Jobs-Report Excitement Yields to Uncertainty

Stocks have traced a choppy course, lately on the upswing, as they follow the lurching bond market.
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Surprise, surprise, surprise. The

Gomer Pyle

-esque action on Wall Street continued today as a unexpectedly benign employment report resulted in another unforeseen development: Both stocks and bonds failed to rally in a meaningful way.

Turned out the rumors circulating through Wall Street

yesterday about the "blockbuster"

employment report were spurious after all. The specious speculation yesterday damaged a bond market already reeling from comments by

Federal Reserve

Chairman

Alan Greenspan

. That, in turn, sabotaged stocks, especially high-tech issues.

Both asset classes mounted a decent advance early on after the

Labor Department

reported 234,000 new jobs were created in April, just slightly above the consensus estimate and vs. talk yesterday of a headline figure over 300,000. Average hourly earnings rose 0.2%, half as much as expected, while the unemployment rate rose to 4.3% from 4.2% in March, a 29-year low.

Equities were mainly in positive ground as lunchtime beckoned on Wall Street, but proxies have struggled to sustain the early impetus as they continue to track a herky-jerky bond market.

After rising nearly a full point at its best, the price of 30-year Treasury bond lately was up 2/32 to 92 13/32, its yield sliding back to 5.79%. (For more on the fixed-income market, see today's early

Bond Focus.)

"Basically, the employment data came more or less in line with expectations, but because of rumors going around yesterday, everyone thought we'd get bad news," said Ken Ducey, director of trading at

BT Brokerage

. "We didn't have bad news, which became good news, but it's really a washout. That's why there's been more or less a flat reaction."

Tech stocks led the early rally in stocks, then stumbled most noticeably, but have recently recovered again. The

Nasdaq Composite Index

lately was up 30 to 2502 after rising as high as 2505.59 and then falling as low as 2462.27.

Among Nasdaq tech bellwethers,

MCI WorldCom

(WCOM)

and

Intel

(INTC) - Get Report

were leading gainers. The

Nasdaq 100

was up 1.8%.

In

New York Stock Exchange

trading,

IBM

(IBM) - Get Report

was up 1.9% thanks to some positive comments from

SoundView Technology Group

.

Big Blue was the most positive influence on the

Dow Jones Industrial Average

, lately up 32 to 10,979 but down from its early best of 11,003.24.

Meanwhile,

TheStreet.com Internet Sector

index was up 6 to 618 after trading as high as 629.92 early on.

In Netland, bellwethers such as

Amazon.com

(AMZN) - Get Report

,

Yahoo!

(YHOO)

and

America Online

(AOL)

were mixed after repeating a recent (and disturbing) pattern of struggling to maintain early strength.

Online brokers were a bastion of strength after

Lehman Brothers

made some positive comments on the group.

E*Trade

(EGRP)

was recently up 5.3% to 110 3/8 but down from its morning high of 113 7/16.

Ameritrade

(AMTD) - Get Report

was up 6.2% to 115 vs. its initial best of 118 1/4.

The

S&P 500

was up 8 to 1340, slightly off an early rise to as high as 1342.76. The

Russell 2000

was up 1 to under 435 vs. an early climb as high as 435.93.

The Russell 2000 was being hampered by a tumult in gold stocks, which plummeted along with the price of the metal after the

Bank of England

announced plans to sell up to 125 tons, or 60% of its reserves, by next March. Gold was lately down $7.30 an ounce to $283.40 while the

Philadelphia Stock Exchange Gold & Silver Index

was off 11.5%.

Overall, Ducey expects the recent (as in, last 90 minutes') positive tone will continue and perhaps gain force as the day proceeds. There has been a pattern in recent days: When the bond futures close at 3 p.m. EDT, stocks ramp higher.

"I would think" that will occur again today, "although as soon as you get to a pattern everyone is looking for, it changes," the trader said. "But if we have a decent market and people are expecting a better week next week, which I do, we could have a good strong close to get

the Dow above 11,000. Most things on my screen look green. I say, go with the flow."

In

New York Stock Exchange

trading, declining stocks were leading advancers 1,418 to 1,403 on 477 million shares. In

Nasdaq Stock Market

activity, winners were leading 1,856 to 1,761 on 511 million shares. New 52-week highs were topping new lows 61 to 17 on the Big Board and 47 to 21 on the Nasdaq.

