SAN FRANCISCO -- Apparently, somebody
afraid of the big, bad
. Conventional wisdom says tomorrow's
Federal Open Market Committee
meeting will be good for stocks (barring a shock), as a rate hike means the Fed is done for the foreseeable future and no tightening means ... well, no tightening.
Nevertheless, stock proxies were hesitant and indecisive throughout the session today, ending mixed with a slightly negative bias.
The highlight of the trading session may have been the
Nasdaq Composite Index's
failure to set another record, closing off 1.6, or 0.1%, to 3219.5 after trading as high as 3236.35.
The Comp was saddled by day-long weakness in tech stalwarts such as
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Chip and equipment makers such as
surrendered recent gains after
reportedly made cautious comments about the short-term sustainability of stock price momentum. The
Philadelphia Stock Exchange Semiconductor Index
New York Stock Exchange
-traded tech favorites such as
followed a similar path, leading the
Morgan Stanley High-Tech 35
Tech giants were a drag on blue-chip averages as well. The
Dow Jones Industrial Average
fell 8.57, or 0.1%, to 10,760.75 after trading as high as 10,798.37. The
dipped 1.66, or 0.1%, to 1394.40 while the
gained 3.28, or 0.7%, to 452.97.
As more conventional stock averages stumbled, Internet proxies continued to rally.
TheStreet.com Internet Sector
index gained 14.25, or 1.7%, to a record 859.93.
The DOT was paced by
as well as
, up 4.3%, one of many online brokers enjoying stellar gains today following positive comments from
gained 20.5%, and
Among so-called momentum stocks, it was a mixed session.
rose 11.2% after announcing a business venture with
gained 7% following an upgrade from
dipped 2.8% to 368 after trading as low as 350 while
"People have shrugged it off," Randy Billhardt, co-head of block trading at
, said of tomorrow's FOMC meeting. "The thinking is even if the Fed does raise 25 basis points it will be the last time before the end of the year. Even if they do
tighten, it's still a low-inflation, high-growth environment.
"If you look at how stocks are trading it seems the economy is going full-blast," Billhardt continued, noting strength in cyclical stocks such as
Morgan Stanley Cyclical Index
Energy stocks were also strong as crude prices rose above $25 a barrel for the first time since January 1997; the
Philadelphia Stock Exchange Oil Service Index
The action suggests a rate hike may be justified, but that sentiment "doesn't seem to be stopping anybody's momentum today," he said. "This market does not come in
much; it acts like a million bucks. People don't seem to be that concerned."
Still, it was a "strange" session, the trader conceded.
In NYSE trading, 803.1 million shares were exchanged while advancers led declining stocks 1,623 to 1,397. In
Nasdaq Stock Market
action 1.27 billion shares traded while gainers led 2,298 to 1,788. New 52-week lows outpaced new highs 100 to 82 on the Big Board while new highs led 206 to 76 in over-the-counter trading.
All News Is Good News
"It's hard to imagine a better set of numbers that relate to inflation coming out ahead of this meeting," said Ken Mayland, chief economist at
in Cleveland, specifying the most recent
Employment Cost Index
, wage component of the
figures. "The fears keep on circulating around the issue of tight labor markets and the potential for a wage-hike spiral. But there's no evidence of it yet."
As a result, the economist predicts no rate hike tomorrow, admitting the odds only slightly favor the Fed standing pat. (
took a look at the case for and against tomorrow's likely hike in a
Regarding speculation the Fed might tighten in order to curtail the stock market's recent momentum, the economist noted the Dow remains below levels it hit in May and that broader averages such as the S&P 500 and Russell have not "zoomed skyward" in concert with the Nasdaq. Thus, while the stock market will play a role in the Fed's decision-making process "it shouldn't be a spoiler," he said.
Meanwhile, the economist wondered which would be "more positive" -- the Fed tightening and going to a neutral bias or no move and the sustaining of a tightening bias.
"Whatever happens tomorrow, it's probably a win-win for the stock market," he said.
Indeed, most market watchers agree only a rate hike with the Fed maintaining its tightening bias (or the highly unlikely prospect of a 50-basis-point hike) would prove unsettling to financial markets.
But apparently, that message didn't get transmitted today.
