Ask any New Era economist: The New Era continues to march forward. The stock market was having some trouble keeping up with it this morning, but that's quickly become part of the past.
released figures this morning showing third-quarter productivity gaining 4.2%, blowing past the 3% increase that economists in the Reuters poll were looking for. An impressive showing, to say the least. What's more, unit labor costs, another measure that intensely interests
, rose just 0.6%, well below the 1.4% forecast and down from a revised 4.2% rate in the second quarter.
Those are just the sort of numbers that New Era proponents need to pack their Fed flak jackets with. Productivity gains like that should let the economy continue to grow at a rapid pace without causing inflation. The low unit labor cost gains are proof of that theory, they'd say. And they might be right. Still, the stock market wasn't immediately able to capitalize this morning, ripe as it was for a technical pullback and preoccupied with its own local issues.
Yet the major proxies were bouncing back around midsession, and bouncing back hard. The
Dow Jones Industrial Average
was up 76 to 10,672, while the
was up 7 to 1389. The running-and-gunning
Nasdaq Composite Index
was pulling back into a half-court offense, down 4 to 3194 amid heavy selling in index heavyweight
. But that was way, way off the Comp's morning low of 3124.77.
Net shares were solidly higher,
TheStreet.com Internet Sector
index up 9, or 1.1%, to 830. The small-cap
was unchanged at 447.
"The Nasdaq was challenging the top end of the trading channel" that it's been moving upward in for the last 12 to 13 months, said Brian Belski, chief investment strategist at
George K. Baum
in Kansas City, Mo. "It was clearly overbought and overdone, and needed to pull back into that channel.
"If the Nasdaq were down 2%, and the yield was up and the bonds were selling off, I'd see reason to worry."
Not the case today. The day's productivity data, which was overshadowing slightly hot core
figures, wasn't doing anything to bolster arguments that the
Federal Open Market Committee
will hike when it meets next Tuesday, and that was helping the bonds extend their recent rally. The 30-year Treasury was up 21/32 to 101 3/32, slimming its yield to 6.05%. (For more on the fixed-income market, see today's early
As they are wont to do, banks and brokerages were moving in sympathy with the bonds. The
Philadelphia Stock Exchange/KBW Bank Index
was up 3.4%, while the
American Stock Exchange Broker/Dealer Index
was booming 5.3% higher.
Technology, however, was recoiling -- a move that market observers were taking in stride given the sector's extreme strength recently. "Tech stocks are on such a tear recently that a little pause here to catch their breath is not to be taken as a great surprise," said Charles Crane, chief market strategist at
Key Asset Management
. "The fundamentals of the tech sector are terrific anyway you slice it, and in just about any sector you want to look at."
Investors weren't enjoying the way
was slicing Intel's fundamentals much, though: The chip king was off about 5% after
analyst Joseph Osha cut it to near-term accumulate from buy. That downgrade comes on the heels of a very bullish note Merrill issued yesterday on the semiconductors, in which it said the market is witnessing the start of a three-to-five year upturn in the chip industry. Osha cut Intel's 2000 earnings estimate to $2.55 a share from $2.69, and reduced its price target to 90 from 100.
In a research note, Osha wrote that "the number of challenges facing Intel for the next twelve months continues to mount." Those challenges include mounting competition from
Advanced Micro Devices
and Intel's "faltering" attempts "to force the market to adopt
The Philadelphia Stock Exchange Semiconductor Index
was shaving off 2.5%. Rambus was down about 5.4%, while AMD was off 6.4% in profit taking after yesterday's gains on news that it expects to break even in the fourth quarter.
"Valuations have gotten a little ahead of themselves," Crane concedes. "Anything less than a Utopian environment for the quarters ahead of us, and we're probably ready for some profit taking."
Among other sector proxies, the
Dow Jones Transportation Average
was 1.8% higher, and the
American Stock Exchange Airline Index
was up 2.5%. Recently rampant paper stocks were letting up a bit of steam, the
Philadelphia Stock Exchange Forest & Paper Products Index
Breadth was slightly negative on very strong volume.
New York Stock Exchange:
1,438 advancers, 1,368 decliners, 521 million shares. 53 new 52-week highs, 91 new lows.
Nasdaq Stock Market:
1,789 advancers, 1,901 decliners, 834 million shares. 146 new highs, 53 new lows.
Friday's Midday Watchlist
Earnings estimates from First Call/Thomson Financial; earnings reported on a diluted basis unless otherwise specified
Mergers, acquisitions and joint ventures
lost 1/2 to 19 1/4 after
The Wall Street Journal
reported it's contemplating the sale or closing of some of its core satellite and military-aircraft operations as it tries to recover its declining financial performance, citing senior executives familiar with the situation. According to the
, Lockheed's CFO said the company is "not restricting in any way" its evaluation of actions and stressed that no conclusions have been made.
hopped 2 1/8, or 5.6%, to 40 and
dropped 3 1/16 to 100 1/2 after the companies said Red Hat plans to license RSA technology for use in one of the Linux software packages.
