Hot Week Ends With Coolly Positive Session

Score one for the little guys, tech stalwarts and the new kids on the (Internet) block.

With blue-chip averages largely in a holding pattern alongside bonds, secondary and Internet names rose to the fore in terribly nonvolatile summer Friday session, triple-witching or no triple-witching.

Following

yesterday's blockbuster advance, the price of the 30-year Treasury bond slid 5/32 to 90 1/32, its yield rising to 5.97%.

TheStreet.com Internet Sector

index was the best performer of major averages, rising 8.61, or 1.5%, to 564.34. Also strong throughout was the

Russell 2000

, which closed up 1.67, or 0.4%, to 445.05 as the majority of stocks posted gains.

The equally weighted DOT was led by

RealNetworks

(RNWK) - Get Report

and

USWeb

(USWB)

, while two IPOs proved there's still demand for new Net issues.

GoTo.com

(GOTO:Nasdaq) jumped 48.3% on its first day of trading and ISP

Viant

(VIAN:Nasdaq) gained 52.3%.

The

Nasdaq Composite Index

closed up 19.29, or 0.8%, to 2563.44, overcoming an early drop to as low as 2524.81 and a 5.3% decline in

Intel

(INTC) - Get Report

, which was downgraded by

Morgan Stanley Dean Witter

.

In addition to improving Net names, the tech-cured index was aided by behemoths such as

Sun Microsystems

(SUNW) - Get Report

,

Cisco

(CSCO) - Get Report

and

Microsoft

(MSFT) - Get Report

. Additionally,

Nextel

(NXTL)

rose 9% thanks to an upgrade from

CIBC World Markets

and

Adobe Systems

(ADBE) - Get Report

gained 11.8% to an all-time high of 82 9/16 after posting better-than-expected earnings. The

Nasdaq 100

rose 0.7%.

The

Philadelphia Stock Exchange Semiconductor Index

was unable to withstand the injury to industry leader Intel, falling 1.4% and snapping its streak of record closes at three. However, SOX component

Motorola

(MOT)

continued its recent acceleration, rising 3% to an all-time best of 93 1/8. The

Morgan Stanley High-Tech 35

gained 1%.

Like the Nasdaq, the

S&P 500

was able to overcome Intel's decline and an early dip to as low as 1333.52, closing up 2.94, or 0.2%, to 1342.84. The index was also restrained by

Gillette

(G) - Get Report

, which fell 10.8% after issuing another profit warning

last night and suffering requisite downgrades this morning.

Among improving S&P 500 components,

Kmart

(KM)

rose 11.9% after

Business Week

said it could be a takeover target and

Deere

(DE) - Get Report

rallied 6.8% after receiving a less-speculative upgrade from

J.P. Morgan

.

The

Dow Jones Industrial Average

, buoyed mainly by cyclicals

Caterpillar

(CAT) - Get Report

and

International Paper

(IP) - Get Report

, overcame an early decline as low as 10,811.55 and some late-session waffling to close up 13.93, or 0.1%, to 10,855.56. The

Morgan Stanley Cyclical Index

rose 1.3%.

However, the blue-chip index demonstrated reticence throughout the session and traded well below its morning best of 10,888.49 for most of the day.

"There was some bargain-hunting in the Internet stocks and some techs based on Abobe's and

Oracle's

(ORCL) - Get Report

earnings

but today was exceptionally slow," said Randy Billhardt, co-head of block trading at

PaineWebber

. "People sort of had digested enough news and were content to sit back and see how things pan out."

Earnings preannouncements and economic data will be keys to the market's short-term fortune, Billhardt said, noting warnings thus far have been "company-specific" and there are few key economic data before the

Federal Open Market Committee

meeting on June 29-30.

As the FOMC gathering approaches, "I think basically the trend of the market is still upward," he said. "The market has discounted something will be done at next meeting. Unless there's disappointing earnings I think the trend is higher."

In

New York Stock Exchange

trading, 908.4 million shares were traded while advancers bested declining stocks 1,531 to 1,380. In

Nasdaq Stock Market

activity, 983.2 million shares were exchanged while gainers led 2,111 to 1,655. New 52-week highs bested new lows 82 to 31 in Big Board action and by 95 to 30 in over-the-counter trading.

