Indices Pull Back Some as Technicals Augur More of the Same

Technical indicators are pointing to a little near-term exhaustion in the market, but optimism continues running high.
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SAN FRANCISCO -- The

Nasdaq Composite Index

did not set an all-time high today. Repeat: The Nasdaq Composite did NOT set a new high. Meanwhile, the majority of stocks declined and blue-chip proxies struggled yet again in heavy trading.

Despite the sour breadth, the

Russell 2000

rose 3.14, 0.7%, to 468.84, a new 52-week high. Still, the small-cap proxy remains below its all-time best of 491.41, set in April 1998.

In

New York Stock Exchange

trading, 952.2 million shares were exchanged while declining stocks led advancers 1,937 to 1,138. In

Nasdaq Stock Market

action 1.667 billion shares traded -- the busiest session in history -- while losers led 2,224 to 1,929. New 52-week lows outpaced new highs 398 to 96 on the Big Board while new highs led 301 to 122 in over-the-counter trading.

After rising as high as 3625.47 early on, the tech-engulfed Comp retreated steadily, dipping briefly below breakeven at midafternoon, before regaining its positive momentum to climb as high as 3602.80 with less than 30 minutes to go in the session. But the index slid into the close, finishing off 0.84 to 3586.08.

In the aftermath of

yesterday's session, some speculated the wild action in

Yahoo!

(YHOO)

signaled a near-term top for the tech sector. "The last kiss," was how one market player described the action.

As expected, Yahoo! suffered some retrenchment today, falling 8.2%. Still,

TheStreet.com Internet Sector

index rose 13.40, or 1.3%, to 1072.27, another record close.

TheStreet.com

Red Hots index rose 3.16, or 0.9%, to 367.27. The 20-stock index tracks action in particularly volatile stocks and is meant to measure so-called hot money.

Technicals Hint of a Top

Few traders were overly concerned about the Comp's setback. But Greg Nie, chief technical analyst at

First Union Securities

in Chicago, said there are some technical indications supporting the notion that yesterday marked a short-term top.

The Comp is nearing a record gap between its current price and 200-day moving average, Nie noted. Coming into today, the index was 32.8% above its 200-day moving average of around 2706.50, the record being 33.4% back in January.

Only twice before has the Comp been more than 30% above its 200-day moving average, and both previous instances "resulted in some kind of move back down," he said, although a severe pullback is not necessarily in the offing. "The fact that it's near a record is self-explanatory

but this thing is due for a timeout."

In addition to Yahoo!, today's "timeout" was fostered by weakness in most of the Comp's biggest bellwethers, notably

Intel

(INTC) - Get Report

,

Dell

(DELL) - Get Report

and

Oracle

(ORCL) - Get Report

. The

Nasdaq 100

fell 1.3% while the

Philadelphia Stock Exchange Semiconductor Index

slid 1.1%.

Sun Microsystems

(SUNW) - Get Report

was the standout among traditional tech favorites, rising 8.7% to an all-time best of 78 7/16 after announcing a venture with

Inktomi

(INKT)

and

Digital Island

(ISLD)

to speed delivery of data online. Inktomi gained 2.8% while Digital Island leapt 66% to 114 15/16 on the

news after trading as high as 133 1/8.

Another deal involved

Ericsson

(ERICY)

, up 9.3% after announcing plans to create a wireless email company.

Motorola

(MOT)

, off 1.6%, agreed to take a minority stake in

the venture.

'I Thought We'd Have an Up Day'

In part because of the aforementioned news, Timothy Heekin, director of equity trading at

Thomas Weisel Partners

in San Francisco, was a bit disappointed by today's setback.

"When I saw the news on Digital Island and some other names sounding strong, I thought we'd have an up day," he said. "I'm a little surprised we didn't have more. But we were very busy, and it was across the board."

Heekin observed a "real battle" going on between the "momentum guys who continue to push higher" and "value-type players" who are "taking money off the table."

