After a week in the Arizona wilderness (if you have the means, I highly recommend it), we're back in the city where nothing is clear. The month-long Cold War on Wall Street continues, but trading this morning was providing some signs of detente.
The session opened with a tenuous advance that gained strength as the morning progressed. The tone of trading was solid, evinced by advance/decline indicators. Meanwhile, merger news inspired a variety of cyclical names. Still, some traders were hesitant to make big bets (or anticipate how the day will end), what with
scheduled to address
tomorrow and Wednesday.
Dow Jones Industrial Average
lately was up 146 to 9486, near its highs of the day, after jumping higher around 10:30 a.m. EST following a hesitant first hour of trading.
was the Dow's biggest gainer, followed by
and tech components
were moving on separate merger news.
'I'm not saying it's up, up and away but it's better than it was,' said Scott & Stringfellow's Richard Dickson. 'The bugaboo is leadership. We need something outside of technology to sustain leadership.'
Eastman Kodak was lately up 3.7% on news that Germany's
is in talks to buy the firm's office imaging business. United Technologies was recently down 0.7% to 124 5/8 -- well off its early decline to as low as 120 1/2 -- on word it is buying
for $4.3 billion. Sunstrand was lately up 17.2%. Other firms moving on M&A include
up 10.8% on news it has made an unsolicited $32 a share offer for
, which was up 6.1%.
Nasdaq Composite Index
was up 32 to 2316, having traded as low as 2275.60 in the early going. Weakness in
restrained the index initially, but the software giant was down just fractionally as lunchtime beckoned on Wall Street. The
was up a relatively modest 1.3% as some of technology's biggest gainers -- notably
Advanced Micro Devices
-- reside on the
New York Stock Exchange
Internet names were higher as well and also building strength as the day unfurled.
TheStreet.com Internet Sector
index was up 15 to 486 while
The Street.com E-Commerce Index
was higher by 3 to 97.
, an E-Commerce Index component, was lately up 15.1% following a favorable write-up in
The Wall Street Journal
, which speculated the online trader could be in the acquisitive sights of
was up 22 to 1261 while the
was higher by 5 to 397, reflecting the solid breadth indications.
"So far today, things are doing OK. Breadth is fairly decent and volume is a little light, but that's not to worry," said Richard Dickson, technical analyst at
Scott & Stringfellow
in Richmond, Va. "If we close above 9400 on the Dow you'll definitely hear people talking about a breakout," with 1250 the comparable level for the S&P 500.
The technical picture is improving, Dickson said, noting an increase in negative sentiment in terms of more put buying and other sentiment indicators. He also pointed to a decrease in the IPO calendar, which aids the liquidity picture. "I'm not saying it's up, up and away but it's better than it was," he said. "The bugaboo is leadership. We need something outside of technology to sustain leadership. I'm betting on the growth stocks," namely consumer staples, drug makers, food and health care.
In NYSE trading, gainers were leading declining stocks by a healthy 1,836 to 989 on 380 million shares. In
Nasdaq Stock Market
activity, advancers were leading by a slimmer 1,947-to1,717 spread on 449 million shares. New 52-week lows were ahead of new highs on both exchanges, by 42 to 26 on the NYSE and by 60 to 29 on the Nasdaq.
'Some Really Cheap Stocks Out There'
Traders were pleased by the action, but unwilling to say the early strength confirms the market's recent reticence has ended.
"I think it's just a reaction to the mergers and takeover, particularly in industrial groups and other beaten down, nontech and nonfinancial sectors," said one veteran trader. "There are some really cheap stocks out there. People are waking up to the fact there are sectors out there other than tech and financials."
The trader, who requested anonymity, said the performance of
typifies the action. "There's nothing going on," but the copper giant was lately up 6.1% after
reported the stock trades at its biggest discount to book value in history, he observed. Additionally, formerly moribund cyclical names such as
were among NYSE percentage leaders; the
Morgan Stanley Cyclical Index
was lately up 1.5%.
The market "looks like its in pretty good shape," the trader said, noting financial and technology names are participating. But he dismissed the notion a leadership shift to cyclical names will inaugurate a new leg of the bull market.
"The sectors getting attention attract value players and they don't drive the market. Momentum drives the market," he said. "Value players pick away at stocks while it's the momentum guys that have millions to buy and keep buying. Maybe it keeps a floor on some things but I don't think it's going to drive stocks to 12,000."
