 5/16 after saying it will buy
North American Vaccine
in a stock deal valued at $390 million. North American Vaccine rose 1/8 to 5 15/16.
inched up 7/16 to 43 after
The Wall Street Journal
reported it has won at least 30 orders worth more than $2 billion for its new line of Delta IV satellite-launch rockets, citing sources familiar with the development. The story said
Loral Space & Communications
placed a significant order. Shares of Loral were rising 7/16 to 18 7/16.
British American Tobacco
slipped 3/8 to 11 1/8 after saying it will sell its
Shoppers Drug Mart
unit to leveraged-buyout firm
Kohlberg Kravis Roberts
for $1.8 billion in cash. The deal is subject to BAT completing its acquisition of Canadian conglomerate
added 13/16, or 7.6%, to 11 5/8 after saying it would sell its drug delivery business to
Johnson & Johnson's
unit for up to $75 million in cash, depending on certain conditions. Johnson lost 1 1/4 to 104 3/8.
Cable & Wireless
slipped 11/16 to 39 7/8 after it said it formed a global relationship with
to provide small and medium-sized companies with e-business solutions. Compaq was climbing 1 1/4, or 5.3%, to 25. The two companies planned to commit $500 million to the venture over a period of five years.
gained 3 15/16, or 9%, to 47 3/4 after it set plans to enter the options market by buying options-trading firm
for $459 million in stock.
Options Buzz had the scoop back on Tuesday.
Major subsidiaries of
announced a venture to share news reports on their Web sites. NBC is a unit of
is a joint venture between NBC and
. GE lost 2 9/16 to 138 1/2, Microsoft climbed 1/8 to 85 3/16 and Washington Post added 1/8 to 574 3/4.
was looking wired, up 8 7/16, or 6.6%, to 135 5/8, after it announced a deal to expand the GSM service of
and received kudos from
. Merrill upped local-currency price targets on Nokia and on
, which was up 3 1/2, or 7.5%, to 50 1/2.
lost 1/4 to 29 7/16 despite saying it will receive a $300 million naval support contract in Guam.
Earnings/revenue reports and previews
Earnings estimates from First Call/Thomson Financial; earnings reported on a diluted basis unless otherwise specified.
Applied Materials fell 3 1/4 to 106 13/16 despite reporting fourth-quarter income last night, from continuing operations, of 69 cents a share, beating the 28-analyst estimate of 65 cents and the year-ago operating loss of 45 cents a share. Credit Suisse First Boston,
and Warburg Dillon Read raised 2000 earnings estimates on Applied Materials. See additional
reporting on Applied Materials from
Barnes & Noble
slipped 1/2 to 21 11/6 after it posted third-quarter earnings of 5 cents a share, in line with the 10-analyst estimate and up from a year-ago loss of 7 cents a share.
joint newsroom covered the book monster's earnings in a separate
Martha Stewart Living Omnimedia
posted third-quarter pro forma earnings of 4 cents a share, a penny better than the three-analyst estimate but down from the year-ago 9 cents. For more on Martha, check out
was unchanged at 19 3/8 after it reported fourth-quarter earnings of 8 cents a share excluding charges, beating the seven-analyst estimate of 6 cents a share, and the year-ago 4 cents a share.
rose 1 1/16 to 32 15/16 after it posted fourth-quarter operating earnings of 58 cents a share, beating the nine-analyst estimate of 41 cents and the year-ago 36 cents a share.
inched up 11/16, or 10%, to 7 9/16 after it reported third-quarter earnings of 7 cents a share, in line with the seven-analyst estimate and better than the year-ago loss of 29 cents a share.
Offerings and stock actions
Credit Suisse First Boston priced 5.5 million shares of
at $15 each last night, above the estimated $12 to $14 range. Retek, a spinoff of
, makes software used by retailers to communicate online with suppliers and distributors.
wasted no time initiating coverage of the new issue, rating it a buy and setting a 12-month price target of 25. Shares were lately popping 15 1/4, or 101.6%, to 30 1/4.
Deutsche Banc Alex. Brown
said it expects rising fuel prices to limit positive earnings surprises for airlines in the fourth-quarter and possibly cause some companies to miss earnings estimates. However, Deutsche did not make changes to any ratings, saying 2000 estimates are still on track and ahead of forecasts, citing travel agent commission cuts, which should offset any more fuel price increases.
Citrix sailed up 16 9/16, or 20.3%, to 98 1/4 after First Boston boosted its 12-month price target to 145 from 83.
PaineWebber raised its price target for
to 87 from 80. Exxon inched up 7/8 to 81 1/8.
PaineWebber upped its price target on
to 83 from 73. Shares dropped 1 1/8 to 67 1/8 despite the news.
price target to 78 from 85. Kodak slipped 3/16 to 66 7/16.
Warburg raised its first-quarter 2000 earnings estimates on
to $1 from 40 cents, and 2000 estimates to $3.39 a share from $2.13. Shares of Micron moved up 2 to 65 13/16.
Merrill set a 2001 earnings per share estimate of $4.20 for
. Merrill also said it sees a price objective of 140 to 150. Motorola motored up 2 3/8 to 121 3/8, after bouncing off a record intraday high of 122 5/8.
Morgan Stanley Dean Witter
to outperform from neutral and set a price target of 37. Unisys jumped 3, or 12.7%, to 27 13/16.
Warburg Dillon Read started
United Parcel Service
with a buy rating and set a price target of 78. Morgan Stanley started the stock with an outperform rating. Merrill Lynch started UPS with an accumulate rating, while
Donaldson Lufkin & Jenrette
started it as a market perform. UPS was lately off 15/16 to 66 3/4.
Merrill Lynch raised its price target on
to 58 from 53. Wells Fargo rose 1/4 to 47 3/8.
First Boston raised its price target on
to 110 from 80. Xilinx gained 3 1/2 to 89 9/16.
Marsh & McLennan
fell 1 1/8 to 78 5/8 after it named President Jeffrey Greenberg to the position of CEO, succeeding A.J.C. Smith, who will remain chairman until he retires in May.
The Heard on the Street column in
The Wall Street Journal
looks at daytrading firm
, which ceased trading for two full weeks after a $600,000 loss by one trader sparked scrutiny by regulators. Regulators also focused on an additional $2.8 million in losses since June. The column discusses the risks associated with daytrading firms that pool their customers' funds.