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Late Failure Does Nothing to Boost Wall Street's Confidence

Optimism is in short supply as the big three major indices close on the downside.
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Not wanting to break their recent form, some of the major market gauges saved their biggest moves for the final hour of trading. And not surprisingly, the way the market's been acting lately, they choose the downside as the direction for that move.

While the big three proxies -- the

Dow Jones Industrial Average

, the

S&P 500

and the

Nasdaq Composite Index

all closed lower, small-caps avoided the same fate as the

Russell 2000

closed modestly higher.

The blue-chip Dow fell 62.05, or 0.6%, to 10,213.48.






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led the Dow on the downside.

The S&P 500 slumped 13.83, or 1.1%, to 1268.37; the Nasdaq Comp shed 25.99, or 0.9%, to 2730.26; and the Russell rose 3.03, or 0.7%, to 421.52.

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message board.


juiced up Internet Sector

index, helping send it up 12.19, or 1.9%, to 643.49. Amazon today said it will allow anyone to sell wares via its Web site.

wrote about the announcement in a story

this afternoon.


Herb Greenberg

weighed in on the Amazon announcement, as did columnist

Jim Seymour.

Oil futures soared intraday, briefly topping $25 a barrel but closing off their highs. Oil and oil-service issues ran higher. The

Chicago Board Options Exchange Oil Index

jumped 1.1%, while the

Philadelphia Stock Exchange Oil Service Index

hopped 4.8%. The rise in the price of oil, however, had a souring effect on the Treasury market.

The 30-year Treasury bond -- which fell a full point yesterday -- continued its slump. The long bond was off 15/32 to 100 1/32, yielding 6.12%.

The lust for gold stocks cooled markedly after their recent sprint higher as the price of gold slipped. The

Philadelphia Stock Exchange Gold & Silver Index

tumbled 4.6%.

Major stock proxies traded in a relatively narrow range above and below unchanged throughout the session. A little before the final hour of trading began, major stock proxies were hit with a bout of selling that eventually sent the Dow, S&P 500 and Nasdaq Comp to their intraday lows.

Scott Curtis, senior equity trader at

Brown Brothers Harriman

, speaking around 3 p.m. EDT, before the late slide, said the market's still under pressure but there wasn't a huge amount of fear out there. Looking ahead for events that market participants will be watching, he pointed to some

economic data to be released over the next couple of days and Tuesday's

Federal Open Market Committee

meeting. He also mentioned the upcoming earnings season. Analysts expect companies will be posting robust profits for the quarter.

Topping economic data this week will be Friday's release of the September

Purchasing Managers' Index

. Economists polled by


are projecting the index to come in at 54.3.

Sour Mood Lingers On

While today's slump -- small-caps aside -- was nothing to match recent swoons, a continued relatively sour mood continues to permeate Wall Street.

In a fax to clients out before the open of today's trading, Stephen Shobin, chief technical analyst at

Lehman Brothers

, said that the reversal

yesterday in the market "was very impressive, from a short-term standpoint, but hardly convincing from a medium-term standpoint."

As for the medium-term trend, gauged by the technician as usually lasting up to four months, he's bearish. For the major trend, which he pegs as usually lasting longer than four months, he's neutral.

"Medium-term technical indicators have not changed enough to suggest an important bottom," he wrote. "While the very short-term picture has brightened, the market will have to go through considerable rebuilding before we might expect a rally of three months or longer. Look for a small bounce, stay defensive, sell rallies."

Other strategists echoed those less-than-glowing views of the market.

"We think it's pretty ugly," said Bruce Bittles, market strategist at

J.C. Bradford

in Nashville, Tenn. He's been recommending to clients for several months to reduce their exposure to stocks, citing the poor performance of the broad market, which he said was a leading indicator for the market averages. Bittles pointed out that only about 25% of all stocks are higher now than they were in April 1998.

Bittles also pointed to the Fed, which has raised interest rates twice this year. He said he doesn't think, however, that the FOMC will tighten next week.

Bittles' current recommended allocation is 40% stocks, 50% bonds and 10% cash. Bittles said he's "very bullish on the bond market." He said if the stock market breaks enough "the economy will suffer terribly" and interest rates would eventually fall and fall hard.

