Market Drags Through Mixed Session After Early Pop

The big buying hasn't stuck, but neither has the big selling. Market players remain divided on how to proceed.
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Stocks look much like a non-exercising pack-a-day smoker attempting to run a marathon.

The runner/smoker's looking good early on in the race --

very early

-- strong, confident. But it's not long after the starting gun is fired that the runner/smoker starts confronting a bit of trouble, the breathing becomes a little more labored, there's a little bit of burn in the lungs.

Not long after that, the runner/smoker can be seen doubled over and kneeling on the side of the race course, wheezing violently, and threatening to dry-heave.

And that's about where stocks are right now. Out of energy. Out of gas. An early-session pop faded and early this afternoon major market averages were in the red. Meanwhile, the 30-year Treasury bond was flying.

The initial pop the stock market enjoyed came compliments of the

Consumer Price Index

, which came in right in line with expectations. The

Labor Department

said the overall CPI rose 0.3% in July, while the core CPI, which excludes food and energy prices, rose 0.2%, both figures exactly matching the forecast of economists polled by

Reuters

.

The CPI data helped soothe inflation fears and jitters that the

Fed

will hike interest rates more than once as part of its effort to keep inflation in check. The CPI release -- as has been the case with other big economic reports of late -- has been anxiously anticipated as market players fret about the direction of interest rates. Many analysts expect

Greenspan

and his pals to raise short-term rates by 25 basis points when they meet next Tuesday.

The

Nasdaq Composite Index

was down 4 to 2642, after trading as high as 2680.00.

The

Nasdaq 100

was down 0.3% to 2305, off its intraday peak of 2346.55. Among other tech barometers, the

Morgan Stanley High-Tech 35

was off 1%, while the

Philadelphia Stock Exchange Computer Box Maker Index

was down 2.1%. The

Philadelphia Stock Exchange Semiconductor Index

was off 1.9%.

Hewlett-Packard

(HWP)

was getting thumped after rallying late last week and yesterday ahead of its earnings release, which hit after the close yesterday. It was the biggest drag on the

Dow Jones Industrial Average

.

As for the blue-chip average, it was down 19 to 11,027, after trading as high as 11,111.69 earlier.

Elsewhere, the

S&P 500

was up a fraction to 1331. The

Russell 2000

was off less than a point to 433.

TheStreet.com Internet Sector

index was up 7, or 1.3%, to 548. The DOT has traded as high as 558.10.

Amazon.com

(AMZN) - Get Report

was steaming ahead, pacing the DOT on the upside, up 5.4%.

"We've had a pretty good rally off the lows," said Louis Todd, head of equities trading at

J.C. Bradford

, pointing out the Dow is at the top end of its recent range of roughly 10,600 to about 11,000. Todd said the blue-chip average was running into some resistance up there at the high end of the range. He thinks the market will back and fill until September.

Todd said a 25-basis-point rate hike is built into the market right now and he's not thinking the Fed will move beyond that.

Thanks in part to the surging Treasury market, financials rallied. The

Philadelphia Stock Exchange/KBW Bank Index

was up 1.7%, while the

American Stock Exchange Broker/Dealer Index

was up 2%.

In the Treasury market, the 30-year bond was lately up 27/32 to 101 9/32, yielding 6.03%. (For more on the fixed-income market, see today's early

Bond Focus.) Shortly before the CPI release, the long bond was up 1/32 to 100 15/32, yielding 6.09%.

Michael P. Ryan, senior fixed-income strategist at

PaineWebber

, said he was a "a little surprised" that the Treasury market was making the move it was on the in-line CPI data. He did point out however, how oversold the Treasury market had become lately, battered by some strong economic data, and the recent glut of supply.

As for next week's FOMC meeting, Ryan's expecting the FOMC to hike 25 basis points and maintain its neutral stance.

Ryan said if the FOMC raises 25 basis points and it comes out with a neutral policy stance, he's not expecting the Treasury market to do a "whole hell of a lot" going forward. "Then we're back to looking at the data," he said.

The data he refers to, of course, are economic data. Market participants are going to be closely scrutinizing and reacting to each release in an effort to figure out what the Fed is going to do going forward -- if anything.

On the

New York Stock Exchange

, advancers were outpacing decliners 1,507 to 1,344 on 410 million shares. On the

Nasdaq Stock Market

, losers were beating winners 1,887 to 1,689 on 532 million shares.

On the NYSE, 61 issues had set new 52-week lows while 39 had touched new highs. On the Nasdaq, 62 issues had set new 52-week highs while new lows totaled 55.

Meanwhile, among other indices, the

Dow Jones Utility Average

was down 0.4%, the

Dow Jones Transportation Average

was down 1% and the

American Stock Exchange Composite Index

was down 0.1%.

On the Big Board,

America Online

(AOL)

was most active with 8.7 million shares changing hands. It was up 9/16 to 95 3/8.

On the Nasdaq,

Dell

(DELL) - Get Report

was most active with 19.8 million shares changing hands. It was down 5/16 to 41 1/8. Dell is expected to report earnings after the close.

Tuesday's Midday Watchlist

By Tara Murphy
Staff Reporter

E*Trade

(EGRP)

was up 1 5/8, or 6%, to 28 9/16 after it revealed plans to provided online trading after the close of the New York markets through

Instinet

, an electronic brokerage service. E*Trade says the postclose trading service will be available by September, allowing individual investors to trade from 4:00 p.m. to 6 p.m.

JB Oxford Holdings

(JBOH)

beat E*Trade to the punch when it announced last Friday that it would offer extended trading hours via Instinet.

