Having suffered through a storm last week, Wall Street enjoyed a bit of calm today. Following some morning volatility, major proxies advanced cautiously and then closed with a surge in a fairly subdued session.
The absence of dramatic developments at either extreme of the news spectrum kept morning losses in check and then the market's bullish trend reestablished itself once again. A stock-split announcement from
proved enough of an impetus to reestablish tech stock leadership, overshadowing disappointing developments at
Other than citing enthusiasm about Microsoft's split, traders were loathe to explain the late-day action.
"I was watching the market tight and I don't know the reasoning behind it other than the fact the market got its head handed to it last week," said Jay Meagrow, vice president of trading at
in Cleveland. "We were directionless all morning, really all over the place. There's nothing to explain
the close, but it felt like it was some kind of program. It was all back-end loaded and there were a lot of imbalances late in the day."
Thanks largely to Mister Softee's 3.6% rise, the
Nasdaq Composite Index
was the best performer among major indices. The tech-leaning index rose 30.43, or 1.3%, to 2369.31, just fractionally off its best level of the session.
In addition to Microsoft,
showed the most muscle among traditional tech bellwethers, while
rambled higher toward the close. The
gained 1.7% but the
Philadelphia Stock Exchange Semiconductor Index
TheStreet.com Internet Sector
index rose 6.58, or 1.3%, to 496.59, as strength in
offset weakness in components such as
. Outside the index,
'I was watching the market tight and I don't know the reasoning behind
the late recovery other than the fact the market got its head handed to it last week,' said McDonald's Jay Meagrow
Brian Belski, chief investment strategist at
George K. Baum
in Kansas City, Mo., said Microsoft's "leadership" is significant because the software giant is so heavily owned by institutions its performance is something of a proxy for the market overall.
breaking below 180 and still volatile, the market is looking for someone to step to the forefront, whether that's
or Microsoft, it bodes well for an eventual turn to the upside," Belski said. "Microsoft continues to be one to keep an eye on. Not only because it's a market leader but it's action historically has been one that helps pull the market out of its doldrums."
Dow Jones Industrial Average
closed up 82.65, or 0.9%, to 9203.32 after falling as low as 9063.25 intraday.
For much of the day, IBM was one of the big laggards in the Dow. But Big Blue closed up 0.7% at 180 15/16, well above its nadir of 173 1/2. Merck fell 1.4% to 137 following disappointing test results for a new antidepressant drug, but climbed from its intraday low of 134 15/16.
was the best Dow performer, rising 5.4% after posting fourth-quarter earnings that narrowly exceeded expectations and predicting better things ahead in 1999. Other Dow leaders included GE and
, which posted fourth-quarter earnings today in-line with expectations. Financial stocks overall benefited from a holiday in Brazil's financial markets, although the real was quoted down a further 3.9% to $1.79 in currency trading.
rose 8.79, or 0.7%, to 1233.98, overcoming an earlier decline to as low as 1219.46. The
closed off its low of 420.38 but still down 0.33, or 0.1%, to 422.11.
Small-Cap Stability Seen Encouraging
Ironically, Belski is encouraged by the small-caps' recent performance. "We saw a broadening out of the rally in the fourth quarter with small-caps at least keeping pace, when in 1998 small stocks didn't always follow the market," he said. "So far in 1999, small-caps have been less volatile, which is a plus long-term. You don't need those stocks to be on fire to the upside and want to see some stability, especially after a long drought. But the megacaps are whipping around and doing some strange things, like trading down on good-to-decent earnings news."
Some of the volatility in big-caps is part and parcel of investors' "indecision regarding the market," which leads to "whippy, consolidation-type trading," the strategist surmised. That is further manifested in that "there's a lot of speculation involved in the selling vs. hard-core fundamentals," he said. For instance, investors are looking further out in terms of earnings projections and trying to guess when the next recession or rebirth of inflation will arrive.
Despite the trend and a narrowing of the market other strategists view with consternation, Belski believes the market remains healthy. Regarding market internals, he said up and down volume is "relatively even" even though declining issues are leading in absolute terms.
New York Stock Exchange
trading today, 727.4 million shares traded while declining stock led advancers 1,519 to 1,440. In
Nasdaq Stock Market
activity, losers led 2,101 to 1,990 while 877.9 million shares traded, snapping at 12 a record string of sessions with more than a billion shares exchanged. New 52-week lows led new highs 49 to 37 on the Big Board but new highs led 87 to 25 in over-the-counter trading.
Among other indices, the
Dow Jones Transportation Average
rose 49.17, or 1.6%, to 3112.97; the
Dow Jones Utility Average
fell 0.12, or 0.04%, to 308.61; and the
American Stock Exchange Composite Index
gained 1.32, or 0.2%, to 706.01.
Today's gains put the Dow and S&P 500 back into positive territory for the year and extended the Nasdaq's 1999 gain to 8%. Belski and Meagrow agreed the old saw "so goes January, so goes the year" could be in the back of market players' minds this week.
"It's just another statistic; You could also say, 'As go the first five days, so goes the year,'" Belski said. "But as we get later in the week, you could see the market trade higher" to ensure the sentiment indicator remains positive.
The price of the 30-year Treasury bond fell 16/32 to 102 2/32, its yield rising to 5.11%.
Elsewhere in North American equities, the
Toronto Stock Exchange 300
rose 24.59 to 6618.50 and the
Mexican Stock Exchange IPC Index
added 10.77 to 3707.80.
Monday'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.