Trouble, but Not Major League Trouble

Many traders were caught off guard by the inability of the employment report to inspire equities and fixed-income.

"I'm really surprised myself bonds are not acting better," said Bruce Bittles, market strategist at

J.C. Bradford

. "My feeling is perhaps the dollar's been trending down the last few weeks, particularly vs. the yen. If the dollar is going to get soft here, that could negatively affect the bonds, particularly the long end."

The dollar recently was up 0.18 to 120.70 yen, however.

Morever, concurrent with the not-as-robust-as-feared April job figures, Bittles noted the March jobs data was revised downward, contributing to his "gut feeling" the U.S. economy is going to slow in the coming months.

Because of that expectation, for which he concedes there is little evidence other than yesterday's retail sales figures, the strategist expects "earnings are not going to come through like people think."

That, in turn, sets the stock market up for a period of "trouble," but not "major-league trouble" between now and June, he said.

The strategist foresees the Dow heading as low as 10,300 by the end of the year, with the Nasdaq "vulnerable" to another 10% decline.

"The problem is everyone owns the techs still, and it's a process of getting out," he said. "I think they'll bottom out in June and rally in July."

Friday's Midday Movers

By Heather Moore
Staff Reporter

IBM was picking up 4 to 213 1/4 after SoundView Technology Group analyst Gary Helmig said the outlook for Big Blue's second-quarter results is very strong and that he may raise earnings estimates. The 21-analyst

First Call

consensus calls for quarter earnings of $1.75 a share vs. the year-ago $1.50.

In new issues,

Media Metrix

(MMXI:Nasdaq) was storming up 22, or 129.4%, to 39 1/16 after

Donaldson Lufkin & Jenrette

priced its 3 million-share IPO top-range at $17 a share. The company measures Internet audiences. Elsewhere, Web advertising and direct marketing company

AdForce

(ADFC:Nasdaq) was up 19 5/8, or 130.8%, to 34 5/8 after

Hambrecht & Quist

priced its 4.5 million-share IPO above-range at $15 a share, and

Latitude Communications

(LATD:Nasdaq) was climbing 3 15/16, or 32.8%, to 15 15/16 after

Credit Suisse First Boston

priced its 3 million-share IPO top-range at $12 a share. Latitude is a provider of integrated voice and data conferencing solutions.

Newport News Shipbuilding

(NNS)

was up 5 1/4, or 19.4%, to 32 1/4 and its merger partner

Avondale Industries

(AVDL) - Get Report

was up 3 3/4, or 11.8%, to 35 9/16 after

Litton Industries

(LIT) - Get Report

made an unsolicited bid for both companies in a combined deal valued at more than $2 billion. Even after

Morgan Stanley Dean Witter

upgraded it to outperform from neutral, Litton was down 3 to 61 3/4. Avondale said Litton is offering $38 a share for the company; Newport News said it's being offered 0.55 of a Litton share for each Newport share. Last month,

General Dynamics

(GD) - Get Report

tried to acquire Newport News but the

Defense Department

rejected the proposal.

In other news:

Equity fund

Baker Fentress

(BKF) - Get Report

was up 3 3/16, or 20.3%, to 18 7/8 after late yesterday saying its board approved a plan to sell most of the company's investments and distribute the proceeds to shareholders.

CellNet Data Systems

(CNDS)

was up 1 1/16, or 12%, to 9 15/16 after naming John LaMacchia, former chief executive of

Cincinnati Bell

(CSN)

, CEO.

E*Trade was up 5 9/16, or 5.3%, to 110 3/8 and Ameritrade was up 5 1/2, or 5.1% to 113 15/16 after Lehman Brothers started coverage of both stocks with buy ratings.

Net.B@nk

(NTBK)

was off 5 1/4 to 164 1/4 after filing with the

Securities and Exchange Commission

to sell 3 million shares and $100 million in convertible securities.

Earnings/revenue movers

QLogic

(QLGC)

was up 16, or 21.1%, to 92 1/8 after last night reporting fourth-quarter earnings of 45 cents a share, a nickel ahead of estimates.

Sterling Commerce

(SE) - Get Report

was up 3 11/16, or 11.2%, to 36 11/16 after late yesterday posting second-quarter earnings of 36 cents a share, in line with the 24-analyst forecast and higher than the year-ago 29 cents. Today,

Warburg Dillon Read

raised the stock to buy from hold with a 12-month price target of 40.