On the

New York Stock Exchange

, advancers managed to beat decliners 1,593 to 1,439 on 857.5 million shares. Meanwhile, on the

Nasdaq Stock Market

, losers beat winners 2,100 to 1,901 on 1.13 billion shares.

On the NYSE, 220 issues set new 52-week lows while 36 touched new highs. On the Nasdaq, 164 issues set new 52-week lows while new highs totaled 66.

On the Big Board,

America Online


was most active with 30.4 million shares changing hands. AOL was in the news on chatter in the market that perhaps it might buy



stake in



. The talk shot Excite@Home up 13%.

On the Nasdaq, Amazon was most active with 79.4 million shares changing hands.

Among other indices, the

Dow Jones Transportation Average

added 35.91, or 1.3%, to 2892.89; the

Dow Jones Utility Average

rose 2.96, or 1%, to 294.73; and the

American Stock Exchange Composite Index

gained 7.19, or 0.9%, to 780.04.

Elsewhere in North American equities, the

Toronto Stock Exchange 300

gained 6.05 to 6883.90 and the

Mexican Stock Exchange IPC Index

slid 3.54 to 5088.15.

Tuesday's Company Report

By Tara Murphy
Staff Reporter


Earnings estimates from First Call/Thomson Financial; earnings reported on a diluted basis unless otherwise specified. New highs and lows on a closing basis unless otherwise specified.

) soared 14 15/16, or 22.7%, to 80 15/16 after it said it would introduce new features on its online shopping site, in an effort to maximize merchandise, allow customers payments to small businesses and upgrade the search for products on the Web.

CEO Jeff Bezos said at a press conference that new options include


, which allow anyone to sell products on the site, while


will enable shoppers to pay small businesses through Amazon. In addition, the site plans to offer an advanced search engine that will link buyers to sellers throughout the Internet. Bezos said that Amazon will charge the zShop merchandisers $9.99 per month to sell their products, while asking for 2% to 5% of the purchase price for each sold product. Shoppers will have access to the new features tomorrow.

took a look at the Amazon news in a

story this morning.



fell 3 11/16, or 9.9%, to 33 5/16 after it warned investors that, although third-quarter earnings will likely be in line with analysts' consensus estimates of 32 cents a share, it expects to post a 1% decline in sales, citing slow economic conditions and unfavorable exchange rates in Latin America and Western Europe. Earlier today,

Salomon Smith Barney

cut its rating on Gillette to neutral from outperform, while

Merrill Lynch

lowered its ratings to near-term neutral, long-term accumulate from near-term accumulate, long-term buy.

Mergers, acquisitions and joint ventures

AK Steel


got shareholders' stamp of approval for its planned merger with



. Shares of AK Steel slid slightly to 17, while Armco climbed 1/16 to 6 1/2.



skidded 1 1/4 to 42 9/16 despite its announcement that it forged a $40 million deal with

Edward Jones

to make its computers a global standard at the brokerage firm. The agreement calls for Edward Jones to use Dell servers and notebook PCs and to purchase a


4350 server to handle the networks of the its new branches. As part of the agreement, the Dell servers will be operated by

Sun Microsystems



El Paso Energy


, which advanced 1 1/16 to 39 5/16 and



, which mounted 1 13/16 to 39 1/16, were awarded approval from the

Federal Energy Regulatory Commission

for their planned merger, becoming the country's largest natural gas distributor. The transaction, which was announced in March, calls for El Paso to buy Sonat for $4 billion in stock, while taking on roughly $2 billion of Sonat's debt.



slipped 1 1/16 to 31 after it said it has forged a three-year, $340 million agreement with Canada's wireless provider

Rogers Cantel


. The deal, which calls for use of time-division multiple access technology, would guarantee Rogers's role in introducing Canada's first third-generation cellular network.

Separately, Lehman Brothers cut Ericsson's fiscal 1999 earnings estimate to 64 cents form 69 cents a share.