The trader believes the former will sustain the upper hand. "People have forgotten about interest rates for the short-term" even though bonds suffered today, he said. "Stocks people have ridden all year or in the last quarter -- they're going to continue to ride those horses and are going to push those babies strong to the close" of the year.

Other tech names on the move included

Corel

(CORL)

, up 24.9% in heavy trading, and

Red Hat

(RHAT)

, declining 4.4% to 271 1/4 after trading as high as 302 5/8 and as low as 270.

This latest burst of excitement over Linux technology was fueled by

Andover.net

(ANDN)

, which rose 253% in its first day of trading. Meanwhile, underwriters moved up the pricing date for

VA Linux Systems

(LNUX:Nasdaq) to tonight from Thursday.

In other IPO action today,

Preview Systems

(PRVW)

gained 300%.

On the other side of the investment spectrum, the

Dow Jones Industrial Average

closed down 38.53, or 0.4%, to 11,068.12. The index rose as high as 11,171.69 early on then faded and spent most of the day hovering in a tight range around either side of neutrality. The

S&P 500

followed a similar pattern before closing off 5.29, or 0.4%, to 1403.88 after trading as high as 1415.66.

Blue-chip averages were saddled by weakness in both financials and drugmakers, as well as the aforementioned tech heavyweights. The

Philadelphia Stock Exchange/KBW Bank Index

fell 2.4% and

American Stock Exchange Broker/Dealer Index

lost 2.5%, while the

American Stock Exchange Pharmaceutical Index

slid 1.2%.

The "poor action" in the financials is one of several "genuine technical hurdles" facing the market, according Nie. Others include "nasty signals" from the utility sector and "pitiful" breadth.

Howeer, the technician sees potential for the Dow to set a new high by year-end, which would make "psychology strong enough to carry the market into January with sufficient momentum to overcome the technical hurdles."

The price of the 30-year Treasury bond fell 12/32 to 98 19/32, its yield rising to 6.23%.

Among other indices,

Dow Jones Transportation Average

rose 4.49, or 0.2%, to 2881.67; the

Dow Jones Utility Average

slid 2.21, or 0.8%, to 273.30; and the

American Stock Exchange Composite Index

shed 0.80, or 0.1%, to 829.22.

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.

Wednesday'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

Amazon.com

(AMZN) - Get Report

gained 2 3/8 to 88 9/16 and

Sprint PCS Group

(PCS)

rose 5 3/16, or 5.5%, to 99 1/2 after the companies said they would offer online shopping at Amazon from Internet-ready Sprint PCS phones.

ING Barings

started coverage on Amazon with a strong buy rating.

Take a gander at the

story written today by

TheStreet.com/NYTimes.com

joint newsroom on the deal.

Cablevision

(CVC)

rose 2 11/16 to 78 3/16 after it said it will sell its Ohio cable operations to

Adelphia

(ADLAC)

for $1.53 billion. Adelphia lost 1 3/4 to 56 13/16. Cablevision said the deal will be composed of $990 million in cash and $540 million in Adelphia Class-A stock. Cablevision said it will continue to evaluate options for its Massachusetts and Kalamazoo, Mich., operations.

For more on this transaction, take a look at the

piece written today by

TheStreet.com/NYTimes.com

joint newsroom.

Cisco

(CSCO) - Get Report

fell 1 9/16 to 99 15/16 after it said the

Justice Department

cleared its $2 billion supply deal with

IBM

(IBM) - Get Report

.

Citigroup

(C) - Get Report

fell 2 3/8 to 54 13/16 and

State Street

(STT) - Get Report

dropped 2 5/16 to 69 1/16 after the companies agreed to form a joint venture called

CitiStreet

, which they said will provide services for partially defined contribution, pension, health and welfare plans.

