Stocks aren't supposed to be struggling today.
Japanese and European stocks markets put in good performances. Treasuries are cruising after the bond futures smashed through levels they haven't seen since mid-June. There's been a spate of merger activity -- atypical during earnings season. And then there's earnings season itself, which kicks off this week and which everyone says is going to be good.
So much for the market doing what it's supposed to do. At midday, the
Dow Jones Industrial Average
was down 29 to 11,165 while the
was off 6 to 1397 and
TheStreet.com Internet Sector
index was down 1 to 664. The tech-slathered
Nasdaq Composite Index
, though, was up 5 to 2798, and the small-cap
was up 1 to 459.
Decliners were topping advancers 1,610 to 1,220 on the
New York Stock Exchange
with 372 million shares changing hands. There were 88 new 52-week highs against 36 new lows. In
Nasdaq Stock Market
action, advancers were beating decliners 1,894 to 1,752 on 549 million shares. There were 183 new highs and 23 new lows.
mixed seems to give credence to an idea that's been making the rounds lately: that those good earnings that everyone expects have already been fully priced into the market. That may be true, according to
chief investment strategist
, but that doesn't mean that stocks don't have further to go.
"Not only are the second quarter's earnings exceeding expectations, a similar trend will go through for the third quarter," he said. In fact, industry analysts expect S&P 500 company earnings to gain 21.5% year-over-year in the third quarter against 11.2% in the second quarter, according to
. True, the second quarter may have been priced in, but the postearnings conference calls where companies gush about how good business looks going forward have not been.
"In addition, we have the long bond yield coming down," said Chalasani. "That should help the market go up further."
Chalasani's view meshes with that of Philip Roth, chief technical analyst at
Morgan Stanley Dean Witter
. Roth views today's weakness as the beginning of a consolidation that's "largely because of an overbought condition in the tech sector." He expects that will be worked off without too much downside, followed by a move into the cyclicals that will take the market higher still.
Yet both Chalasani and Roth worry that things could get sloppy later on this summer.
"The sheer overvaluation and the lack of money on the sidelines will cause problems for the stock market," said Chalasani, who thinks autumn may offer a better chance to put new money to work than now.
The stock market was supposed to be up today, but it's down.
was supposed to be down on the late-Friday news that a California jury ordered it to pay $4.9 billion to six people severely burned when the fuel tank of their Chevy Malibu exploded after getting rear-ended. But it's up.
A slew of analysts came out to say that the verdict probably wouldn't stick. "We do not believe that publicity related to this verdict will have any lasting impact on GM's share price for a number of reasons," wrote
analyst John Casesa in a report this morning. "First, similar verdicts against automakers have not had a prolonged impact on auto stocks in the past. Second, GM will appeal immediately and these cases usually take many years to resolve. Third, any final award is likely to be a fraction of the original damages and settled out of court."
GM was lately up 1 5/8 to 67 3/4.
Monday's Midday Watchlist
was down 4, or 7.8%, to 47 9/16 following news
will combine its
Buena Vista Internet Group
with Infoseek and offer a tracking stock for the newly formed company, to be called
. Infoseek shareholders will receive 1.15 shares of go.com for each share held. Disney, which currently owns a 42% stake in Infoseek, will have about a 72% stake in go.com. The Mouse lately was trading up 1/4 to 27 7/8. (
rumors of such plans from Disney last month.)
was up 3/16 to 55 on word Infoseek will use the company's private-label white pages as the
Mergers, acquisitions and joint ventures
, a medical-products maker, was up 1 15/16 to 62 13/16 after saying it plans to spin off its cardiovascular business, creating a new publicly traded company with sales of nearly $1 billion.
raised the stock to buy from market performer with a 12-month price target of 77.
upped it to buy from accumulate.
was up 1 11/8 to 68 3/8 on word it's buying Chicago-based market maker
for $531 million in stock, options and cash.
was up 11/16 to 138 1/16 after announcing it would buy
for $810 million in cash. Sequent was down 3/16 to 17 1/4. Rumors of the takeout emerged in the options market in
Separately, online computer retailer
was up 1 3/16, or 12.2%, to 10 15/16 after saying it will sell IBM's full line of PCs.
was up 6 9/16, or 16.1%, to 47 5/16 after Britain's
Royal & Sun Alliance Insurance Group
agreed to buy it for about $1.4 billion in cash.
Red Roof Inns
was up 4 3/16, or 22.9%, to 22 1/2 on news
, a French hotel group and owner of
, is acquiring the company for $1.1 billion, including debt.
was up 9/16 to 20 5/8 after
said it will invest $400 million in the company. Mister Softee was up 7/16 to 93 11/16.
was up 1 1/8 to 30 1/4 after agreeing to sell its personal insurance operations to
MetLife Auto & Home
, a subsidiary of
Metropolitan Life Insurance
, for about $600 million.
was down 5/16 to 64 after announcing it will spin off its contract drilling business and combine it with
. Transocean Offshore was up 1/2 to 29 1/2. Schlumberger shareholders will have a majority stake in the resulting company, called
Transocean Sedco Forex
. The deal, which should close by year's end, is expected to be modestly dilutive to Transocean Offshore's 2000 earnings but accretive after that.
World Color Press
was up 4 3/4, or 15.9%, to 34 1/2 on word
will take over the Greenwich, Conn., firm in a stock and cash deal valued at $2.7 billion, including debt. Quebecor Printing was down 1 to 22 11/16.
Earnings/revenue reports and previews
was down 3/4 to 37 7/16 after posting third-quarter earnings of 5 cents a share, beating the 11-analyst
estimate of 3 cents and moving up from the year-ago 3 cents.
was up 9/16 to 72 after reporting second-quarter earnings of 87 cents a share, a penny above the 13-analyst consensus and up from last year's 78 cents.
, a supplier of transportation equipment and services to the railroad industry in North America, was up 1/8 to 11 1/8 after reporting third-quarter earnings of 43 cents a share, in line with the six-analyst estimate and up from the year-ago 38 cents.
was up 2 3/4, or 12.6%, to 24 5/8 after
Morgan Stanley Dean Witter
upgraded the stock to outperform from neutral with a price target of 30.
was up 1 13/16 to 72 15/16 after
Warburg Dillon Read
raised it to buy from hold.
was up 3/16 to 37 3/16 after the
Food and Drug Administration
approved the company's
drug. It will be the first topical drug sold to prevent heartworm disease in dogs and cats.