Fifth Third Bancorp


slipped 11/16 to 59 1/8 after it said the Fed and Indiana state regulators authorized its plans to acquire Indianapolis-based

Peoples Bank


in a stock deal valued at $228 million. The transaction calls for Fifth Third to pay 1.09 share of its common stock for each of People's outstanding shares. Shares of Peoples were down 9/16 to 63 1/2.



said it has joined with



to provide Oracle's applications to Britain's process and discrete manufacturing markets. Shares of Oracle hopped 7/16 to 43 5/16.



popped 1/8 to 98 after it said that it agreed to sell to

BP Amoco


its 30% stake in their European gas-station joint venture to win regulatory approval for its merger with



. BP Amoco will pay about $1.65 billion for the stake. Shares of BP Amoco bounced 15/16 to 107 3/16.



declined 9/16 to 34 7/16 after it said it would acquire financially strapped candy company

Favorite Brands International

in a deal valued at $475 million. Nabisco said it would add Favorite Brands, which filed for Chapter 11 bankruptcy protection in March, to its


confections division, an arm of

Nabisco Foods


Qwest Communications


stumbled 5/8 to 28 3/8 after it inked a three-year deal with



, which plummeted 6, or 6.3%, to 89, to jointly provide an Internet-based data storage system, which would supply customer data back-up and recovery, storage utility services for Internet Service Providers and disaster recovery services. The joint venture, which is set to begin in the fourth quarter, could mean $1.5 billion in revenues for Qwest.

Philips Electronics


fell 1/4 to 100 7/16 after it said it was considering a possible sale of a unit of its Component Division, but said there were no grounds for fears about job losses.

Tyson Foods


advanced 15/16, or 6.25, to 15 15/16 after it announced plans to sell it pork division to

Smithfield Foods


for 3 million shares of Smithfield. The sale of

The Pork Group

, which can produce up to 1.8 million hogs a year, is part of Tyson's effort to concentrate on its core chicken business, while Smithfield increases the number of hogs it raises compared to the number it slaughters. Merrill Lynch upgraded its intermediate-term rating on the stock to accumulate. Shares of Smithfield climbed 5/8 to 26 7/16.



hopped 2 7/16, or 6.7%, to 38 3/8 after its

Williams Gas Pipeline

division said it was planning to build a second natural gas pipeline to Vancouver Island with BC Hydro, which carries a price tag of $100 million to $120 million. According to Williams, the new pipeline, known as the

Georgia Strait Crossing Project

, would power two cogeneration facilities that are under construction as well as serve as an another residential and industrial natural gas resource.

Earnings/revenue reports and previews



plummeted 9 7/8, or 27.65, to 25 13/16 after it said that it was on track to meet analysts' third-quarter consensus estimate of 34 cents a share, but warned that it expects fourth-quarter earnings to match or slightly beat the year-ago 56 cents, greatly missing the consensus estimate of 63 cents. Earlier today,


cut the shares to neutral from attractive.



declined 5/16, or 7%, to 4 3/16 after it said it expects a 1999 net loss of between $47 million to $51 million, or $1.15 to $1.25 a share. The company said it would delay reporting results due to restructuring and job cuts.



advanced 1/2 to 25 7/8 after it said it is on target to meet estimated 10% 1999 production growth and said it expects third-quarter earnings to be 4 cents to 7 cents higher than the 18-analyst estimate of 33 cents a share.

Philadelphia Consolidated


tumbled 1 1/2, or 10.3%, to 13 after it warned investors that it would post a third-quarter post-tax loss of 11 cents to 14 cents a share. The analysts' consensus estimate expects the company to report a 21-cent profit.



mounted 5/8 to 20 7/16 after it said it expects to post third-quarter earnings of 64 cents to 66 cents a share and fiscal 1999 earnings of $1.74 to $1.79. The company's third-quarter outlook is in line with the analysts' consensus estimate of 64 cents, while its fiscal 1999 estimate is in the range of the analysts' expectation of $1.75 a share.



fell 5/16 to 8 1/8 after it reported second-quarter earnings of 21 cents a share, above the single-analyst estimate of 15 cents a share and up from a year-ago 10 cents, including a pretax gain. Topps said the distribution of


cards added about 5 cents a share in earnings in the latest quarter.

Offerings and stock actions

AMC Entertainment


advanced 13/16, or 6.6%, to 13 after it said it would reduce its workforce by 100 as a result of its effort to combine three divisional operating offices into one. The merger would save the company roughly $20 million a year. The company, which has designated its Kansas City, Mo., headquarters as its divisional operating office, said it would assume a second-quarter charge of $12 million for the reorganization changes.

Adelphia Communications


slipped 3/4 to 58 1/2 after it said that it anticipates the family of chairman and CEO John Rigas to purchase 2.5 million class B common shares of its stock. The latest purchase locks in the family's already 30% economic stake in the company. According to a spokesman, the company currently controls more than 50% of the company's voting rights.



soared 33 1/16, or 165%, to 52 after it made its trading debut.