Digital Island

(ISLD)

soared 45 3/4, or 66%, to 114 15/16,

Sun Microsystems

(SUNW) - Get Report

climbed 6 1/4, or 8.7%, to 78 7/16 and

Inktomi

(INKT)

gained 4 1/2 to 168 after the companies announced a pact designed to accelerate Web-site performance for consumers and e-business Web sites.

Ericsson

(ERICY)

gained 5 7/8, or 9.3%, to 64 1/8 and

Microsoft

(MSFT) - Get Report

lost 1 3/16 to 91 3/4 after the companies announced a strategic pact "to develop and market end-to-end solutions for the wireless Internet." The companies will form a joint company -- of which Ericsson will own a majority stake -- to market and deliver mobile e-mail solutions for network operators.

For more on this

story, check out the coverage provided by

TheStreet.com/NYTimes.com's

joint newsroom.

Finova

(FNV) - Get Report

lost 3/8 to 35 1/16 after saying it will acquire Fremont Financial from

Fremont General

(FMT)

for $765 million in cash, which includes debt. Fremont Financial rose 5/16, or 6%, to 5 9/16. Finova said the deal would be accretive to its 2000 earnings.

General Motors

(GM) - Get Report

added 7/16 to 73 1/16 after it said it is still holding discussions with other automakers over possible alliances, but declined to comment on reports that it was close to taking and equity stake in Japan's

Fuji Heavy Industries

.

Media General

(MEG.A)

lost 2 1/4 to 48 after it said it agreed to a $605 million merger with

Spartan Communications

.

Nextlink

(NXLK)

popped 6 7/8, or 12.3%, to 62 3/4 after it said

Forstmann Little

will invest $850 million in the company in the form of convertible preferred stock. Nextlink said the investment represents 8% of its fully diluted shares.

Premier Parks

(PKS)

moved up 15/16 to 25 7/16 after it said it planned to spend $140 million to covert four properties into

Six Flags

theme parks, including locations in Mexico and the Netherlands.

Ravisent Technologies

(RVST)

lifted 10 7/16, or 41.9%, to 35 1/2 after it set a pact with

MindSpring Enterprises

(MSPG)

, which closed up 1 7/8, or 5.2%, to 38 1/4 . The companies will offer consumers access to the Internet without a computer. Ravisent customers will be able to use their TV screens to surf the Net, read and send email, among other things. Under the terms of the deal, Ravisent will offer its Internet TV appliance at a "subsidized, competitive price" to those who subscribe to two years of MindSpring's service.

Siemens

said it planned to sell its entire cable and fiber optic business to

Corning

(GLW) - Get Report

for about $1.4 billion. Shares of Corning rose 4 9/16 to 109 13/16. Siemens said it would transfer business activities comprising 3,300 employees to Corning on Feb. 2, 2000.

Telescan

(TSCN)

gained 1 3/8 to 29 7/8 after saying it entered into a three-year agreement with

America Online

(AOL)

in which Telescan will add its stock screening and portfolio analysis tools to AOL's personal finance channel. AOL slipped 7/8 to 80.

Earnings/revenue reports and previews

Commercial Intertech

(TEC)

gained 3/8 to 12 3/8 after it posted fourth-quarter earnings of 44 cents a share, beating the two-analyst estimate of 43 cents but down from the year-ago 62 cents a share.

Korn Ferry International

(KFY) - Get Report

popped up 4, or 16.6%, to 28 1/8 after it reported second-quarter earnings of 17 cents a share, beating the four-analyst estimate of 15 cents, and the year-ago loss of 1 cent a share.

Warburg Dillon Read

initiated coverage of Korn Ferry with a buy rating and a price target of 31.

Land's End

(LE) - Get Report

sank 14 1/8, or 24.5%, to 43 5/8 after it said November same-store sales were down about 18%, a larger-than-expected decline.

TheStreet.com.NYTimes.com

has been following this

story. Jim Cramer also

weighed in on the company.

