Repeat after me: "Dow 10,000 is NOT a big deal." One more time. And exhale....
The explosive blue-chip rally ran out of gas today, leaving the
Dow Jones Industrial Average
in modestly negative territory and spoiling the five-figured Dow dreams of investors and media outlets alike.
The venerable index climbed as high as 9958.77 early on but never seriously threatened 10,000. The Dow flip-flopped around break-even for much of the final hour of trading before ending down 21.09, or 0.2%, to 9876.35.
also fell from its recent record jaunt, sliding 3.09, or 0.2%, to 1294.59. The
dipped 2.70, or 0.7%, to 398.38.
With the media focused on the ethereal implications of Dow 10,000, real-world trading was dictated by profit warnings from
. Disappointing revenue growth from
, which reported quarterly profits
last night, furthered the descent.
Strength in financial components
, as well as consumer favorite
kept the Dow's losses in check.
The big financials climbed in concert with the bond market, which improved after the
Producer Price Index
fell 0.4% in February. Economist had expected only a 0.1% decline. Core PPI, which excludes food and energy, was flat vs. expectations for a 0.1% rise. The price of the 30-year Treasury bond rose 15/32 to 95 28/32, its yield sliding to 5.53%.
"It was a Caterpillar catastrophe," said Bill Allyn, head of block trading at
. "That's a big, cyclical, bellwether-type stock. That does not bode well."
In addition to Caterpillar, which fell 12.2%, the Dow was restrained most notably by
, which fell along with the majority of tech bellwethers.
Regarding Dow 10,000, Allyn said simply: "It's a media event." Like many market pros, he was not terribly disappointed or surprised the Dow didn't breach the historic mark, noting recent gains have been impressive and perhaps overstated.
"It is a psychological barrier," the trader said. "The conventional wisdom is we're going to fail a couple of times on the attempt. But if earnings in the first quarter come out and prove corporate America is still strong and we have low inflation, there's no reason we shouldn't go through
10,000 and beyond."
Near-term, Allyn expects the Dow to mount a few more attempts at 10,000 but fail and retreat some 5% to 7%. But "we'll eventually have an assault through that number," he said, as long as first quarter earnings are solid.
Technology's Oracle Comes Up Snake-Eyes
Oracle, meanwhile, tumbled 22.4% and was a heavy influence on the
Nasdaq Composite Index
, which fell 30.72, or 1.3%, to 2381.53. That was an improvement on its nadir of 2362.87.
joining Oracle on the downside, the
Philadelphia Stock Exchange Semiconductor Index
fell 2.2%, largely as a result of last night's profit warning by
, which fell 5.3%.
slid 6.3% in sympathy.
Internet names, which have outperformed traditional tech bellwethers of late, fell prey to the selling as well.
slid 10% after saying last night it will not likely bid to acquire
, which lost 9.2%, (
reported on the CMGI-Lycos-
in a recent
TheStreet.com Internet Sector
index, of which CMGI and Lycos are both components, closed down 16.08, or 2.8%, to 568.
TheStreet.com E-Commerce Index
fell 2.91, or 2.7%, to 105.47.
"Technology is notorious for getting ahead of itself and now it's consolidating," said Brian Piskorowski, market analyst at
. "With technology in the backseat it's now a Dow story again. But technology has taken us to where we are now. We're forgetting who got us here."
The tech sector is currently "mired in earnings pre-announcement season, which is giving us this lack of follow-through and conviction, this state of anxiety," Piskorowski said, noting Prudential remains bullish on the group. "Once we get through first quarter earnings and people see the numbers are OK, I can see all the negative sentiment out of the market
and the tech group going forward."
The market watcher dismissed the importance of what he described as "Dow 10,000 angst." But he was disappointed in today's action for one reason: "Just what we needed, another weekend to ponder what Dow 10,000 really means."
New York Stock Exchange
trading 825.9 million shares traded while declining stocks bested advancers 1,540 to 1,381. In
Nasdaq Stock Market
activity 922.1 million shares were exchanged while losers led 2,220 to 1,671. New 52-week lows led new highs 82 to 58 on the Big Board and by 82 to 57 in over-the-counter trading.
In addition to the financials, blue-chip proxies were able to avoid bigger losses thanks to strength in energy plays as well as transports. The
Philadelphia Stock Exchange Oil Service Index
American Stock Exchange Airline Index
each climbed 2.8%.
Among other indices, the
Dow Jones Transportation Average
rose 9.86, or 0.3%, to 3267.51; the
Dow Jones Utility Average
gained 2.94, or 1%, to 304.51; and the
American Stock Exchange Composite Index
was off 0.44, or 0.1%, to 721.21.
For the week, the Dow industrials rose 140.27, or 1.4%; the S&P 500 gained 19.13 or 1.5%; the Nasdaq Comp rose 43.26, or 1.9%; the Russell 2000 rose 0.37, or 0.1%; TheStreet.com Internet index gained 33.66, or 6.3%; TheStreet.com E-Commerce index rose 9.95, or 10.4%; the Dow transports fell 45.28, or 1.4%; the Dow utilities added 3, or 1%; and the Amex Composite rose 13.80, or 1.9%.
Elsewhere in North American equities today, the
Toronto Stock Exchange 300
slipped 3.69 to 6562.06 and the
Mexican Stock Exchange IPC Index
rose 17.93 to 4697.73. For the week, the TSE 300 gained 146.95, or 2.3%, and the IPC jumped 369.93, or 8.5%.
Friday's Company Report
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, Caterpillar declined 6 3/16, or 12.2%, to 44 11/16 after warning its first-quarter earnings will fall 50% below estimates because of lower sales. The 15-analyst view called for 84 cents a share this quarter vs. the year-ago 83 cents. The heavy equipment maker blamed the lower sales volume on weak demand from agriculture, mining and oil and gas customers and on poor economic conditions in Latin America.
