SAN FRANCISCO -- Tech stocks gave up the ghost while transports rose from the dead today in another session of low volume and volatility. All major averages fell from
Friday's record-setting grace as weakness in big-cap tech names overshadowed earnings-driven strength in airlines and select financials.
Having come the farthest, the fastest, the
Nasdaq Composite Index
suffered the biggest relative decline among the "big three" major proxies, falling 34.19, or 1.2%, to 2830.29.
There was modest weakness in most over-the-counter tech bellwethers, notably
, which tumbled 12.4% after posting second-quarter earnings of 31 cents a share, in line with the 20-analyst consensus but down from 46 cents a year ago. The
dipped 1.1% ahead of its earnings. After the close, the software giant posted fiscal fourth-quarter earnings of 40 cents a share vs. the 27-analyst consensus of 36 cents and year-ago results of 25 cents. Separately,
leapt 17.8% on news Microsoft is taking a 9% stake in the company.
New York Stock Exchange
trading, bellwethers such as
also stumbled from recent heights. The
Morgan Stanley High-Tech 35
fell 2.1%. After the close, IBM posted second-quarter earnings of 91 cents a share vs. the 21-analyst consensus of 88 cents and 78 cents a year ago (see below).
Meanwhile, Internet stocks continue to fade.
TheStreet.com Internet Sector
index slid 21.97, or 3.4%, to 616.76 and is now down 22% from its April 12 high of 790.44.
Today's decline was spearheaded by
, down 7.5%, as online brokers overall tumbled after a critical article in
. Outside the DOT,
each fell at least 4.8%.
Among blue-chips, the
Dow Jones Industrial Average
fell 22.16, or 0.2%, to 11,187.68 while the
stumbled 11.13, or 0.8%, to 1407.65.
Dow decliners were led by
Johnson & Johnson
Aiding the Dow and S&P was strength in
, up 2% after naming
executive Carly Fiorina as its president and CEO.
Fiorina "handled herself well on the conference call with analysts by giving a nod to H-P's history while implying she can bring new ideas and aggressiveness,"
analyst Steven Milunovich wrote in a midday email. "The stock is getting rich given that H-P is just now getting back into double-digit revenue growth. However, we think our thesis of enterprise hardware vendors as Internet infrastructure plays should not to be underestimated."
Additionally, better-than-expected earnings from
Bank of America
had some carryover impact on financials such as
. However, the earning providers traded mixed and the
Philadelphia Stock Exchange/KBW Bank Index
In a story with a happier ending for a group that's been living anything but a fairy tale of late, the
Dow Jones Transportation Average
rose 61.97, or 1.8%, to 3463.84. Better-than-expected earnings from carriers
Alaska Air Group
Delta Air Lines
aided the average, as did
, which rose 4.6% on reports it is in talks to sell its international container-shipping business. The
American Stock Exchange Airline Index
"The markets were pretty quiet," said one West Coast trader. "It's the usual summertime slowdown. I see some paring down by institutional accounts but don't necessarily see any major selling. It's not super-busy."
The trader, who requested anonymity, referred to himself as a "reserved bull" but observed "we need something significant to knock us. Otherwise, we'll keep chugging along."
In NYSE trading, 645 million shares were exchanged -- the third-slowest session of the year -- while declining stocks led advancers 1,733 to 1,175. In
Nasdaq Stock Market
action 950.2 million shares traded while losers led 2,220 to 1,782. New 52-week highs bested new lows 86 to 33 on the Big Board and by 190 to 41 in over-the-counter trading.
One More Time
With most market players feeling sanguine by the averages' ability to avoid serious declines, John Roque, stock market strategist at
Arnhold & S. Bleichroeder
, continues to fret about action in the bond market.
"I still think the bond market is going to have another leg down," Roque said. "I'm no economist but I can't see why everyone is getting so excited
about last week's
with oil moving higher. I don't see oil getting weaker and if it doesn't, I think comparisons are going to be harder for the next month."
The strategist observed (as did others) the bond market did not exactly rejoice at last week's apparently favorable economic data, perhaps reflecting the fact oil prices have risen in July indicating August PPI will rise. (Today, crude oil futures dipped 0.8% to $20.45 a barrel.)
Additionally, I've got to believe with business activity so strong, demand for money is great," he said. "That's why I expect bonds to get hit one more time."
Today, the price of the 30-year Treasury bond fell 1/32 to 90 31/32, its yield at 5.90%.
"I am fully invested but I know my risk is in the bond market," Roque continued. "Bull market runs don't stop until bonds get bearish so I have to pay attention, be more vigilant."
As for today's action, the strategist said the dollar's weakening vs. the yen and euro was most noteworthy in a largely quiet session for stocks. The dollar fell 0.48 yen to 118.26 (a five-week low) and by 0.0098 euro to 0.971.
"I don't now how this translates in terms of the market, but it says 'pay attention,'" he said. "When things look this good is when people start to make mistakes
and get careless."
Among other indices, the
fell 3.89, or 0.8%, to 461.37; the
Dow Jones Utility Average
rose 1.17, or 0.4%, to 321.41; and the
American Stock Exchange Composite Index
lost 0.44, or 0.1% to 817.66.
Elsewhere in North American equities, the
Toronto Stock Exchange 300
slipped 9.64 to 7275.94 while the
Mexican Stock Exchange IPC Index
rose 25.88 to 5912.29.
Hardware Woes Past, IBM Kicks Earnings Butt
It took almost all of 1998, but IBM seems to have put its significant hardware issues behind it.
Huge Cobalt reported second-quarter net income Monday of $1.7 billion, or 91 cents a share, easily beating the
consensus estimate of 88 cents. In the year-earlier period, the company earned $1.5 billion, or 75 cents a share. Revenue was particularly strong, up 16%, to $22 billion from $18.82 billion.
