Looking to Take Records Into the Weekend, Wall Street Rallies

Unfazed by a mixed jobs report, the few market players not already heading beachward are running stocks higher.
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The June

employment report

was about as balanced as the major equity indices for a large part of the morning. Come lunchtime on Wall Street, though, stocks were on pace to celebrate the long weekend with record highs.

The jobs number for June was stronger than anticipated -- the economy added 268,000 jobs, well above expectations for 220,000. But downward revisions to the May report and an uptick in the unemployment rate (to 4.3% from 4.2%, against economists' expectations for it to remain unchanged) helped sooth inflation anxiety this morning. Wages gained 0.4% against expectations of a 0.3% gain. (

TheStreet.com

looked at the 8:30 a.m. EDT release of the jobs report in an earlier

piece.)

The

Dow Jones Industrial Average

recently was leaping 55 to 11,121, near its intraday high and above its May 13 all-time closing record of 11,107.19. With many components of the blue-chip proxy claiming 1-plus-change gains,

American Express

(AXP) - Get Report

was gloating as the index's best performer, lately up 3.1%.

The

Nasdaq Composite Index

was climbing 22, or 0.8%, to 2728, also near its session high and in record territory.

Cisco

(CSCO) - Get Report

and

Sun Microsystems

(SUNW) - Get Report

were upside standouts, with the

Nasdaq 100

up 0.6%.

TheStreet.com Internet Sector

index was rising 15, or 2.4%, to 655, while recently issued Internet names continued to feel the love.

The broader

S&P 500

was up 6 to 1387 and the small-cap

Russell 2000

was up 1 to 456. But the index rallying hardest thus far was the

Dow Jones Transportation Index

, lately up 1.5%. Market watchers said the transports, which have been lagging behind the industrials, were doing some catching up.

"Hey, maybe people just want to go home happy," mused Rosanne Lang, vice president of program trading at

Cantor Fitzgerald

, adding that the jobs numbers weren't "significantly surprisingly strong enough" to change investors' views on the

Fed's

next move. "You know, they're going on vacation and maybe they're just looking for values, some of those laggers in the fields." Despite the long weekend, the trader still predicts a slight push in end-of-the-day trading.

The 30-year Treasury was up 5/32 to 89 21/32, easing its yield to exactly 6.00%. (For more on the fixed-income market, see today's early

Bond Focus.)

McCabe Offers a Skeptic's Take

Richard McCabe, chief market analyst at

Merrill Lynch

, said that despite Wednesday's Fed decision, the market still is locked in the trading range it began at the end of April.

"We've had two indices make marginal new highs but the net gain is still small," McCabe said. "The momentum has gotten very overbought again, so I think there's a limit to this rally's follow-through." He added that this week's bulls/bears sentiment, at 55.8% to 25.7% (18.5% called for a correction), also renders him skeptical of a new leg upward for stocks.

"There's too much optimism," he continued, "which is not usually an indication of a long-lasting advance. And the low put/call ratios this week haven't been encouraging. Even last week, when the market was going down, the put/call ratio didn't go up -- so I see that as unhealthy. ... But I do think the Fed will put the icing on the cake for the next few trading days."

As for bonds, McCabe said they're in a couple-of-months-long bottoming process, but that they haven't necessarily made a low yet. "That also limits stocks' upside," he said, predicting that bonds might rally in August on a stock decline or possibly on inflation-friendly data. The strategist expects stocks to drop 10% from their highs in July or August, but noted that if we saw a 10-day average of advancers-to-decliners around 2-to-1, he might change his tune.

"Judging from the cars in the parking lot, the people on the train and the few calls I've gotten this morning," McCabe said, it feels like many folks have left early -- or not come in at all -- ahead of the July Fourth three-day weekend. Fridays before long weekends, he said, traditionally treat stocks well.

But for a preholiday session, volume, as

Adam Sandler

would say, is "not too shabby." On the

New York Stock Exchange

advancers were leading decliners 1,476 to 1,298 on 363 million shares. The ups had the downs 2,003 to 1,609 on 519 million shares in

Nasdaq Stock Market

activity. New 52-week highs were outpacing new lows 93 to 29 on the Big Board and 140 to 21 on the Nasdaq.

Friday's Midday Watchlist

By John J. Edwards III
Markets Editor

Earnings estimates from First Call. Earnings reported on a diluted basis unless otherwise specified

.

Mergers, acquisitions and joint ventures

Brazilian beverage behemoth

Brahma

(BRH)

was up 2 9/16, or 22.9%, to 13 3/4 after late

yesterday agreeing to merge with Brazil's other bevvy behemoth,

Antarctica

. Brahma shareholders will receive one share of the combined company for each share held while Antarctica shareholders will receive 46.63 share in the new company for each share held.

Glenayre Technologies

(GEMS)

was up 1 7/16, or 36.2%, to 5 15/32 after yesterday inking a pact with

Lucent

(LU)

unit

AG Communication Systems

to form a venture to sell a platform supporting prepaid wireless telephone call services. Lucent was up 1 7/8 to 69 7/8.