Good Riddance to Triple-Witch

As has increasingly been the case in recent years, market players said the impact of today's concurrent expiration of stock options and futures and index futures was muted after a wild first hour.

"The first hour was purely expiration which at this point has been completely discounted," Billhardt said. "People are well aware what positions are, what needs to be rolled. Aside from

volume, there's no impact whatsoever."

Gillette was an exception, as its warning sparked a flurry of options activity, which

TheStreet.com

reported in a

story today.

"The best thing about expiration is its conclusion. Now we can get back to the business at hand," said Greg Nie, chief technical analyst at

Everen Securities

in Chicago. "

Ned Davis

Research

did a study and the history of expiration weeks after a declining week is generally favorable. But the June triple-witching expiration is generally flat to down. So it was a nonevent, possibly with an up bias if any at all."

It is "tempting" to call Wednesday a short-term low (at 1301.16 on the S&P and 10,609 on the Dow), Nie said, but we'll "get a better picture after expiration because it does push volume up."

Going forward, the "overriding question for a successful lift attempt is, do the bulls seize the initiative?" the technician said, echoing (for him) a familiar theme. "The contraction in volume since mid-May has been the prime element to say it's a timeout, not a rollover. But from a long-term perspective, volume has to come along and breadth is still a laggard piece of the internal picture."

As he often does, Nie believes "the bulls deserve the benefit of the doubt." But as the Dow retests 11,000 -- which he suspects it will as investors "favorably anticipate" second-quarter earnings -- "the momentum question becomes a bit more critical still," he said. "Broad-based participation accompanied by a significant expansion from short-term volume levels prevalent the last month or so will take care of resistance and other benchmarks."

Among other indices, the

Dow Jones Transportation Average

added 23.10, or 0.7%, to 3396.34; the

Dow Jones Utility Average

slid 2.81, or 0.8% ,to 330.10; and the

American Stock Exchange Composite Index

ebbed 0.12 to 768.57.

For the week, the Dow industrials rose 365.05, or 3.5%; the S&P 500 added 49.20, or 3.8%; the Comp climbed 115.42, or 4.7%; the Russell 2000 added 7.04, or 1.6%; and the DOT rose 14.07, or 2.6%. Additionally, the Dow transports gained 51.87, or 1.6%; the Dow utilities rose 1.38, or 0.4%; and the Amex Composite climbed 2.75, or 0.4%.

Elsewhere in North American equities today, the

Toronto Stock Exchange 300

climbed 76, or 1.1%, to 7005.06 and the

Mexican Stock Exchange IPC Index

added 55.99, or 1%, to 5716.65. For the week, the TSE rose 87.93, or 1.3% and the IPC soared 482, or 9.2%.

Friday'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.

)

As noted above, Gillette shaved off 5 1/8, or 10.8%, to 42 3/16 after last night warning it expects to report about a 20% decrease in second-quarter earnings compared with a year ago. The 14-analyst estimate called for quarterly earnings of 29 cents a share vs. the year-ago 33 cents. Gillette said it sees quarterly sales increasing by a low-single-digit percentage, and blamed the warning on disappointing sales of its

Braun

, stationery and toiletries products. Today,

Donaldson Lufkin & Jenrette

cut the stock to market perform from buy.

J.P. Morgan

lowered it to long-term buy from buy and dropped its price target to 56 from 70. The firm also decreased its 1999 earnings estimate for the company to $1.27 a share from $1.35.

Bear Stearns

slashed Gillette to neutral from attractive.

GoTo.com, which operates an online marketplace that brings together consumers and advertisers, soared 7 1/4, or 48.3%, to 22 3/8, off an earlier high of 28 1/2, after DLJ priced its 6 million-share IPO top-range at $15 a share.

Elsewhere in new issues, Viant rocketed 8 3/8, or 52.3%, to 24 3/8, off an earlier high of 29 1/2, after

Goldman Sachs

last night priced its 3 million-share IPO top-range at $16 a share. The price range for the Internet services company's offering was raised to $14 to $16 from $10 to $12.