New York Times

(NYT) - Get Report

gained 4 1/8, or 9.9%, to 45 7/8 after it said it was comfortable with the current consensus earnings estimate. The 12-analyst estimate for 1999 currently calls for earnings of $1.72 a share.

Wolverine Tube

(WLV)

rose 1 1/8, or 8.3%, to 14 3/4 after it said it expects to post fourth-quarter earnings between 21 cents and 23 cents a share, possibly beating the four-analyst estimate of 21 cents. The company attributed the solid estimates to strong demand.

Analyst actions

Deutsche Banc Alex. Brown

cut its rating on

AK Steel

(AKS) - Get Report

to buy from strong buy. Shares of AK Steel Holdings slid 1 1/4, or 6.8%, to 17.

Donaldson Lufkin & Jenrette

started coverage of

BancWest

(BWE)

with a market performer rating. BancWest shares fell 7/16 to 42 3/4.

PaineWebber

upped its price target on

CareInsite

(CARI)

to 90 from 63. CareInsite hopped 3 1/8 to 73.

Schroder

upped its rating on

Coca-Cola

(KO) - Get Report

to significant outperformer from outperformer and set a 12-month price target of 76. Shares of Coke climbed 1 to 60.

DLJ raised

Cigna

(CI) - Get Report

to top pick from buy. Shares of Cigna lost 7/8 to 78 1/4.

Warburg started coverage of

CVC

(CVCI)

with a buy rating and set a price target of 16. CVC shares added on 11/16, or 5.4%, to 13 5/16.

Goldman Sachs

raised its rating on

Dollar Thrifty

(DTG)

to trading buy from market outperform. Shares of Dollar Thrifty were climbing 5/8 to 21 7/8.

Merrill Lynch's

Henry Blodget initiated coverage of

Exodus Communications

(EXDS)

with an intermediate-term buy rating and put a 200 price objective on the stock. The long-term rating is also buy. Exodus closed yesterday at 144 1/2. Shares of Exodus soared 21, or 14.5%, to 165 9/16.

PaineWebber

cut its earnings estimate on

Fort James

(FJ)

to $2.43 from $2.60 per share. Shares Fort James slid 5/8 to 27 1/16.

Alex. Brown cut its rating on

General Motors

(GM) - Get Report

to market perform from buy. General Motors added 3/8 to 73.

SG Cowen

rolled out coverage of

Ebookers.com

(EBKR)

with a buy rating. Ebookers.com fell 2 1/4, or 10.1%, to 20.

Jefferies

raised

Knight/Trimark

(NITE)

to buy from accumulate. Shares of Knight/Trimark lost 7/8 to 44 3/16.

Morgan Stanley Dean Witter

raised

Sealed Air

(SEE) - Get Report

to strong buy from outperform. Sealed Air tacked on 2 3/4, or 6%, to 47 7/8.

Goldman Sachs sliced its rating on

Millennium Pharmaceuticals

(MLNM)

to market outperform, removing the stock from its recommended list. Shares of Millennium sank 5 1/4 to 105 5/8.

Merrill Lynch upped its intermediate-term rating on

Stillwater Mining

(SWC)

to buy from accumulate. Stillwater Mining gained 2 5/8, or 11%, to 26 3/8.

Lehman Brothers

started coverage of

Summit Technology

(BEAM)

with a buy rating, saying it is a possible acquisition candidate. Summit Technology climbed 1 5/16, or 8.7%, to 16 1/4.

Warburg initiated coverage of

Temple-Inland

(TIN)

with a buy rating and set a price target of 75 on the stock. Shares of Temple-Inland rose 3/4 to 61 11/16.

Lehman Brothers started coverage of

VISX

(VISX)

as a buy. VISX lifted 4 3/4, or 9.1%, to 56 11/16.

DLJ sliced its rating on

Walter Industries

(WLT)

to market perform from buy. Walter Industries fell 1 1/2, or 14.3%, to 8 15/16.