The reason for the somewhat routine earnings surprise can be attributed to easy year-over-year comparisons.
early 1998 decision to flood the marketplace with cheap PC's forced IBM to play tit-for-tat. The game cost IBM's PC division $1 billion over the course of last year. In last year's second quarter, IBM reported flat year-over-year revenue and a 13% decline in hardware sales.
This year IBM improved strongly in its hardware division, especially in its PC and RS6000 divisions, and hardware sales shot up 21% on a year-over-year basis. IBM's stock, which was down 1 5/8 Monday to 134 5/8, is up 48% year-to-date.
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.
As noted above, recently sluggish airline names flew high, boosted by solid earnings reports.
Alaska Air climbed 1 3/8 to 43 1/4 ahead of a 3-for-2 stock split tonight and after this morning recording second-quarter earnings of $1.59 a share, topping both the 11-analyst forecast of $1.35 and the year-ago $1.51.
Continental climbed 2 7/8, or 7.5%, to 41 7/16 after reporting second-quarter earnings of $1.80 a share, beating the 12-analyst estimate of $1.73 but falling behind the year-earlier $2.11.
Delta climbed 3 1/8, or 5.3%, to 62 3/16 after posting fourth-quarter earnings of $2.40 a share, 9 cents ahead of the 11-analyst estimate and above the year-ago $2.26.
Even the prewarned
got to join in the fun, rising 1 1/16 to 41 1/4 despite a downgrade to market perform from buy by
Donaldson Lufkin & Jenrette
. Last week, the company warned it would miss second-half earnings estimates.
Mergers, acquisitions and joint ventures
slouched 3 to 136 3/4 on news it's acquiring privately held
for $280 million in stock.
CSX grew 2 1/4 to 51 3/16 following a report in
The Wall Street Journal
saying the company is in talks to sell its international container-shipping business to Danish
for about $800 million.
picked up 1/2 to 30 5/8 after
said it's buying the company via its subsidiary
for $764 million. Vodafone AirTouch lowered 13/16 to 213 7/16.
gave up 3/4 to 68 5/16 on word it's considering exercising an option to complete a takeover of
, the Swedish carmaker, by acquiring a second half of the company from Sweden's
rallied 5 3/4, or 14.3%, to an all-time high of 46 3/16 after striking a deal to provide computer-generated stamps and postage over
Web site. Office Depot lost 13/16 to 18.
kicked up 1/4 to 13 7/16 on word it will sell its trendy, clunky shoes on America Online's new shopping site Shop AOL.
Ticketmaster Online-CitySearch expanded 6 1/16, or 17.8%, to 40 1/16 after agreeing to buy the entertainment portion of Microsoft's MSN Sidewalk online city guide in a stock deal valued at $240 million.
rocketed up 6 13/16, or 389.2%, to an annual high of 8 5/8 after saying Microsoft chose the company's Netgain sales product for its Embedded Systems group.
U S West
declined 1/2 to 59 3/4 after accepting
buyout offer. Also,
tacked on 1/4 to 46 3/8 after saying it will proceed with its $12.9 billion purchase of
, which fell 2 3/16 to 56 15/16
Earnings/revenue reports and previews
tanked 7 5/8, or 37.2%, to 12 7/8 after saying it sees second-quarter earnings of 23 cents to 28 cents a share due in part to disappointing results from its light commercial service business and weather-related discounts in its residential business. The 10-analyst prediction called for 50 cents vs. the year-earlier 44 cents.
Total Renal Care
collapsed 4 1/4, or 33%, to 8 5/8 after warning late last night that it expects to post second-quarter earnings of 20 cents to 22 cents a share, below the 10-analyst view of 35 cents. The company, which earned 31 cents in the year-ago period, cited higher operating expenses and lower operating revenue per treatment for services billed out of the company's Tacoma office. The company also said its chairman and CEO, Victor M.G. Chaltiel, resigned.
shaved off 9/16 to 44 3/16 after reporting second-quarter earnings of 8 cents a share, better than the 15-analyst estimate of 5 cents and moving up from the year-ago loss of 40 cents. Viacom also amended a previously filed registration statement with the
Securities and Exchange Commission
for a proposed 31 million-share IPO for
, representing approximately 17.7% of its shares. Viacom estimates the IPO price will be $16 to $18 a share.
In other earnings news:
tumbled 1 1/16, or 6.3%, to 15 7/8 after
downgraded it to hold from buy based on valuation.
shot up 4 11/16, or 15.6%, to 34 7/8 after
started coverage with a buy and a price target of 55.
also started coverage with a buy. Merrill Lynch initiated coverage of the stock with a near-term accumulate and a long-term buy.
sloughed off 5/16 to 67 13/16 even after Merrill raised it to long-term buy from accumulate.
excelled 2 9/16, or 8.7%, to an annual high of 32 1/34 after
upgraded the stock to strong buy from accumulate.
advanced 5/16 to 55 13/16 after the
reported it will start a new Internet company in partnership with Tim Robertson, the son of evangelist
. The site aims to give parents a way to screen out pornographic material, hate sites and other information unsuitable for children.
gave up 1/8 to 53 15/16 after the
said the company's assessing several initiatives to boost its stock price, including a possible divestiture of its auto-parts unit,
Visteon Automotive Systems
Hewlett-Packard flourished 2 1/4 to an all-time high of 116 1/4 after naming Lucent executive Carly Fiorina its new president and CEO. Lucent lowered 1 39/64 to 76 53/64.
grew 8 1/16, or 28.9%, to an all-time high of 35 15/16 after
is using a viewfinder made by Kopin in its newest JVC video camera.