'Incredible,' Yahoo!-Fueled Nasdaq Leaves Broad Market Behind

Even as the Nasdaq Comp soared to a record, many major measures fell and most stocks declined. Calls for a pullback persist.
Publish date:

Considering the head-scratching that market observers have been doing lately at the performance of the

Nasdaq Composite Index

, today one could conclude that some of those scalps have to be bleeding.

The Nasdaq Comp soared 40.83, or 1.1%, to 3586.84, defying those calling for it to take a break. The Comp closed at another all-time high and hit an all-time intraday high when it peaked at 3589.06. The advance wasn't exactly remarkably inclusive. Breadth on the

Nasdaq Stock Market

was negative. Volume was heavy on the Nasdaq with 1.557 billion shares changing hands, the third-heaviest day of trading ever. Volume on the Big Board was also heavy with 1.06 billion shares changing hands.

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message boards.

The Comp, never lacking in astounding moves by its components, perhaps outdid itself today.



-- which as of today's close became a member of the

S&P 500

-- skyrocketed 67 1/4, or 24%, to an all-time high of 348.

In tech, networking and telecommunications stocks were standouts and helped boost the Comp. The

American Stock Exchange Networking Index

advanced 2.1%.


(CSCO) - Get Report

, a member of the networking index and a heavyweight in the Comp, hit an all-time intraday high today at 102 7/16. It closed up 3 5/16 to 101 1/2. Elsewhere,


(CIEN) - Get Report

soared 27.3%. The

Nasdaq Telecommunications Index

jumped 1.5%.

TheStreet.com Internet Sector

index rose 14.23, or 1.3%, to 1058.87, to close at an all-time high. The DOT also hit an all-time intraday high today when it peaked at 1064.76. Yahoo! was the biggest gainer by far in the DOT.


raised its price target on the stock today to 350 from 225. Yahoo! hit an all-time intraday high of 353.


Red Hots index soared 16.69, or 4.8%, to 364.11. The 20-stock index tracks action in particularly volatile stocks and is meant to measure so-called hot money.

But stocks overall stumbled as players pared back positions in light of last week's advance. And while the Comp's momentum continued, the rest of the market's major gauges fell.


Dow Jones Industrial Average

fell 118.36, or 1.1%, to 11,106.65. Some of the beefiest losers in the Dow included


(KO) - Get Report



(MMM) - Get Report


General Motors

(GM) - Get Report


Dan Marciano, head of trading at

First Albany

, said the market is acting pretty well despite today's decline overall. "I'm pretty optimistic," he said.

"I'd look for an up market into the end of the year," the trader said. The trader did say, however, that some people are nervous because the market's so high, pointing to the fiery Comp.

The S&P 500 fell 14.17, or 1%, to 1409.17. The small-cap

Russell 2000

slipped fractionally to close at 465.68.

"I would expect the markets are due for some consolidation," said Paul Cherney, market analyst at

S&P MarketScope

, with some sideways movement with perhaps a negative bias. He noted that "there's usually a mid-December low that launches a year-end rally."

Cherney pointed out that the same "group-think" that has pushed up highflying sectors can work the other way too.

Cherney said that put/call ratios were at excessive levels, with the ratios of 30-day moving averages at levels that can precede a selloff. "Usually when you get very low put/call ratios over an extended period of time, that says to me that the bears have thrown in the towel and they're no longer attempting to buy puts," he said.

The analyst said that if the market "continues to ramp higher without any sort of digestion," the market could tumble on the first or second trade of 2000 as investors and traders sell on the news that the rollover into 2000 wasn't a disaster.

Of the Comp's recent performance: "It's just incredible," he said.

The 30-year Treasury bond advanced 22/32 to 98 30/32, yielding 6.20%. The long bond was buoyed in part by a


coupon pass.

But the improvement in the bond market didn't hearten bank stocks. The

Philadelphia Stock Exchange/KBW Bank Index

gave up 2%. However, brokerage stocks gained. The

American Stock Exchange Broker/Dealer Index

soared 2.8%.

Gaming stocks flew. The

Chicago Board Options Exchange Gaming Index

soared 3%, led by

Mirage Resorts


, which rallied after

Lehman Brothers

upgraded the stock to buy from neutral. Mirage gained 7.4%.

Gold mining stocks soared as gold prices hopped. The

Philadelphia Stock Exchange Gold and Silver Index

rallied 4.8%.

Today's individual stock debacle was



, which tumbled on that an

International Trade Commission

judge ruled that a VISX competitor didn't infringe on VISX's patent.


joint newsroom wrote about the situation in a story


Conversely, momentum players pushed up shares of

Red Hat



Juniper Networks

(JNPR) - Get Report


Infosys Technologies

(INFY) - Get Report


Commerce One



F5 Networks

(FFIV) - Get Report

to whopping gains.


