September and October have not been particularly kind to the stock market the last couple of years, and since midsummer investors have worried that this year would be no different.
It has not helped that stocks have followed a similar contour to 1997's and 1998's. The run-up in the winter, the spring consolidation, the jump to new highs in July, the drop down from there, the fake-out rally. Until Friday, it looked like the market was following the script perfectly. This year's demon would not be a crisis from overseas as in the past, but homegrown. The
would again tighten on Oct. 5, damaging the stock and bond markets -- perhaps accelerating capital flows away from the U.S. -- and driving major indices below the lows they hit in August.
But then came the weak
Friday, and everything looked different. While one report doth not an on-hold Fed make, even the more hawkish economists on the Street agree the new jobs data upped the odds that the central bank will stand pat. And while stocks are not making much headway today, it says something that, despite a bit of a pullback in the bonds, they are holding onto their gains they made on Friday's huge rally.
"Treasuries are a little heavy, and that's dampened the carryover enthusiasm from Friday," said Bill Schneider, head of U.S. equity block trading at
Warburg Dillon Read
But while the dangers of the markets getting upset this fall may have been diminished, it seems likely that volatility will continue to rule the roost, said Charles Crane, chief market strategist at
Key Asset Management
. "Watching the latest economic statistic crawl across the tape has become a great pastime," he said. "The market will remain very sensitive to indicators of business activity for the next several weeks. I suspect we continue this recent bout of volatility, and may even see it become more pronounced."
"The market is going to get too negative and too positive," Schneider agreed. "The pendulum for me is still swinging to the positive side of that equation. I think the market could do all right here."
Dow Jones Industrial Average
was lately up 3 to 11,082 while the
was up half a point to 1358. Big-cap techs continued to outperform -- the
Nasdaq Composite Index
was up 14, or 0.5%, to 2858.
TheStreet.com Internet Sector
index was up 11, or 1.8%, to 607. The
was up 1 to 437.
Media stocks were the focus, on the heels of the news that
would combine. Investors liked the deal, in part because there is little overlap between Viacom's and CBS' operations. Viacom rose 6.5% on the news, while CBS was up 3.2%.
While the deal signals that investment bankers are apparently back from vacation -- cheering the Street with the thought that deals will get rolling again -- plenty of traders were stretching their Labor Day. Volume was light to moderate on slightly negative breadth. In
New York Stock Exchange
action, decliners were beating advancers on 1,516 to 1,288 with 395 million shares changing hands. There were 59 new highs and 48 new lows. On the
Nasdaq Stock Market
, decliners were leading advancers 1,842 to 1,737 on 521 million shares. There were 118 new highs and 36 new lows.
The bond market was slumping, with the bellwether 30-year Treasury off 19/32 to 100 27/32, its yield rising to 6.06%. (For more on the fixed-income market, see today's early
Tuesday's Midday Watchlist
CBS and Viacom unveiled merger plans which call for Viacom to buy CBS, combining their media and entertainment divisions in a $37 billion stock swap. Viacom Chairman Sumner Redstone is expected to remain chairman and CEO of the merged company, while current CBS CEO Mel Karmazin will be tapped as its president and chief operating officer. CBS rose 1 9/16 to 50 1/2 while Viacom vaulted 2 15/16, or 6.5%, to 48.
King World Productions
inched up 15/16 to 40 7/16 after saying it will delay until Sept. 14 its shareholder vote on a planned $2.5 billion merger with CBS. The decision followed news of the Viacom deal, though both CBS and King World reiterated their commitment to proceed with the merger.
Mergers, acquisitions and joint ventures
was unchanged at 8 after saying it has inked a deal with
Advanced Micro Devices
to use AMD's microprocessors.
added 7/16 to 12 1/4 after saying it signed a deal with
to sell Clarus business procurement software. Shares of Compaq slipped 1/8 to 23 1/8.
Fleet Financial Group
lost 5/8 to 38 15/16 after it forged a $1.4 billion deal to sell 278 branches and other assets to
, lately up 25/32 to 10 3/4. The bank is attempting to meet regulatory requirements for its proposed acquisition of competitor
, lately down 5/8 to 45 5/16. Fleet announced plans in March to purchase BankBoston, establishing the eighth-largest bank in the U.S. Sovereign said it would receive $12 billion in deposits and an estimated $8 billion in loans, in what is being called the largest proposed bank divestiture.