Among other indices, the
Dow Jones Transportation Average
fell 24.97, or 0.8%, to 3064.60; the
Dow Jones Utility Average
slid 2.18, or 0.7%, to 298.13; and the
American Stock Exchange Composite Index
added 7.59, or 0.9%, to 830.66.
Elsewhere in North American equities, the
Toronto Stock Exchange 300
rose 74, or 1%, to 7600 and the
Mexican Stock Exchange IPC Index
gained 80.34, or 1.3%, to 6115.10.
Monday's Company Report
Earnings estimates from First Call/Thomson Financial; earnings reported on a diluted basis unless otherwise specified. New highs and lows on a closing basis unless otherwise specified.
soared 42 1/4, or 73.2%, to 101 3/16, on news of China's agreement with U.S. Trade Representative
, which resuscitated its 13-year-old bid to join the
World Trade Organization
While the Nasdaq Composite handed back its intraday gains,
used the energy it shored up over the weekend and kept a firm grip on a second solid trading day. Shares flew 30 11/16, or 35.4%, to 117 7/8.
Meanwhile, on the Big Board, shares of
popped 19, or 38.2%, to 68 3/4 following news Sunday that it will be acquired by
in a stock deal valued at $1.8 billion. Under terms of the deal, Corning will swap 0.83 shares of its stock for each of Oak's shares. The deal, which signifies a 51% premium over Oak's 49 3/4 closing price Friday, will enable Corning to offer both components and modules for optical communications.
Corning's price target was upped to 105 from 85 by
, to 115 from 86, by
Warburg Dillon Read
and to 125 from 100 by
cut its intermediate-term rating on Corning to neutral from accumulate. Shares of Corning fell 3 1/4 to 87 1/8.
Mergers, acquisitions and joint ventures
Air Express International
was unchanged at 32 9/32 after saying it will be bought by European parcel giant
in a deal valued at $1.14 billion. The transaction calls for Deutsche Post to combine Air Express into its
freight forwarding division.
Associates First Capital
gained 1/4 to 34 1/4 after saying it plans to acquire
for $200 million in cash along with security obligations. Arcadia climbed 7/8, or 23.3%, to 4 5/8.
gained 3/32 to 5 1/4 after saying it plans to acquire
for $150 million. The deal calls for Catherines' shareholders to receive $21 a share in cash, a 70% premium to the closing stock price on Friday. Catherines popped 7 9/16, or 61.7%, to 19 13/16.
lost 1 7/8, or 13.1%, to 12 7/16 after saying it will merge with the specialist asset valuation business (FTAM) of the
group, which is part of
. Under the deal, the FT group will transfer ownership of FTAM to Data Broadcasting in exchange for a 60% stake in the combined business. Data Broadcasting owns about 32% of
, which operates
, a competitor of
. Under the deal,
, will form an international and domestic marketing alliance.
owns a third of MarketWatch. CBS rose 1/2 to 52 5/16, while MarketWatch dropped 3, or 6.1%, to 46.
Health food maker
rose 5/16, or 8.1%, to 4 3/16 after it forged a licensing deal with
, a division of
to create a new drink called
Tropicana Smoothie with Veggie Milk
. Pepsi slipped 9/16 to 32 9/16.
anticipates closing its acquisition of
by Wednesday. According to Grupo Mexico, 81.5% of Asarco's shares were tendered in reaction to its offer of $29.75 a share, which expired Friday. As a result of the tender offer, Grupo Mexico will hold 91% of Asarco's common shares, enabling Grupo Mexico to finish its planned merger of Asarco, without gaining Asarco shareholders' approval. Asarco was unchanged at 29 11/16.
gained 2 3/8 to 74 3/4 after saying it forged a two-year contract, worth roughly $100 million, with
to expand and improve ITC DeltaCom's current voice and data networks. Shares of DeltaCom rose 1/2 to 29.
climbed 7/8, or 5.9%, to 15 3/4 after saying it plans to sell off its microelectronics engineering development group. The company also said it agreed to pay $2.5 million to another party to end a joint technology development agreement.
popped 3 5/16, or 5.9%, to 59 15/16 after saying it has inked a deal with
which closed up 1 1/4 to 54 5/8. The two companies said that they would roll out test marketing for a "name-your-own-price online" buying feature for Ford Motors in Florida this week.