Microsoft scored 5 5/8 to 161 7/8 after its board approved a 2-for-1 stock split, effective March 12. Meanwhile, Microsoft and
of Britain agreed to jointly develop broadband services for delivery to customers in the U.K. and Ireland. Microsoft will make a $500 million investment in NTL to accelerate deployment of high-speed voice, video and data services over its national fiber-optic telecommunications networks and to continue the company's introduction of advanced Internet, telephone and cable television services over its broadband facilities. NTL shot up 12, or 17.7%, to an all-time high of 79 3/4.
Shares of three leading Y2K solutions companies --
-- fell sharply after a BT Alex. Brown analyst downgraded all three stocks. Edward Caso, the Alex. Brown analyst, downgraded Keane to market performer from buy; IMRglobal to market performer from strong buy; and Computer Horizons to buy from strong buy.
Keane closed down 2 1/2, or 6.8%, to 33 15/16. IMRglobal plummeted 4 3/8, or 15.1%, to 24 1/16, on a volume of 1.24 million shares, compared with a three-month average of 376,356. And Computer Horizons edged down 13/16 to 19, well off its Feb. 27 all-time high of 52 3/16. Caso was unavailable for comment.
Spencer E. Ante
Mergers, acquisitions and joint ventures
Broadcast.com lifted 17 1/16, or 12.7%, to 151 7/8 after joining up with Japan's
to launch a Japanese language-based Internet audio and video programming concern.
added 11/16 to 46 7/8 after it and
announced a strategic marketing alliance. Under the agreement, Compaq will feature an eBay icon exclusively on its
Prosignia Desktop 310
PCs. In turn, eBay, which rose 20 1/2, or 10.4%, to 217 1/2, will promote Compaq's Prosignia computers at more than 90 trade-show events throughout the year.
General Electric brought in 2 5/8 to 100 1/2 after its
said it will buy the leasing business of troubled
for an estimated $7 billion.
Britain's auto-parts maker
swelled 9 1/4, or 25.5%, to 45 1/2 after refusing a buyout offer from
. FMO slid 1 7/16 to 61 13/16.
Yahoo! surged 26 1/16, or 9.1%, to 312 after entering a national media and marketing promotional program intended to span national network and cable television properties and the Internet with
. News Corp. rose 5/16 to 26 3/4.
Earnings/revenue reports and previews
sliced off 1 9/16, or 12.9%, to 10 9/16 after warning it expects 1998 earnings to come in at 95 cents a share, below the single-analyst forecast for $1.15. The company blamed unseasonably warm weather and reduced footwear reorders.
tumbled 2, or 21.1%, to 7 1/2 after saying it expects to post a fourth-quarter loss of 9 cents to 14 cents a share vs. the year-ago profit of 35 cents on lower sales. The single-analyst outlook called for earnings of 7 cents.
Wind River Systems
jumped 2 7/8, or 9%, to 35 after last week forecasting fourth-quarter earnings will meet expectations. The five-analyst outlook calls for 29 cents a share vs. the year-ago 22 cents.
In other earnings news:
Offerings and stock actions
climbed 4 7/8, or 9.7%, to 55 5/8 after announcing a 2-for-1 split. The stock has climbed more than 300% in the past year, closing at 50 on Friday. It reached a closing high of 59 on Jan. 12. The split is intended to increase the shareholder base and provide more liquidity for the stock, according to Chairman and Chief Executive Joe Ricketts. He said the rise in the stock reflects the strength of the company's financial performance and business model. The stock will begin trading at the post-split value on Feb. 23 when Ameritrade said it will have approximately 58 million shares outstanding.
Elsewhere in the sector, online investing company
expanded 1 1/4 to 79 3/4 after saying it set a single-day record of $108.6 million in new customer deposits last week.
dropped 1 7/8 to 71 even after
LVMH Moet-Hennessy Louis Vuitton
upped its stake in the company to 34.4%. LVMHY fell 1/2 to 46 3/4.
advanced 3 7/16, or 13.8%, to 28 1/2 after
Adams Harkness & Hill
upgraded it to strong buy from accumulate.
won 3 7/8, or 7.4%, to an all-time high of 56 1/8 after
ING Baring Furman Selz
reiterated a strong buy and increased its 12- to 18-month price target to a range of 63 to 75 from 50 to 60.
plunged 1/2, or 28.6%, to an annual low of 1 1/4 after
slashed it to market outperform from trading buy.
excelled 4 13/16, or 8%, to 64 13/16 after
Morgan Stanley Dean Witter
upgraded it to strong buy from outperform.
took in 15/16, or 5.4%, to 18 7/16 after the firm upped it to outperform from neutral.
vaulted 2 3/16, or 10.3%, to 23 3/8 after
raised the stock to strong buy from hold.
powered up 3 3/8, or 6.8%, to 53 27/32 after Goldman Sachs started coverage with a market perform.
sloughed off 1 7/16 to 58 11/16 after
initiated coverage with a market perform.
gave up 1 7/16, or 5.2%, to 26 after
Deutsche Bank Securities
reduced its 1999 earnings estimate for the company to $1.05 a share from $1.15. The 18-analyst First Call consensus calls for $1.65.
Amazon.com lowered 10 5/8, or 8.6%, to 112 3/8 after
The Wall Street Journal
said that price wars could trim margins for some electronic retailers.
shot up 1 7/8, or 21%, to 10 13/16 after a mention in
as one of investor Archie MacAllaster's top stock picks. Also,
rose 1 3/16, or 18.3%, to 7 11/16 and
rose 3/4, or 14%, to 6 1/8 on positive comments from the investor.
spiked up 2, or 13.5%, to an all-time high of 17 after saying preliminary results from a Phase II trial of its T-20 showed the drug was well tolerated at all doses and cut the viral load in HIV patients.
took a closer look at the news in a
story this morning.