New York Stock Exchange

trading, 1.060 billion shares were exchanged while declining stocks beat advancers 2,025 to 1,046. On the Nasdaq, losers beat winners 2,138 to 1,992. New 52-week lows beat new highs 338 to 86 on the Big Board, while new highs beat new lows 274 to 142 in over-the-counter trading.

Among other indices, the

Dow Jones Utility Average

fell 5.40, or 1.9%, to 275.91. Elsewhere, the

Dow Jones Transportation Average

advanced 19.36, or 0.7%, to 2886.16 and the

American Stock Exchange Composite Index

rose fractionally to close at 830.02.

Elsewhere in North American equities, the

Toronto Stock Exchange 300

gained 31.58 to 7889.1 and the

Mexican Stock Exchange IPC Index

lost 27.86 to 6397.84.

Tuesday's Company Report

By Tara Murphy
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.


Mergers, acquisitions and joint ventures

BP Amoco


fell 9/16 to 59 1/2 and

Exxon Mobil

(XOM) - Get Report

slipped 1/16 to 83 7/8 after the companies said they will dissolve their European fuel and lubricants joint venture and divide up the assets in line with their equity stakes. Mobil had to sell its 30% interest in the fuel business as a condition of European regulatory approval of its merger with Exxon. BP Amoco will pay about $1.5 billion for Mobil's stake, which includes its pipeline at London's Gatwick Airport.

Goldman Sachs

raised Exxon Mobil to its recommended list from market outperformer. For more on BP Amoco's

buy, check out a separate story from the


joint newsroom.


European Commission

said it granted regulatory approval to the full buyout of Dutch company




(AVT) - Get Report

. Shares of Avnet fell 7/8 to 57 5/16.

A unit of

El Paso Energy


said it will buy



for $255 million. El Paso Merchant Energy said the deal involves Dynegy's California co-generation plants. Shares of El Paso dropped 1 1/16 to 35, while Dynegy was unchanged at 21 15/16.


(HXL) - Get Report

lost 1/16 to 5 1/2 after saying it has retained

Credit Suisse First Boston

to explore alternatives for its Engineered Products business, including a possible sale.


(MSFT) - Get Report

lost 2 7/16 to 93 after it signed a range of deals to support its Internet video and audio delivery software and said it saw continued momentum for its Internet services. Of the companies with which Microsoft struck agreements:

General Instrument


fell 1.4% to 74 3/4,

Texas Instruments

(TXN) - Get Report

shed 3 1/4 to 104 1/16 and

Thomson Multimedia


slipped 1/4 to 45 3/8.



rose 1 1/8 to 114 1/4 after a report in the

Nihon Keizai Shimbun

said it has signed a contract to lease semiconductor-fabrication equipment from U.S. leasing firm



. The major Japanese electric machinery manufacturer is making the move to shrink asset holdings and improve profitability. By the end of the year, NEC will sell Comdisco equipment -- installed this autumn -- worth about 28 billion yen. NEC then plans to lease the equipment back from Comdisco. Shares of Comdisco rose 1/2 to 26 3/16.

News Corp.

(NWS) - Get Report

slipped 3/8 to 38 7/16 and



gained 15/16 to 46 7/16 after the companies said they formed a $1 billion partnership in which News Corp. will take a 10.8% stake in the online health network to move into the health programming arena. The financial terms include $700 million in branding services provided by News Corp. over 10 years and a $100 million purchase of Healtheon/WebMD stock at $50 a share. The alliance also includes a $100 million cash investment by News Corp. in an international joint venture and a $62.5 million five-year licensing agreement for syndication of WebMD daily broadcast content.

Banc of America Securities

upped its rating on Healtheon to buy from market performer. For more on News Corp.'s

new friend, check out a separate story from the


joint newsroom.

Nextlink Communications


gained 2 1/2 to 55 7/8 after it said it will buy the 50% stake in venture firm


that it doesn't already own from holding company

Eagle River

for $220 million in Nextlink stock, or 4.1 million common shares.

Prodigy Communications


was unchanged at 24 11/16 and



rose 1/2 to 61 1/12 after the companies said they have entered a deal which calls for Priceline customers to register for Prodigy's Internet service and then receive bidding "dollars" to use for Priceline.com's "name-your-own-price" airline tickets and hotel rooms.

Provident American


gained 2 11/16, or 8.4%, to 34 1/2 after it said its


unit will merge with a unit of


(UCI) - Get Report

. UICI lost 1 9/16, or 6.4%, to 23 1/16. Provident said each company's shareholders will own 50% of the new Healthaxis.com, which will receive a $57 million equity investment.