TriPoint Global Communications
announced its plans to buy
, for roughly $118.7 million. The transaction calls for TriPoint to tender for all Vertex shares at $22 a share, beginning Thursday. Shares of Vertex were hopping 6 3/16, or 41%, to 21.
dropped 4, or 8.1%, to 47 5/8 after saying it continues to review a wide range of options in a consolidating global wireless market but said it has set no definite plans. Vodafone is expected to launch a takeover bid for
, a company Vodafone values at $217.60 a share.
Earnings/revenue reports and previews
inched up 5/16 to 16 1/4 after it posted third-quarter earnings of 48 cents a share, in line with the five-analyst estimate but down from the year-ago 63 cents a share.
dropped 1 11/16 to 41 13/16 after late yesterday reporting third-quarter earnings of 18 cents a share, meeting its revised outlook, which was scaled down due to a computer components shortage. The report was in line with the 27-analyst estimate and up from the year-ago 14 cents. CEO Michael Dell told
that he sees a "healthy" fourth quarter and Y2K concerns easing, with "a group of customers buying at a more intense level, strong enough that they offset any Y2K effect."
joint newsroom covered Dell's report in a
story last night.
raised its rating on Dell to an outperform from a hold and
Credit Suisse First Boston
reiterated its strong buy rating, while
cut its fiscal 2001 estimate on the boxmaker to $1 from $1.05 a share and said Dell officials sent a mixed message with a cautious revenue outlook.
lost 4 1/16, or 9.6%, to 38 7/16 after it posted a third-quarter loss of 24 cents a share, wider than the five-analyst estimate of a 20-cent loss but narrower than the year-ago 26-cent loss.
inched up 29 32 to 44 29/32 after it reported first-quarter earnings of 15 cents a share, beating the 14-analyst estimate of 12 cents and the year-ago 6-cent profit.
Offerings and stock actions
gained 3/16 to 52 3/8 after it set a $40 million repurchasing program for its Class B stock.
climbed 5/16 to 20 11/16 after it announced its plans to resume repurchasing stock. The company said about 15 million shares remain from its current 30 million-share buyback set in 1996.
was unchanged at 22 3/8 after saying it set a 2.1 million-share repurchasing program.
Hambrecht & Quist
is set to price a 4.25 million-share IPO for
in an expected range of $9 to $11 a share.
Donaldson Lufkin & Jenrette
upped its rating on
Air Products & Chemicals
to a top pick from a market perform. Air Products & Chemicals was up 2 9/16, or 9.2%, to 30 3/8.
upped its price target on
and reiterated its market outperformer rating. Separately, the
Communication Workers' Union
said that BT customer-service workers have voted to hold a one-day strike on Nov. 22 to protest "oppressive" working conditions. Shares of BT were falling 3 to 199 5/16.
Morgan Stanley Dean Witter
sliced its rating on
to neutral from outperform. CKE shares were off 1, or 13.9%, to 6 3/6.
Warburg Dillon Read
initiated coverage of
with a hold rating. Shares of Conoco were unchanged at 27 1/2.
Merrill Lynch started coverage of
with intermediate- and long-term accumulate ratings. Shares of Covance were slipping 1/16 to 11 1/8.
Merrill Lynch upgraded its long-term opinion on
to a buy from an accumulate. General Dynamics was sliding 9/16 to 51.
Merrill Lynch raised its long-term rating on
to a buy from accumulate. General Mills shares hopped 1/8 to 41 3/8.
As noted above, Merrill Lynch sliced its near-term rating on Intel to accumulate from buy, citing worries over the disruption in its plans to roll out a memory product linked Rambus and competitive pressure from Advanced Micro Devices. Merrill analyst Joe Osha also cut his fiscal 2000 earnings estimate to $2.55 from $2.69 and price target to 90 from 100. Shares of Intel were sinking 4, or 5%, to 75 7/16.
Donaldson Lufkin & Jenrette
downgraded shares of
to market perform from buy. Praxair shares were losing 1 1/8 to 46 3/16.
Bear Stearns downgraded
to a neutral from attractive. Shares of Speedway were losing 4 9/16, or 14.2%, to 27 1/2.
Banc of America Securities
rolled out coverage of
with a buy rating. Visx shares were jumping 4 1/16, or 5.9%, to 72 1/8.
Deutsche Banc Alex. Brown
raised its rating on
to a strong buy from a buy. Shares of Williams were up 3/16 to 35 1/16.
said it has selected Vice Chairman Peter Pestillo as the new chairman and CEO of the company's
Visteon Automotive Systems
parts division. Shares of Ford were gaining 5/16 to 53 9/16.
said it has tapped Larry Johnson as president and CEO of
. Shares of GE were climbing 9/16 to 134 1/2.