Separately, priceline said more than 1,000 stores are participating in its grocery unit. The
priceline WebHouse Club
, launched Nov. 1 in the New York metropolitan area, said more than 120
stores will join the unit in the coming weeks.
gained 3 9/16, to 105 3/8 after saying it plans to buy
for $647 million. Red Hat also said it tapped Matthew Szulik as its new president and CEO.
joint newsroom covered the
news in a separate story.
gained 3/8 to 43 1/4, TD Waterhouse tacked on 2 1/2, or 15%, to 19 1/8 and Ameritrade added 4 1/2, or 20.5%, to 26 7/16, after the firms announced plans for a new online investment bank along with three venture capital firms. The VC firms are
Kleiner Perkins Caufield & Byers
announced plans to sell its
in a cash transaction valued at $625. Shares of Earthgrains dropped 1 9/16, or 7.5%, to 19 3/8.
gained 1/8 to 47 1/2 after its all-stock $107 billion bid for
was rejected. Mannesmann called the offer "extremely unattractive" monetarily, stirring up rumors that Vodafone will launch the largest hostile takeover bid in history in an effort to gain control of Mannesmann. Industry sources told
that Mannesmann plans to explain to its shareholders today and Tuesday why it refused the offer.
, which has agreed to merge with
American Home Products
, is considering terminating its
, which has made an unsolicited takeover bid for Warner. Pfizer and Warner have a co-marketing deal for Lipitor, the blockbuster cholesterol-fighting drug. Shares of Warner lost 7/8 to 92 3/4, American Home Products slipped 1/16 to 55 7/8 and Pfizer slipped 1/8 to 35.
joint newsroom covered the action in a separate
Earnings/revenue reports and previews
Columbia Energy Group
slipped 7/16 to 65 3/4 after saying it expects a loss of $13 million, or 16 cents a share, from the sale of the wholesale and trading operations of its energy services unit.
fell 3 1/4, or 5.6%, to 54 5/8 after it posted third-quarter earnings of 44 cents a share, beating the 20-analyst estimate of 42 cents a share and up from the year-ago 33 cents a share.
moved up 1 11/16, or 5.1%, to 34 13/16 after it said it is revising its 1998 financial statement to move $5.8 million of discontinued operations in 1998 to earlier periods. The company said it revised the statements in response to correspondence with the
Securities and Exchange Commission
shed 6 5/8, or 41.8%, to 9 5/16 after saying it sees fourth-quarter earnings at less than half the consensus estimate, citing staffing needs and labor costs. The current 10-analyst estimate calls for earnings of 17 cents a share.
added 3/8 to 10 5/32 after it reported fourth-quarter earnings of 19 cents a share, well above the five-analyst estimate of 13 cents and the year-ago 13 cents a share.
fell 1 7/8, or 5.7%, to 34 3/4 after it posted a third-quarter loss of 41 cents a share, wider than the three-analyst estimate of a 27-cent loss and the year-ago 37-cent loss.
Toys R Us
gained 1 7/16, or 8.7%, to 17 15/16 after it posted third-quarter earnings of 13 cents a share, beating the 10-analyst estimate of 9 cents a share and up from the year-ago 8 cents
climbed 1/16 to 19 1/8 after it posted fourth-quarter earnings of 46 cents a share, beating the three-analyst estimate of 44 cents and the year-ago 40 cents.
Offerings and stock actions
VA Linux Systems
, which provides Linux-based systems and software, set its IPO at 4.4 million common shares in a projected price range of $11 to $13 a share.
climbed 1/16 to 9 1/4 after saying it expanded its stock repurchase plan to 3 million shares from 1.1 million.
climbed 1 1/4 to 33 5/8 after it set a 4-for-3 stock split.
Applied Materials lost 2 to 107 despite a positive outlook from
which upped its 1999 earnings per share estimates to $1.77 from $1.73 and 2000 estimates to $3.00 from $2.85.
Credit Suisse First Boston
started coverage of
with a buy rating and a price target of 40. Shares of AnswerThink hopped 1 3/16 to 28.
SG Cowen upped its rating of on Ariba to a strong buy from a buy and set a price target of 250. Ariba soared 17, or 8.6%, to 212 7/8.
Morgan Stanley reiterated its outperform rating and $68 price target on
. Shares of Coca-Cola gained 3/4 to 58 1/4.