Morgan Stanley Dean Witter

priced the 9.9 million-share IPO at $20 a share.



jumped 5 15/16, or 45.6%, to 19 in its first day of trading. The IPO priced at $13 per share.

Ottawa Financial


bounced 1/2 to 20 1/2 after it said that it has set a buyback for up to 5% of its outstanding shares.


jumped 11/16, or 5.7%, to 12 11/16 in its first day of trading. The IPO priced at $12 per share.

Tarrant Apparel


skidded 5/16 to 10 15/16 after it said the company and its CEO Gerard Guez will buy back 2 million of the company's 15.8 million shares.


climbed 3/16 to 14 3/16 after it made its trading debut. The offering was priced at $14 per share.

Troy Financial


mounted 1/8 to 10 15/16 after it set a share repurchasing plan for up to 9% of its outstanding shares.

Analyst actions

Abbott Laboratories


slid 2 1/2, or 6.2%, to 37 1/2 after

Deutsche Banc Alex. Brown

lowered its rating on the stock to buy from strong buy.

Anchor Gaming


soared 5 9/16, or 10.5%, to 58 7/16 after

Bear Stearns

upgraded it to attractive from neutral.

Consolidated Freightways


was unchanged at 9 1/2 after

Credit Suisse First Boston

cut its rating to hold from strong buy.



leaped 6 1/4, or 10.4%, to 65 7/8 after

Goldman Sachs

raised its rating on the stock to a trading buy from market outperform.

IBM declined 3 1/4 to 120 1/4 after Merrill Lynch axed the stock from its Top 10 list of technology stocks but reiterated a buy rating.

SG Cowen

rolled out coverage of motorsports companies

International Speedway


with a strong buy rating, while giving

Champion Auto Racing Teams



Speedway Motorsports


buy ratings. Shares of International Speedway climbed 1 13/16 to 52, while Champion advanced 9/16 to 26 11/16. Speedway Motorsports shares mounted 1 3/8 to 44 1/16.

Rohm & Haas


popped 2 5/16, or 6.8%, to 35 7/8 after Lehman upgraded the shares to a buy from outperform, citing its current attractive price level.

Sierra Pacific


advanced 3/16 to 21 3/4 after


raised to it to buy from neutral.



bounced 1/16 to 30 3/8 after Salomon Smith Barney initiated coverage of the stock with an outperform rating.

U.S. Interactive


slipped 1/4 to 20 3/4 after Deutsche Banc Alex. Brown started coverage of the stock with a buy rating.

Vodafone AirTouch


leaped 7 3/16 to 234 3/16 after

ABN Amro

analyst James Ross said he is anticipating subscribers numbers to hit a record 2.7 million worldwide, reported in





jumped 2, or 6%, to 35 7/8 after Deutsche Banc Alex. Brown initiated coverage with a strong buy rating.


Bell Atlantic


fell 1 3/8 to 65 3/4 after it filed with the

Federal Communications Commission

to provide long-distance service to New York. Approval would make Bell Atlantic the first regional Baby Bell to enter the $80 billion long-distance market since the breakup of AT&T 15 years ago. Shares of AT&T slid 1/4 to 43 1/2.

Separately, Excite@Home leaped 5, or 13%, to 43 7/16 on rumors that its largest shareholder, AT&T was negotiating the sale of its interest in the company to America Online,


reported. Shares of AOL declined 1/2 to 109 3/8.



mounted 9/16 to 88 3/16 after it said it tapped vice chairman Dave O'Reilly to replace the retiring Ken Derr as chairman and CEO, effective Jan. 1.

Cummins Engine


hopped 1 1/8 to 50 1/8 after it said its CEO James Henderson will retire at the end of the year. President and COO Theodore Solso, a 28-year veteran of the company, will succeed Henderson.



bounced 3/4 to 34 11/16 after it said it received

Food and Drug Administration

marketing approval for its

Hancock II

tissue heart valves, which are used to replace diseased valves.


United Auto Workers


General Motors


reached a tentative agreement on a new contract. The union also reached a separate tentative deal with

Delphi Automotive Systems


, the former GM parts unit that was spun off earlier this year. Shares of GM rose 7/8 to 62 9/16.