Datek Online

also said plans are in the works for to offer postclose trades that would be processed through its own electronic system.

Mergers, acquisitions and joint ventures

algroup

CEO Sergio Marchionne told

Reuters

the pending

APA

alliance will not interfere in

Alcoa's

(AA) - Get Report

hostile takeover battle for

Reynolds Metals

(RLM) - Get Report

. Canada's

Alcan

(AL) - Get Report

is acquiring algroup and French aluminum manufacturer

Pechiney

(PY) - Get Report

to form APA. Marchionne said the parties are focusing on their own pending deal. Reynolds was down 1/4 to 68 11/16 and Alcoa was unchanged at 66 7/8. Alcan was off 1/8 to 34 1/2, while Pechiney was down 3/16 to 30 1/8.

AlliedSignal

(ALD)

was up 1/4 to 63 1/4 after it said the

European Commission

is questioning the effect of its potential acquisition of Honeywell on a "limited number of aerospace products." AlliedSignal spokesman Thomas Craine said that it does not expect complications in completing the merger.

Excite@Home

(ATHM) - Get Report

was up 3/8 to 38 1/2 after it invested $15 million in

Tickets.com

and will invest an additional $40 million, subject to regulatory approval.

Global Crossing

(GBLX)

was down 3/8 to 31 5/8 on news that it has chosen French telecommunications company

Alcatel

(ALA)

to build a South American part of Global's fiber-optic network in a $700 million deal. Shares of Alcatel were up 1/6 to 30 3/16.

World Access

(WAXS)

, a telecommunications company, was up 3/8 to 14 1/8 after it announced plans to buy privately owned

FaciliCom International

.

Earnings/revenue reports and previews

(

Earnings estimates are from First Call

.)

AnnTaylor

(ANN)

was off 1 5/8 to 36 despite reporting second-quarter earnings of 42 cents a share, ahead of the 12-analyst estimate of 41 cents and up from the year-ago 27 cents.

Applied Materials

(AMAT) - Get Report

was off 7/8 to 69 5/8 ahead of its postclose earnings report. The 29-analyst estimate calls for the company to earn 53 cents in the third quarter.

Cost Plus

(CPWM)

was flat at 42 3/4 after it reported second-quarter earnings of 8 cents a share, a penny ahead of the 11-analyst estimate and up from the year-ago 1 cent.

Deere

(DE) - Get Report

was off 1 /716 after it reported third-quarter earnings of 29 cents a share, ahead of the 20-analyst estimate of 25 cents, but down from the year-ago $1.19.

Dell was down 5/16 to 41 1/8 ahead of its postclose earnings report. The 30-analyst estimate calls for earnings of 17 cents a share.

Eaton Vance

(EV) - Get Report

was up 1/4 to 35 3/16 after it posted third-quarter earnings of 70 cents a share, in line with the single-analyst estimate and up from the year-ago 36 cents.

Hewlett-Packard plunged 6 1/8, or 5.5%, to 104 3/16 despite yesterday's solid earnings report of 85 cents a share, ahead of the 21-analyst estimate of 80 cents and up from the year-ago 58 cents. This morning,

Lehman Brothers

raised its fiscal 2000 estimates for H-P to $4 a share from $3.95.

Limited

(LTD)

was flat at 44 13/16 after it posted second-quarter operating earnings of 26 cents a share, in line with the 19-analyst estimate and up from the year-ago 13 cents.

Tiffany

(TIF) - Get Report

soared 3 1/2, or 7.5%, to 50 3/16 after it reported strong second-quarter earnings of 31 cents a share, ahead of the 15-analyst estimate of 24 cents and up from the year-ago 19 cents.

Offerings and stock actions

Mass email service provider

Exactis.com

said it has filed with the

Securities and Exchange Commission

for an IPO. The company did not provide a possible price range or specific size for the potential offering in its preliminary prospectus, stating that the $57.5 million worth of common stock noted was a mere gauge to tabulate the SEC registration fee. Exactis has applied to trade on Nasdaq under the symbol XACT.

Thomas Weisel Partners

,

Dain Rauscher

and

Wit Capital

are underwriting the deal.

Silverstream

(SSSW:Nasdaq) had not made its trading debut by midday.

Morgan Stanley Dean Witter

priced the 3 million-share IPO after yesterday's close above-range at $16 a share.

Analyst actions

Carpenter Technology

(CRS) - Get Report

was down 1/16 to 25 1/2 after

Goldman Sachs

downgraded the stock to a market perform from market outperform.

Deutsche Banc Alex. Brown

initiated coverage of

Insight Communications

(ICCI)

with a buy rating. Insight was off 5/16 to 27 15/16.

CIBC World Markets

slashed

Kansas City Southern Industries

(KSU) - Get Report

to hold from strong buy. Shares of Kansas City Southern fell 3 1/4 to 49 3/4 on the news.

Safeway

(SWY)

was up 1/2 to 49 3/8 after Lehman Brothers upped 1999 earnings estimates to $1.90 a share from $1.88.

Tricon Global Restaurants

(YUM) - Get Report

was off 1 to 39 3/16 after

Credit Suisse First Boston

initiated coverage with a hold rating.

Donaldson Lufkin & Jenrette

Web analyst Timothy Weller stamped

Voyager.net

(VOYN)

with an initial buy rating. Despite Weller's positive outlook, Voyager shares were down 3/4 to 10 3/4.

Miscellany

America Online was up 9/16 to 95 3/8 after it said worldwide membership of its AOL service has exceeded 18 million.