Soundview Technology

said it rolled out coverage of

Xicor

(XICO)

with a buy rating. Xicor shares edged up 1 7/8, or 13.8%, to 15 7/16.

Offering and stock actions

Eclipsys

(ECLP)

retreated 2 3/16, or 7.6%, to 26 9/16 after it said it filed with the

Securities and Exchange Commission

to register 7.6 million shares. The company said the shares were issued to stockholders associated with acquisitions that closed during the last two years.

Global Crossing

(GBLX)

declined 1/16 to 47 3/8 after it said it set a $500 million offering in convertible preferred stock.

Perfumania

(PRFM)

climbed 9/16, or 16.3%, to 4 after it said it has set a share repurchasing plan of up to 1.5 million shares.

Tribune

(TRB)

vice president Donald Grenesko told analysts at a

PaineWebber

media conference that the company may consider holding an offering for part of its Internet media business,

Tribune Interactive

, according to

Reuters

. Grenesko also said the Tribune expects to post strong fourth-quarter earnings and 10%-15% growth in EPS for 2000. The 15-analyst estimate sees the company reporting fourth-quarter earnings of 43 cents a share, while the 16-analyst estimate expects fiscal 2000 earnings to be $1.73 a share. Shares of Tribune bounced 4, or 8.4%, to 52.

Bristol-Myers Squibb

(BMY) - Get Report

dwindled 1/8 to 66 9/16 after it said its board approved a $2 billion increase in its share-buyback plan.

C-COR.net's

(CCBL)

skidded 3/16 to 52 after its board approved a 2-for-1 stock split.

MapInfo

(MAPS)

hopped 2 3/4, or 8.5%, to 34 3/4 after it declared a 3-for-2 stock split.

Pegasus Systems

(PEGS)

soared 10 5/8, or 16%, to 76 3/4 after it said its board approved a 3-for-2 stock split. Pegasus' transfer agent will distribute the additional shares on or about January 7, 2000, to shareholders of record at the close of business on December 20, 1999.

Miscellany

Amgen

(AMGN) - Get Report

gained 7/16 to 45 1/4 after it said it has tapped COO Kevin Sharer to replace the retiring Gordon Binder as CEO in May. Binder also plans to leave his role as the company's chairman.

AstraZeneca

(AZN) - Get Report

is expected to release results today of an experimental cholesterol-lowering agent that it believes will be more potent than

Warner-Lambert's

(WLA)

Lipitor,

The Wall Street Journal

reported. Shares of AstraZeneca climbed 1 1/2 to 44 15/16.

Gateway

(GTW)

announced this afternoon that -- effective Jan. 1, 2000 -- company president and COO Jeff Weitzen has been given the additional title of CEO, replacing company founder Ted Waitt. Waitt, who started the company in 1985, will remain as Gateway's chairman.

MCI Worldcom

(WCOM)

said Tim Price, the head of its core communications group, will leave the company early next year. Shares of MCI Worldcom lost 1 1/4 to 77 3/8.

The

Pentagon

said that

General Electric

(GE) - Get Report

has won a $1.98 billion U.S. defense contract to contribute to a jet-engine improvement program for certain

Air Force

planes through 2014. The program, which will be launched in January, will include power plants for F-16 fighters and A-10 attack jets, B-1 and B-2 bombers, KC-135 refueling tankers, C-5 cargo planes and T-38 trainers. Shares of GE popped 2 7/8 to 142 7/8.

The Heard on the Street column in the

Journal

takes a look at

Charles Schwab's

(SCH)

efforts to maintain its large online brokerage market share in the face of increasing competition from cheaper dot.coms as well as more traditional rivals such as

Merrill Lynch

(MER)

and

Morgan Stanley Dean Witter

(MWD)

. Shares of Merrill Lynch stumbled 1 5/8 to 80 3/8, while Charles Schwab fell 1 1/4 to 38. Morgan Stanley Dean Witter climbed 13/16 to 132 7/16.