Federal Realty Trust
lost 15/16 to 23 after saying it will spin off its retail site unit to shareholders as a new public company. The REIT also said a third party may acquire most of its community shopping centers through a merger for a combination of cash and stock for about $18 a share.
slipped 3/4, or 5.8%, to 11 1/16 after it agreed to pay $4 billion in cash, stock and debt for
. The deal calls for Hilton to pay $38.50 per share in cash for 55% of Promus shares. The remaining 45% of the Promus stock would be exchanged for Hilton common stock at a rate determined by market conditions. Promus CEO Norman Blake Jr. said he will not take a position with the merged company once the transaction is complete. Shares of Promus popped up 3 1/2, or 11.2%, to 34 7/8.
Dutch supermarkets group
added 1 3/8 to 37 1/16 after acquiring Spanish supermarket chains
. Ahold said it will operate seven supermarket chains in southern Spain and Madrid when the deals are completed.
lost 1/16 to 87 9/16 after setting an agreement with
Tele 1 Europe's
Finnish division to provide its DX 200 switching system to the Nordic telecom operator's customers by September.
shed 4 3/8, or 21.7%, to 15 3/4 and
added 7/16 to 16 5/8 after the companies said they had ended merger talks, scuttling a potential $50 million deal. Professional said its board had decided to kill the deal with FirstFed when it concluded it would not secure the $23.50 per share the banks had agreed on earlier this year.
Russian cell-phone operator
rose 3/16 to 15 3/8 after it said it was in talks with strategic partner
of Norway for joint financing of up to $300 million in investments.
Earnings/revenue reports and previews
lost 13/16 to 36 15/16 despite reporting same-store sales for August up 6%.
sparkled 2 1/16, or 5.9%, to 37 1/4 after posting fourth-quarter earnings of 23 cents a share, beating both the 12-analyst estimate of 21 cents and the year-ago 16-cent gain. The retailer also said that board member and former president and COO Beryl Raff would become its acting CEO after Robert DiNicola resigned from the position. DiNicola will remain the company's chairman.
Offerings and stock actions
gained 1 9/16, or 6.8%, to 24 5/8 after it added 4 million additional shares to its current share repurchasing program, raising the possible total of the buyback to 6.4 million shares. The company said the increase gives it authorization to repurchase about 12% of its 55 million outstanding shares.
airline analysts Candace Browning and Mike Linenberg sliced their estimates on U.S. airlines, citing increasing fuel prices, air traffic control delays and capacity growth.
lost 13/16 to 29 1/2 after third-quarter estimates were cut to 45 cents a share from 95 cents.
lost 5/8 to 16 7/16 after third-quarter estimates were lowered to 24 cents a share from 26 cents and
lost 3/4 to 27 5/8 after third quarter numbers were chopped to $2.10 from $2.30.
fell 2 to 50 11/16 when its third-quarter estimates were trimmed to $2.10 from $2.15. Separately Delta said it tapped Edward West to replace Warren Jenson as its CFO. Jenson left Delta to become the CFO of
added 1/8 to 14 11/16 after
rolled out coverage of the stock with an initial buy rating.
lost 11/16 to 93 1/8 after
started coverage with a buy rating and a price target of 110.
added 1 1/4, or 5.4%, to 24 9/16 after
Credit Suisse First Boston
rolled out coverage with a strong buy rating and a price target of 35.
lost 1 11/6, or 8%, to 19 3/8 after Merrill Lynch initiated coverage of the stock with a long-term buy rating.
PaineWebber axed both
to neutral from attractive. Dow lost 1 5/16 to 114 1/16 while Union Carbide slipped 15/16 to 57 7/16.
El Paso Energy
darkened 1 5/16 to 38 1/8 despite Merrill Lynch's upgrade of its intermediate-term rating to a buy from an accumulate.
climbed 2 17/32 to 118 15/16 after Salomon Smith Barney raised its rating on the shares to buy from outperform and set a new price target of 135.
powered up 5 3/8, or 18%, to 35 after
started coverage of the stock with a buy rating.
Kansas City Power
added 1/16 to 24 3/16 after
initiated coverage with a buy rating.
added 3/4, or 6.7%, to 11 7/8 after ABN Amro upped its rating to a buy from an outperform.
Provantage Health Services
lost 1/16 to 13 3/8 after
initiated coverage of the stock with a buy rating.
lost 7/16 to 11 1/4 after
started coverage of the stock with an initial long-term buy rating.
Merrill Lynch reiterated its buy rating on
and set a price target of 110,
reported. Texas Instruments added 2 1/8 to 90.
lost 3/8 to 34 1/4 after saying it chose former
head Gary Rodkin as its president and CEO. Tropicana is a unit of PepsiCo.