Scott's Restaurants

and its U.S. partner

Tricon Global

(YUM) - Get Report

said it was forming a new company to operate its Canadian fast food chains, Pizza Hut, Kentucky Fried Chicken and Taco Bell. Tricon rose 3/16 to 40 1/4.

Vodafone AirTouch

(VOD) - Get Report

slipped 1/4 to 52 3/4 after it said it has chosen



to supply its infrastructure for its next-generation network technology in Britain, the Netherlands and Greece. Ericsson lost 9/16 to 58 11/16. The General Packet Radio Service (GPRS) technology will let mobile customers access services such as train timetables, directions and online shopping.

Separately, U.S. regulators approved the planned combination of the U.S. wireless operations of

Bell Atlantic


and Vodafone, as long as the companies eliminate some overlapping properties, Bell Atlantic said. Shares of Bell Atlantic slipped 3/8 to 64.

Earnings/revenue reports and previews


(AVP) - Get Report

lost 1/2 to 34 3/16 despite saying it is comfortable with its 1999 earnings estimate of $1.64 per share. Avon also said it comfortable it can at least meet the seven-analyst estimate of 29 cents for its first quarter. Avon also said it would invest $30 million in an Internet site in 2000.

H.J. Heinz


climbed 9/16 to 43 11/16 after it reported second-quarter earnings of 65 cents a share, a penny better than the 17-analyst estimate and up from 60 cents a year ago. Heinz said it was comfortable with third-quarter estimates of 62 cents and fourth-quarter estimates of 63 cents. The current 15-analyst estimate from

First Call/Thomson Financial

is for 63 cents a share in each of those quarters. Heinz also said it was on track to deliver a year-end target of 6% to 7% earnings-per-share growth.


European Commission

said it cleared plans by Heinz's European unit to buy U.K.-based

United Biscuits

frozen and chilled foods unit. The cost of the purchase, made in October, was $317 million.

Interstate Bakeries


lost 15/16, or 5.3%, to 17 after it reported second-quarter earnings of 40 cents a share, missing the nine-analyst estimate of 49 cents and the year-ago 44 cents a share. The company said the latest second-quarter decline in earnings was due to business disruptions from Hurricane Floyd, ongoing operational start-up problems in the northeast bakery consolidation project and higher selling and delivery costs.

Offerings and stock actions


(CLS) - Get Report

jumped 5 1/2, or 7.2%, to a record 81 1/2 after it said it will split its shares 2-for-1.



raised the expected price range for its 4 million-share IPO to $40 to $42 a share from $14 to $16 a share.

Goldman Sachs

is serving as the deal's lead underwriter.


(HON) - Get Report

fell 1/16 to 61 5/8 after it said roughly 96% of

TriStar Aerospace


common stock was tendered during its $9.50-a-share tender offer, which expired Monday.

Leucadia National


fell 1/16 to 21 1/2 after it upped its share repurchasing program to 6 million shares.

Osh Kosh B'Gosh


lost 1/2 to 19 3/4 after it said its board authorized the repurchase of up to 1.5 million shares of Class-A common stock in the open market.



raised the expected price range for its 4.4 million-share IPO to $21 to $23 a share from $11 to $13 a share.

Credit Suisse First Boston

is serving as the deal's lead underwriter.

Analyst actions

Goldman Sachs



(BVSN) - Get Report

as a market outperformer. Shares of BroadVision slid 1 1/4 to 105 1/4.

Deutsche Banc Alex. Brown

started coverage of

Casella Waste

(CWST) - Get Report

as a strong buy. Alex. Brown also resumed coverage of

Republic Services

(RSG) - Get Report

as a strong buy and

Waste Management


as a market performer. Casella Waste added 7/16 to 19 1/16, while Republic Services shares lost 3/16 to 12 3/8. Shares of Waste Management skidded 11/16 to 14 3/4.

Donaldson Lufkin & Jenrette



(KO) - Get Report

to market perform from buy. Shares of Coca-Cola fell 4, or 7.4%, to 59 13/16.

Merrill Lynch

started shares of


(GLW) - Get Report

with an intermediate-term accumulate, long-term buy rating. Merrill said it sees shares of Corning doubling within the next three years. Shares of Corning were unchanged at 105.

Goldman Sachs upped its rating on

CNF Transportation

(CNF) - Get Report

to market outperformer from market performer. CNF Transportation hopped 1/2 to 30 3/4.


raised its price target on



to 20 from 10 and upped its rating to buy from neutral. Shares of Cygnus bounced 8, or 95.9%, to 18.

CIBC Oppenheimer

analyst Jim Berlino upgraded


(DELL) - Get Report

to buy from hold and set a price target of 55. Dell rose 5/8 to 45 3/8.