SG Cowen initiated coverage of
with a strong buy rating. Crossroads popped 7 1/16, or 8.9%, to 86 5/8.
cut its rating on
to buy from strong buy, citing in part lower near-term earnings estimates. Fritz climbed 1/8 to 11.
initiated coverage of
with a buy rating. Intimate Brands edged up 3/16 to 38 1/8.
Deutsche Banc Alex. Brown
sliced its rating on
to buy from strong buy. Masco declined 11/16 to 28 11/16.
Merrill Lynch started coverage of
Martha Stewart Living Omnimedia
with near-term accumulate and long-term buy ratings.
Morgan Stanley Dean Witter
rolled out coverage of the stock with an outperform rating. Martha Stewart was down 11/16 to 30 1/8.
Warburg Dillon Read initiated coverage of
with a buy rating. PC-Tel was up 1/4 to 38.
to market perform from market outperform. Pep Boys was up 3/8 to 10 1/4.
Merrill Lynch analyst Jeff Kauffman raised his rating on
to long-term buy from accumulate. Rollins Truck shares gained 1 1/16, or 10.6%, to 11 1/16.
Merrill reinstated coverage of
with a buy rating and named it a Focus One selection. Staples was up 2 3/4, or 12.5%, to 24 3/4.
raised its price target on
to 70 from 45 to 50. Tanning tacked on 9 1/8, or 18%, to 60.
upped its rating on
to strong buy. Shares rose 8 1/16, or 36.2%, to 30 5/16.
upped its fiscal 2000 earnings outlook for
to $2.20 from $2.10. Tyco hopped 7/8 to 43 7/8.
Deutsche Banc Alex. Brown initiated coverage of
with a buy rating, while Merrill also stamped it a buy. Zapme! was off 1/2 to 12 1/8.
Royal Dutch Petroleum
stock rose slightly, closing up 5/8 to 62 1/4 following a rise in December crude oil futures and the Dutch company's defiant agreement with the
National Iranian Oil Co.
, signed Sunday.
According to the deal, Shell will help develop the Soroosh and Nowrooz fields in the northern Persian Gulf for an estimated $800 million. Reserves at the fields are estimated to be 500 million to 550 million barrels of heavy crude oil, and Shell expects output to be a combined 190,000 barrels a day.
The agreement flies in the face of U.S. sanctions against non-U.S. oil companies doing business in Iran, stipulated in the
Iran-Libya Sanctions Act.
said today that in accordance with ILSA, it will review the Royal Dutch/Shell Group's agreement. The State Department did not indicate whether Shell would receive a sanctions waiver similar to those granted France's
and other companies or whether the oil giant would be the first company to feel the full effect of ILSA.
Bausch & Lomb
gained 1 7/16 to 60 1/16 after it said it has been awarded
Food and Drug Administration
approval to sell its
intraocular lens, to correct patients' vision after cataract surgery. Bausch & Lomb said it would begin marketing the lens in the U.S. in early 2000.
Chairman Alan Greenspan expressed his approval for a new law removing Depression-era statutes, which enforced the separation of banking, brokerage and insurance activities, during remarks to the
American Council of Life Insurance
said it has been awarded a contract for digital subscriber line broadband Internet protocol equipment from German Internet service provider
. Nokia shares slipped 1/2 to 121 3/4.
Connecticut has brought legal proceedings against
, claiming the company had switched some customers' long-distance carriers without authorization, also known as "slamming," according to Attorney General Richard Blumenthal. Blumenthal said during a press conference that the lawsuit seeks "hundreds of thousands of dollars" in penalties and restitution, and that other states including Texas and Florida are conducting a probe, which may lead to legal proceedings. Separately, the
U.S. Federal Communications Commission
has issued a "notice of liability" against Qwest for $2.8 million. Shares of Qwest rose 1 13/16 to 38 11/16 despite the news.
rose 1/8 to 11 5/8 after it said Bradford Ray was named CEO and vice chairman. Ray succeeds his father, Merwyn Ray, as CEO. The senior Ray will continue as chairman.
Tricon Global Restaurants
added 2 to 45 1/8 after it said it has tapped President David Novak as its CEO. For more on Tricon, check out a separate
said it has named Leonard Green chairman, while Timothy Noonan will continue as interim CEO.
joint newsroom covered the news in a