And

Mail.com

(MAIL:Nasdaq) jumped 1 11/16, or 24.1%, to 8 3/4, off an earlier high of 9 1/2, after

Salomon Smith Barney

priced its 6.85 million-share IPO mid-range at $7 a share. The price range for the email provider was lowered to $6.38 to $8.38 from the original $10 to $12.

Mergers, acquisitions and joint ventures

Borg-Warner Security

(BOR)

climbed 4 1/8, or 23.6%, to 21 5/8 after saying it received an "unsolicited preliminary indication of interest" from another company about a business combination. The company also postponed a planned secondary offering of 4.8 million shares held by

Merrill Lynch

(MER)

affiliates.

Britain's

Danka Business Systems

(DANKY)

expanded 1/2, or 6.7%, to 8 1/16 after selling its facsimile division,

Omnifax

, to

Xerox

(XRX) - Get Report

for $45 million in cash. Xerox slipped 1/32 to 57 31/32.

Durakon Industries

(DRKN)

shot up 3 1/2, or 29.2%, to an annual high of 15 1/2 after agreeing to a $16-a-share buyout by a partnership formed by

Littlejohn

, a private investment fund based in Connecticut.

Frontier

(FRO) - Get Report

added 9/16 to 58 5/16 after deciding to take no action on the hostile bid from

Qwest

(QWST)

and reaffirming its plan to be taken over by

Global Crossing

(GBLX)

. On Sunday, Qwest offered to acquire Frontier and Baby Bell

U S West

(USW)

in separate transactions.

Earnings/revenue reports and previews

Adobe Systems swelled 8 11/16, or 11.8%, to an all-time high of 82 9/16 after last night reporting second-quarter earnings of 70 cents a share, beating the 11-analyst projection by a nickel and moving ahead of the year-ago 41 cents.

Cotelligent

(CGZ)

shed 2 1/4, or 26.5%, to an all-time low of 6 1/4 after last night saying it sees a first-quarter loss of $13 million to $15 million, including a restructuring charge and a pretax goodwill writedown. The company, which did not provide per-share estimates, said it's experiencing a downturn in demand for its services which it believes is related to decreased investment in information technology infrastructures while companies analyze their Y2K compliance status. Today,

Prudential Securities

downgraded the stock to accumulate from strong buy.

Iomega

(IOM)

sloughed off 9/16, or 12.9%, to 3 13/16 after saying it plans to take a $45 million restructuring charge in the second quarter. Excluding the charge, the company forecast a quarter loss of 5 cents to 10 cents a share. The four-analyst outlook called for break-even results vs. the year-ago loss of 13 cents.

MSC Industrial Direct

(MSM) - Get Report

tanked 5 1/4, or 32.1%, to an all-time low of 11 1/8 after last night saying it expects to record third-quarter earnings around 18 cents a share, which would be below the 10-analyst forecast of 25 cents. The company, which earned 21 cents in the year-earlier period, cited a declining growth rate in May. Today, Prudential slashed the stock to hold from accumulate, Morgan Stanley Dean Witter dropped it to neutral from market outperform, and DLJ cut it to market perform from buy.

Nova

(NIS)

vaulted 2 13/16, or 13.2%, to 24 1/16 after last night saying its full-year 2000 earnings will come in around $1.48 to $1.52 a share, which would be below the seven-analyst estimate of $1.72. Meanwhile, the company said its fiscal 1999 earnings will be in line with analysts' expectations for $1.13 a share. Nova blamed higher costs for operating expenses, taxes and service delivery for the warning. The company also announced the repurchase of up to $250 million in stock.

Oakwood Homes

(OH)

lowered 9/16 to 12 3/16 after warning its third-quarter earnings could be as much as 50% lower than the seven-analyst estimate of 55 cents a share. Oakwood said its board will look into strategic alternatives, including a merger or sale of the company. The board is also pursuing the possibility of a management-led buyout.