J.P. Morgan

started coverage with buy ratings on





(AKAM) - Get Report




. Shares of Exodus soared 20 11/16, or 16.7%, to 144 1/2, while Akamai shares climbed 9 3/8 to 226. Shares of Covad advanced 5 15/16, or 11%, to 60 1/8.

Soundview Technology

rolled out coverage of


(FNSR) - Get Report

with a buy rating. J.P. Morgan also stamped the stock a buy. Shares of Finistar plummeted 7 5/8, or 7%, to 101 3/16.

Deutsche Banc Alex. Brown started coverage of


(FLEX) - Get Report

with a buy rating and set a price target of 45. Flextronics shares slipped 1/16 to 89 7/8.

Lehman Brothers

cut its rating on



to neutral from outperform. Guidant shares added 1 3/8 to 49 1/8.

Soundview Technology raised its price target on


(IBM) - Get Report

to 140 from 110 and maintained its buy rating. Shares of IBM edged up 1/4 to 116 1/4.

Robertson Stevens

initiated coverage of



with a buy rating. Lucent shares advanced 0.5% to 80 1/4.

Robertson Stephens initiated coverage of



with a buy rating. Shares of Net2Phone mounted 1 15/16 to 55 1/8.

Bear Stearns

initiated coverage

of Starwood Financial


with a buy rating. Shares of Starwood Financial skidded 7/16 to 17 1/4.

Banc of America

raised its rating on


(SYMC) - Get Report

to strong buy from buy and upped its price target to 72 from 60. Symantec shares popped 2 3/8 to 54 3/8.

Goldman Sachs cut


(TX) - Get Report

to market performer from market outperformer. Shares of Texaco dwindled 3, or 5.1%, to 56 7/16.

Lehman Brothers

started coverage on

Veritas Software

(VRTS) - Get Report

as a buy and set a 12-month price target of 140. Shares of Veritas Software retreated 5/8 to 103 1/2.


said its boosted its price target on



to 350 from 225. Yahoo soared 67 1/4, or 23.9%, to 348.


Bassett Furniture

(BSET) - Get Report

fell 5/16 to 16 after it said it would close its upholstery plant in Arkansas and will post a charge of $1.9 million.

El Al Airlines

signed a $400 million deal with


(BA) - Get Report

for three 777 planes. Shares of Boeing slipped 5/8 to 37 15/16.



said it agreed to pay $2.83 billion to settle a shareholder class action lawsuit over accounting irregularities. Cendant said the settlement would result in a non-cash, after-tax charge of $1.8 billion in the fourth quarter and would reduce 2000 earnings by 12 cents to 16 cents per share.


took an in-depth look at the Cendant debacle in an

April series.


joint newsroom also covered the

story this morning. Shares of Cendant gained 1, or 5.8%, to 18 3/16.


(HAS) - Get Report

skidded 3/16 to 21 1/4 after it said it would cut 2,200 jobs, or 19% of its workforce, and consolidate manufacturing, product lines and sourcing activities in a sweeping restructuring. Hasbro said it will close manufacturing plants in Tijuana, Mexico, and Ashford, England. The company said it expects to post a fourth-quarter charge of $141 million from the consolidation, and also set a new $500 million-share buyback plan. See additional reporting from


joint newsroom for more on the

tinkering at Hasbro.

IMC Global


tacked on 3/8 to 16 5/16 after it said it would record special charges of $825 million in the fourth quarter as part of a restructuring that will include cutting 850 jobs. The program will provide estimated annual pretax savings of about $70 million affecting 2000, according to the company.

Shares of



fell 36 1/16, or 41%, to 52 after it said that the

International Trade Commission

made an initial finding in favor of a rival in a patent infringement case. For more on the VISX

vexation, check out a separate story from the


joint newsroom.



slid 1/8 to 7 3/8 after it said it is exploring strategic options for its fresh mushroom business.

A front-page story in

The Wall Street Journal

examines an unusual breed of day traders, who continuously trade a single stock, irrespective of the company's revenue, profits, news developments or strategies. For instance, the story cites one trader, who, in a single day, traded more than 130,000 shares of




The trader accounted, by himself, for nearly 2% of the company's total daily volume. The aim for such traders is to determine when big, institutional players are buying or selling stock in volume, and jump in ahead of them.

The "Heard on the Street" column in the


takes a look at the spat between



parent IOS Brands and

Bankers Trust

, a unit of Deutsche Bank. In a suit which will be heard in New York federal court, FTD has accused Bankers Trust of improperly forcing its way into FTD's newly public Internet subsidiary, FTD.com, by demanding and receiving warrants in the parent during negotiations over a previous FTD financing. Shares of FTD.com declined 1/8 to 6.


Food and Drug Administration

gave its stamp of approval to


(PFE) - Get Report

antidepressant Zoloft as a remedy for post-traumatic stress disorder. Shares of Pfizer stumbled 1 to 33 7/8.