Earnings/revenue reports and previews

Mirage Resorts

(MIR)

was down 1 5/8, or 9.7%, to 15 1/8 after late yesterday warning it expects to report second-quarter earnings of 7 cents to 10 cents a share, below the 21-analyst forecast of 24 cents. The company, which earned 18 cents in the year-ago period, cited competition in the Las Vegas market, low table-games win percentages and a slow start with a new resort in Mississippi.

Deutsche Banc Alex. Brown

dropped Mirage to market perform from buy, and

Donaldson Lufkin & Jenrette

cut it to market performance from top pick.

Down in sympathy were

Mandalay Resort Group

(MBG)

, the former Circus Circus, off 1 3/16, or 5.7%, to 19 3/4; and

Harrah's Entertainment

(HET)

, off 1 7/16, or 6.7%, to 20 1/8.

ADAC Laboratories

(ADACE)

was down 1/8 to 7 1/8 after late yesterday reporting a second-quarter loss of 39 cents a share, in a different millennium that the six-analyst prediction for a 18-cent profit. The company, which made 27 cents in the year-ago period, said it expects third-quarter revenue coming in 12% to 18% below second-quarter revenue. The company cited more stringent revenue recognition policies and increased competition in certain markets.

ConAgra

(CAG) - Get Report

was down 1/16 to 27 1/4 after late yesterday posting fourth-quarter earnings of 41 cents a share, on target with the 15-analyst forecast and above the year-ago 36 cents.

Day Runner

(DAYR)

was plunging 2 3/16, or 17.7%, to 10 1/4 after late yesterday warning of a fourth-quarter loss of 14 cents to 18 cents a share. The company blamed tightened inventories. The five-analyst estimate called for earnings of 10 cents vs. the year-ago profit of 39 cents.

Evans & Sutherland Computer

(ESCC)

was down 1 7/16, or 10.4%, to 12 1/2 after warning it expects to report a second-quarter loss in the range of 35 cents to 40 cents a share, a world away from the four-analyst consensus estimate of a profit of 11 cents a share.

Food Lion

(FDLNA)

was up 5/16 to 11 15/16 after late yesterday reporting second-quarter earnings of 14 cents a share, in line with the 14-analyst estimate and a penny ahead of the year-ago figure.

Ha-Lo Industries

(HMK)

was plummeting 3 11/16, or 37.3%, to 6 3/16 after late yesterday warning of a second-quarter earnings shortfall.

Credit Suisse First Boston

and

Barrington Research Associates

both downgraded the stock to hold from buy.

Jostens

(JOS)

was down 2 1/16, or 9.4%, to 19 15/16 after warning its 1999 earnings would be $1.55 to $1.65 a share, below the two-analyst consensus estimate of $1.67.

Rogue Wave Software

(RWAV)

was down 2, or 21.6%, to 7 5/16 after late yesterday warning that it expects to report third-quarter earnings of 4 cents a share, matching the year-ago figure. The four-analyst outlook called for 13 cents. Rogue Wave blamed poor European sales.

SG Cowen

knocked the stock to neutral from strong buy.

U.S.A. Floral Products

(ROSI)

was down 7/8, or 11.7%, to 6 9/16 after late yesterday warning it sees second-quarter earnings of 10 cents to 15 cents a share, including a gain from antidumping duties. The six-analyst forecast called for operating earnings of 26 cents vs. the year-ago 34 cents. The company cited global pricing pressure for the expected shortfall.

Walgreen

(WAG)

was down 1/16 to 28 15/16 despite reporting a June same-store sales increase of 13%.

Offerings and stock actions

Sun Community Bancorp

(SCBL)

was up 3/8 to 16 3/8 after

Everen Securities

priced its 1.65 million-share IPO midrange at $16 a share.

Analyst actions

Caribiner

(CWC)

was down 9/16, or 9.5%, to 5 3/8 after

Merrill Lynch

slapped it to near-term neutral from accumulate.

Crane

(CR) - Get Report

was down 2 7/16, or 7.7%, to 29 1/8 after DLJ cut it to market performance from buy.

Intermet

(INMT)

was down 1 1/2, or 10.2%, to 13 3/8 after DLJ lowered it to market performance from buy.

Jefferson Smurfit

(JS)

was up 13/16 to 25 1/16 after

Morgan Stanley Dean Witter

initiated coverage at outperform.

Nortek

(NTK)

was up 5/16 to 31 after

PaineWebber

upped it to buy from attractive.

PMI Group

(PMA)

was down 11/16 to 67 1/4 after PaineWebber trimmed it to attractive from buy.

Miscellany

GoTo.com

(GOTO)

was up 11 1/8, or 30.5%, to 47 5/8 after late yesterday announcing a deal to provide search services to

America Online's

(AOL)

Netscape

unit. AOL was up 1 3/4 to 113 7/8.

RealNetworks

(RNWK) - Get Report

was up 8 7/16, or 10.8%, to 86 3/8, benefiting from yesterday's news that the company will supply software to

Microsoft's

(MSFT) - Get Report

WebTV Networks

unit. Mister Softee was up 3/4 to 91 7/8.