Hewlett-Packard Inspires Broad Tech-Led Rally

The Nasdaq Comp is on pace for another record and H-P is powering the Dow near 11,000.
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Once again, a tech heavyweight managed to pack a punch that kept the major indices soaring in positive territory at midsession.

Hewlett-Packard

(HWP)

was strengthening the

Dow Jones Industrial Average

and, along with its freshly traded spinoff,

Agilent

(A) - Get Report

, 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

Fed

behind us, there aren't any clouds on the horizon and the market is celebrating that."

Hewlett-Packard: Join the discussion on

TSC

Message Boards.

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

S&P 500

hit all-time highs, with continued strength from the

Nasdaq

. 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

Citrix

(CTXS) - Get Report

was soaring 16 9/16, or 20.3%, to 98 1/4 thanks to a price-target boost from

Credit Suisse First Boston

, while

Applied Materials

(AMAT) - Get Report

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

America Online

(AOL)

and

CMGI

(CMGI)

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

OPEC

, 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."

The

American Stock Exchange Oil & Gas Index

was lately down 0.6%.

On the

New York Stock Exchange

, the airlines were looking sluggish on concerns that rising fuel prices will make for future turbulent earnings.

AMR

(AMR)

was losing 2 7/8 to 57 1/2, while

Delta

(DAL) - Get Report

was falling 15/16 to 48 15/16.

The

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

S&P 500

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

Bond Focus.)

Market Internals

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

By Eileen Kinsella
Staff Reporter

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.

PaineWebber

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

TheStreet.com/nytimes.com

joint newsroom.

Mergers, acquisitions and joint ventures

Baxter

(BAX) - Get Report

rose 11/16 to 68 5/16 after saying it will buy

North American Vaccine

(NVX)

in a stock deal valued at $390 million. North American Vaccine rose 1/8 to 5 15/16.

Boeing

(BA) - Get Report

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

(LOR) - Get Report

placed a significant order. Shares of Loral were rising 7/16 to 18 7/16.

British American Tobacco

(BTI) - Get Report

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

Imasco

.

Cygnus

(CYGN)

added 13/16, or 7.6%, to 11 5/8 after saying it would sell its drug delivery business to

Johnson & Johnson's

(JNJ) - Get Report

Ortho-McNeil Pharmaceutical

unit for up to $75 million in cash, depending on certain conditions. Johnson lost 1 1/4 to 104 3/8.

Cable & Wireless

(CWP)

slipped 11/16 to 39 7/8 after it said it formed a global relationship with

Compaq

(CPQ)

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.

Knight/Trimark

(NITE)

gained 3 15/16, or 9%, to 47 3/4 after it set plans to enter the options market by buying options-trading firm

Arbitrade Holdings

for $459 million in stock.

TheStreet.com's

Options Buzz had the scoop back on Tuesday.

Major subsidiaries of

NBC

,

MSNBC

and

Washington Post

(WPO)

announced a venture to share news reports on their Web sites. NBC is a unit of

General Electric

(GE) - Get Report

, while

MSNBC

is a joint venture between NBC and

Microsoft

(MSFT) - Get Report

. 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.

Nokia

(NOK) - Get Report

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

Globe Telecom

and received kudos from

Merrill Lynch

. Merrill upped local-currency price targets on Nokia and on

Ericsson

(ERICY)

, which was up 3 1/2, or 7.5%, to 50 1/2.

Raytheon

(RTN.A)

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,

Lehman Brothers

and Warburg Dillon Read raised 2000 earnings estimates on Applied Materials. See additional

reporting on Applied Materials from

TheStreet.com/nytimes.com's

joint newsroom.

Barnes & Noble

(BKS) - Get Report

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.

TheStreet.com/nytimes.com

joint newsroom covered the book monster's earnings in a separate

story.

Martha Stewart Living Omnimedia

(MSO)

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

TheStreet.com/nytimes.com

joint newsroom

story.

TD Waterhouse

(TWE)

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.

Westvaco

(W) - Get Report

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.

Venator

(Z) - Get Report

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

Retek

(RETK)

at $15 each last night, above the estimated $12 to $14 range. Retek, a spinoff of

HNC Software

(HBCS)

, makes software used by retailers to communicate online with suppliers and distributors.

Jefferies

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.

Analyst actions

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

Exxon

(XON) - Get Report

to 87 from 80. Exxon inched up 7/8 to 81 1/8.

PaineWebber upped its price target on

Kimberly-Clark

(KMB) - Get Report

to 83 from 73. Shares dropped 1 1/8 to 67 1/8 despite the news.

PaineWebber cut

Kodak's

(EK)

price target to 78 from 85. Kodak slipped 3/16 to 66 7/16.

Warburg raised its first-quarter 2000 earnings estimates on

Micron Technology

(MU) - Get Report

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

Motorola

(MOT)

. 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

raised

Unisys

(UIS) - Get Report

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

(UPS) - Get Report

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

Wells Fargo

(WFC) - Get Report

to 58 from 53. Wells Fargo rose 1/4 to 47 3/8.

First Boston raised its price target on

Xilinx

(XLNX) - Get Report

to 110 from 80. Xilinx gained 3 1/2 to 89 9/16.

Miscellany

Marsh & McLennan

(MMC) - Get Report

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

Harbor Securities

, 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.