Microsoft slipped 1 1/8 to 160 3/16 after last night saying it was on track to meet analysts' third-quarter earnings estimates but that it's experiencing a sequential slowdown in revenue.
reported on the details of the conference call in a separate
story yesterday. Today,
Credit Suisse First Boston
reiterated its strong buy rating on the company.
Fellow software company Oracle tumbled 8 1/4, or 22.4%, to 28 9/16 on worries about its licensed database revenue growth. The company posted third-quarter earnings in line with estimates last night.
took a closer look at the report in a
story last night. Today,
dropped Oracle to intermediate accumulate from buy, keeping the stock at a long-term buy. Both
NationsBanc Montgomery Securities
Warburg Dillon Read
downgraded the stock to hold from buy. In sympathy, IBM gave up 4 7/8 to 178.
Mergers, acquisitions and joint ventures
slid 2 3/16, or 22%, to an all-time low of 7 7/8 even after its parent company,
, said the terms and conditions for GeoScience's $200 million acquisition by
were "true and correct." Yesterday, Core said the conditions were unsatisfactory. Tech-Sym fell 1 3/8, or 5.7%, to 22 5/8; Core gained 2 1/4, or 9.9%, to 24 15/16.
climbed 9/16, or 11.5%, to 5 7/16 after
agreed to acquire the company in a stock swap valued at $24.1 million, or $6.41 a share. Orbital scored 2, or 10.4%, to 21 5/16.
flew 1 3/16, or 14.5%, to 9 3/8 after the
New York Post
are rumored to be interested in buying the company's
soared 9 13/16, or 40.1%, to 34 5/16 after saying it's in talks with
about possible business combinations. DuPont lowered 3/8 to 57 3/4.
shed 3 5/16, or 20.4%, to 12 3/4 after saying it won't complete a previously announced sale of
and that it plans to liquidate the value-added hardware reseller. As a result, the company sees a fourth-quarter loss of 5 cents a share, instead of the previously expected 3-cent loss.
jumped 1 1/2, or 21.8%, to 8 3/8 after closely held
agreed to buy the company for $53.2 million.
Earnings/revenue reports and previews
collapsed 2 1/4, or 16.8%, to 11 3/16 after last night warning it expects a third-quarter loss of 35 cents to 40 cents a share, below estimates for a loss of 16 cents. The company, which earned 9 cents in the year-ago quarter, blamed the warning on a industry trend of retailers shifting the inventory burden to manufacturers.
vaulted 15/16, or 6.8%, to 14 13/16 after reporting second-quarter earnings of 32 cents a share, 2 cents higher than both the six-analyst estimate and the year-ago figure.
sloughed off 1 9/16, or 11.9%, to 11 5/8 after saying its auditors are questioning certain barter transactions in December 1997 and January 1998.
lifted 2 1/8, or 5.3%, to 43 after last night reporting a narrower fourth-quarter loss than in the year-ago period.
Rite-Aid plunged 14 7/16, or 39%, to an annual low of 22 9/16 after saying it sees fourth-quarter earnings coming in around 30 cents to 32 cents a share because of store opening and relocation costs. Analysts called for a profit of 52 cents vs. the year-ago 44 cents.
dwindled 6 11/32, or 41.4%, to an annual low of 8 31/32 after last night warning its first-quarter and full-year 1999 earnings will fall below estimates due to high distributor inventories and a slower ramp of new orders. Today,
BT Alex. Brown
lowered the stock to market perform from buy, and Merrill Lynch lowered it to intermediate-term neutral from accumulate while maintaining its long-term buy.
Offerings and stock actions
spiked up 24 1/16, or 22.6%, to an all-time high of 131 after last night announcing a 2-for-1 stock split.
slouched 1 1/2, or 7.6%, to an annual low of 18 1/4 after
lowered it to intermediate-term market performer from outperform, based on uncertainty and cross-currents affecting the information technology staffing and consulting services sectors.
popped up 1 3/8 to 36 1/16 after BT Alex. Brown upgraded it to buy from market perform.
sliced off 2 7/8, or 6.6%, to 40 5/8 after Merrill Lynch slashed it to accumulate from buy.
lost 1 11/16, or 5%, to 32 1/16 after
Morgan Stanley Dean Witter
cut it to neutral from outperform.
picked up 1 9/16 to 62 after
lifted the stock to buy from long-term buy and increased its price target to 70 a share.
shot up 9 3/4, or 55.3%, to an all-time high of 27 13/16 after Credit Suisse First Boston initiated coverage with a buy.
grew 1 9/16, or 5.1%, to 32 7/16 after
began coverage of the stock by placing it on the firm's recommended list.
gave up 15/16, or 9.4%, to an annual low of 9 after Everen cut it to intermediate-term market performer from outperform.
expanded 3, or 11.9%, to 28 3/8 after
Inside Wall Street column quoted a
BancBoston Robertson Stephens
analyst as saying the Israeli software development firm was worth nearly double its current trading price. Elsewhere in the column,
, which rose 1 7/16, or 14.7%, to 11 1/4, was said to be a possible takeover target "in the rapidly consolidating defense industry."
advanced 3 1/8, or 8%, to 42 3/8 after receiving approval from the
Internal Revenue Service
for a tax-free spinoff of its
Investment Technology Group
business. Investment Technology swelled 3 3/4, or 9.9%, to 43.
tacked on 2 1/16 to 67 1/16 on overall airline strength and a
Wall Street Journal
report saying the company is near a choice for a new CEO.