Steelcase

(SCS) - Get Report

tacked on 13/16 to 17 1/4 after posting first-quarter earnings of 37 cents a share, topping the five-analyst outlook by 7 cents and moving ahead of the year-ago 35 cents.

Valley Media

(VMIX)

plunged 6 7/8, or 31.6%, to an all-time low of 14 15/16 after last night saying it sees a first-quarter loss of 8 cents to 10 cents a share due to higher-than-expected warehouse moving expenses. The two-analyst estimate called for earnings of 2 cents vs. the year-ago loss of 25 cents. Today,

BancBoston Robertson Stephens

cut the stock to long-term attractive from buy.

Woodhead Industries

(WDHD)

declined 1 13/16, or 13.2%, to 11 15/16 after last night saying it sees third-quarter earnings coming in around 18 cents to 21 cents a share. The four-analyst estimate called for 28 cents vs. the year-ago 25 cents. Woodhead said sales for the industrial communications and connectivity segments of its business haven't met expectations.

Offerings and stock actions

Cutter & Buck

(CBUK)

stumbled 2 7/8, or 14%, to 17 5/8 after last night announcing a 1.7 million-share stock offering.

National Discount Brokers

(NDB)

skidded 2 3/8, or 6%, to 37 9/16 after last night saying that, in view of current market conditions, it will go ahead with its planned 2.6 million-share stock offering. Three days ago, the firm canceled the offering -- due to (then) current market conditions.

Analyst actions

Intel sliced off 3/16, or 5.3%, to 54 15/16 after Morgan Stanley Dean Witter downgraded it to outperform from strong buy. Yesterday,

Credit Suisse First Boston

cut its fiscal 1999 earnings estimate on the chipmaker to $2.25 from $2.32 a share and to $2.55 from $2.65 for fiscal 2000.

Caribiner

(CWC)

stormed up 1 5/16, or 23.1%, to 7 after PaineWebber lifted it to buy from attractive.

Caterpillar inched up 2 5/8 to 61 1/2 after

Legg Mason Wood Walker

analyst Barry B. Bannister reiterated his buy on the company. He said trucking industry data released late this week showed Class A truck orders for May were in line with his expectation but cancellations were lower than he was expecting.

Deere picked up 2 5/8, or 6.8%, to 41 3/16 after J.P. Morgan upgraded it to buy from market performer. The firm also blessed farm equipment companies

New Holland

(NH) - Get Report

, which picked up 1/8 to 15 3/16, and

AGCO

(AG) - Get Report

, which picked up 15/16, or 8.8%, to 11 9/16.

EarthWeb

(EWBX)

rallied 4 1/4, or 15%, to 32 3/4 after

Volpe Brown

lifted it to strong buy from buy.

Lam Research

(LRCX) - Get Report

added 1 3/8 to an annual high of 40 1/2 after Morgan Stanley Dean Witter upgraded it to strong buy from outperform and lifted its price target to 55 from 50.

Nextel Communications grew 3 11/16, or 9%, to an annual high of 44 3/4 after CIBC World Markets pushed up the stock to strong buy from buy.

Quantum

(QNTM)

climbed 1 7/8, or 8.6%, to 23 7/8 after Prudential upgraded it to strong buy from hold.

Times Mirror

(TMC)

rose 3/16 to 62 1/16 after

Merrill Lynch

raised it to near-term accumulate from neutral while keeping its long-term buy.

Miscellany

Aetna

(AET)

deflated 2 15/16 to 93 9/16 on word

Prudential Healthcare

, the company's planned acquisition target, is performing worse than expected. Salomon Smith Barney analyst Jim Lane cut Aetna's price target to 106 from 114.

Kmart kicked up 1 13/16, or 11.9%, to 17 after

Business Week's

Inside Wall Street column said the company is being eyed as an acquisition target by some big grocers, notably

Safeway

(SWY)

and

Kroger

(KR) - Get Report

. Kroger recently bought

Fred Meyer

.

Rural/Metro

(RURL)

flew 1 15/16, or 23.9%, to 10 1/16 after the column said a management group appears to be moving toward taking the company private. The piece also said some investors specializing in leveraged buyouts have expressed interest in the company.