Among other indices, the
Dow Jones Transportation Average
was up 2.2%, led by
, higher by 3.6% on news that it incurred lower-than-expected expenses during talks with its pilots union. Airlines were also higher amid ongoing consolidation speculation and an upgrade of
Delta Air Lines
Donaldson Lufkin & Jenrette
Amercican Stock Exchange Airline Index
was lately up 1.7%.
Dow Jones Utility Average
was up 0.5% and the
American Stock Exchange Composite Index
was higher by 1%.
The price of the 30-year Treasury bond was up 10/32 to 98 11/32, its yield dipping to 5.36%.
Monday's Midday Movers
Gateway was up 5 3/16, or 7%, to 77 15/16 after
Ashok Kumar upgraded the stock to strong buy from buy and raised its price target to 95 to 100 from 56 a share. The analyst also upped his first-quarter earnings estimate to 90 cents a share from 59 cents and his 1999 forecast to $3.87 from $2.82. In a report, Kumar said the aggressive expansion of Gateway's Country Stores, which focus on consumers and small to medium-sized businesses, will help the PC maker offset a seasonal slowdown. Late Friday, Gateway said it selected Advanced Micro Devices as its second supplier of chips. AMD was up 1 1/2, or 8.5%, to 19 1/8 while
, Gateway's first supplier, was up 1 13/16 to 129 15/16.
In other news:
was up 1 11/16, or 6.8%, to 26 1/2 after announcing it's acquiring
, an online software retailer, for about $134 million. Beyond.com expects to complete the transaction by the end of March.
was up 4 1/4, or 9%, to 51 3/4 after the
Food and Drug Administration
granted the company approval to ship
, which is used to treat osteoarthritis of the knee, from its new 55,000-square-foot manufacturing plant in Ridgefield, N.J.
E*Trade, the focus of today's Heard on the Street column in
The Wall Street Journal
, was up 6 1/16, or 15.1%, to 46 1/4 after launching an online mutual fund. Elsewhere in online news from the
was up 7 7/8, or 5%, to 168 3/16 after the newspaper said its
unit is expected to unveil a major makeover of its online offerings.
was up 13/16 to 22 5/16 after
agreed to acquire the company for $1.8 billion in cash and stock. The deal calls for Sempra to assume $4.2 billion in KN Energy debt. Sempra was off 1/4 to 22 1/16.
was up 6 3/16, or 9.6%, to 71 after the
said it and
are close to a deal that would end a long-running patent dispute and could aid in resolving a looming international trade conflict over the future of wireless communications. Ericsson was up 15/16 to 27 9/16.
was up 10 1/8, or 14.3%, to 81 3/8 after
BancBoston Robertson Stephens
lifted the stock to buy from attractive with a price target of 90 a share.
Warburg Dillon Read
initiated coverage with a strong buy.
was up 7/8, or 15.9%, to 6 3/8 after announcing it will create
, a joint venture with
Dawntreader Fund I
, to market the company's brands on the Web. Data Broadcasting was down 3/16 to 14 1/8.
Southwest Gas was up 1 5/8, or 6.1%, to 28 1/4 after saying it received an unsolicited $32-a-share acquisition offer from Southern Union. Southern Union was up 1 15/16, or 10.8%, to 19 7/8.
Sundstrand was up 10, or 17.2%, to 68 on news United Technologies is buying the company for $4.3 billion. UTX was down 1 7/16 to 124.
wrote about a burst of activity in Sundstrand options
was up 4 7/16, or 6.3%, to 75 1/4 even after posting a fourth-quarter loss of 47 cents a share, excluding gains, wider than both the eight-analyst forecast for a loss of 15 cents and the year-ago loss of 21 cents. Perhaps investors were paying attention to the cable company's operating cash flow, which shot up 15% during the quarter.
was down 3 11/16, or 19.1%, to 15 5/8 after warning it sees third-quarter earnings of 14 cents to 17 cents a share due to weaker-than-expected demand and continuing industry-wide pressures on pricing and margins. The four-analyst outlook called for 30 cents
was up 1, or 5.3%, to 19 3/4 even after recording fourth-quarter earnings of 20 cents a share, 2 cents below the 23-analyst view and behind the year-ago 26 cents. Investors seemed to be focusing more on upgrades of the company to buy from market perform from
BT Alex. Brown
and to buy from hold from
NationsBanc Montgomery Securities