Market Endures a Tough Slog Through an Uncertain Landscape

No one's looking to make big bets ahead of next week's Greenspan comments, so it's a narrow range for now.
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Technology -- at least the big guys -- has been the real star of late, and today's no different. While the other major equity indices flailed in the red for much of the morning (albeit not all that violently), the

Nasdaq Composite Index

has perked its head above the flatline all day. Not long ago, the

S&P 500

joined the Nasdaq in positivity.

Most notably in techland,

Microsoft

(MSFT) - Get Report

was making its investors beam after a

Wall Street Journal

report said Mister Softee is close to creating a tracking stock for its

Microsoft Network

Internet unit. The stock was climbing 3.5% -- that's record territory -- on 28.2 million shares.

Tom Burnett, senior trading advisor at

Wall Street Access

, said today, being the monthly expiration of options on stocks and index futures, is an important day but a quiet one.

"Volatility is down under 20 -- it's a calm, quiet phase," the trader said, adding that many folks are waiting to hear what

Fed

Chairman

Alan Greenspan

will say Thursday during his semiannual

Humphrey-Hawkins

testimony before Congress. "Puts are low priced, the VIX

Market Volatility Index

was over 60 last fall with all those concerns out of Russia and Latin America. Now it's at 19."

Burnett continued: "So I sense complacency. People are relaxed now that the bond rallied and we're way under 6%. They're feeling comfortable here. ... The market environment is good, but there's no hot story. We can't just make things up. I think we're headed for a correction but that could be months away. It's hard to predict these things."

As for earnings, he said "there's no rhyme or reason" to figuring out what investors' response will be to company earnings news. "And we got all the bad news early.

Coke

(KO) - Get Report

and

Gillette

(G) - Get Report

already told us they would miss and so they had no impact when they reported. Even

Caterpillar

(CAT) - Get Report

which missed second-quarter earnings estimates by 2 cents a share this morning is only down three-quarters of a point. It's all so counter-intuitive:

Texas Instruments

(TXN) - Get Report

which announced a 2-for-1 split last night rallied earlier but now it's down?" Cat was lately off 0.2% and Texan was down 0.7%.

The

Dow Jones Industrial Average

, meanwhile, was losing 32 to 11,154 after an earlier high of 11,194.90. Upside standouts were

Alcoa

(AA) - Get Report

, rallying on upgrades from

Morgan Stanley Dean Witter

and

Merrill Lynch

;

General Motors

(GM) - Get Report

; and

International Paper

(IP) - Get Report

. Leading on the downside were

American Express

(AXP) - Get Report

,

Chevron

(CHV)

,

Merck

(MRK) - Get Report

and

Procter & Gamble

(PG) - Get Report

.

The aforepraised techtastic Nasdaq was jumping 17, or 0.6%, to 2856, below an earlier high of 2860.25. Along with Microsoft,

Sun Microsystems

(SUNW) - Get Report

was performing well.

TheStreet.com Internet Sector

index was giving back 8 to 642.

The broader S&P 500 was up 1 to 1411 while the small-cap

Russell 2000

was down 2 to 464.

The 30-year Treasury was up 10/32 to 91, yielding 5.90%. (For more on the fixed-income market, see today's early

Bond Focus.)

Market internals were weak. On the

New York Stock Exchange

, decliners were leading advancers 1,577 to 1,173 on 427 million shares. And the downs had the ups 1,907 to 1,728 on 635 million shares in

Nasdaq Stock Market

activity. Still, new 52-week highs were outpacing new lows 70 to 21 on the Big Board and 182 to 18 on the Nasdaq.

Friday's Midday Watchlist

By Thomas Lepri
Staff Reporter

Investors were bidding up Microsoft 3 5/16 to 97 3/4 ahead of its earnings report Monday. The usual Softee earnings optimism was getting an extra boost today from a

Wall Street Journal

report that the tech giant is closer to creating a tracking stock for its Microsoft Network properties; the paper wrote that Microsoft may make an announcement as early as next week.

Mergers, acquisitions and joint ventures

No one's very excited about the news that

Cyprus Amax Minerals

(CYM)

and

Asarco

(AR) - Get Report

are combining in a $764.2 million stock transaction. Cyprus Amax was lately off 11/16, or 4.7%, to 13 7/8, while Asarco was down 11/16, or 3.6%, to 18 9/16. Cyprus Amax shareholders will get 0.765 shares of the new company, to be called Asarco Cyprus, for each share of Cyprus Amax they hold, giving them about a 64% stake in the new company. Asarco shareholders will exchange their stock for Asarco Cyprus shares at a 1-for-1 ratio. Not impressed,

Warburg Dillon Read

cut Cyprus Amax to hold from buy.

Earnings/revenue reports and previews

Air Products & Chemicals

(APD) - Get Report

was shedding 4 3/16, or 10.1%, to 37 1/8 after it warned that it expects to report third-quarter earnings of 48 cents a share, below the 12-analyst

First Call

outlook of 56 cents a share and down from the year-ago 63 cents.

Investors aren't selling too hard on Dow component Caterpillar's bad news today. The stock was off a scant 1/8 to 59 after the company said it earned 78 cents a share in its second quarter, 2 cents below the 20-analyst consensus and down from the previous year's $1.20. Caterpillar also said it expects 1999 earnings to be 20% to 25% lower than in 1998.

Charles Schwab

(SCH)

was sinking 2 11/16, or 4.9%, to 52 9/16 after it warned that its profit margins may shrink later this year. Schwab posted second-quarter earnings of 18 cents a share, a penny above the eight-analyst view and up from last year's 9 cents.

In other earnings news:

Gillette

(G) - Get Report

was up 2 1/8 to 46 7/8 after last night posting second-quarter earnings in line with lowered analysts' estimates. The razor-blade maker earned 26 cents a share, matching the 13-analyst view but falling below the year-ago 33 cents.

Insurance firm

Horace Mann Educators

(HMN) - Get Report

was dumping 2 15/16, or 10.2%, to 26 after warning that its second-quarter earnings will be about 34 cents a share, 16 cents below the six-analyst call and slightly up from last year's 31 cents.

Mercury Interactive

(MERQ)

was moving up 6 1/2, or 17.8%, to 43 3/16 after yesterday reporting second-quarter earnings of 18 cents a share, 2 cents on top of the 11-analyst vision and up from last year's 10 cents. The company also yesterday named its CEO and co-founder, Amnon Landan, to the additional post of chairman.

Newport News Shipbuilding

(NNS)

was up 1/2 to 31 5/8 after reporting second-quarter earnings of 55 cents a share, excluding one-time items, above the two-analyst estimate of 52 cents and up from the year-ago 45 cents.

Potlatch

(PCH) - Get Report

was up 1/4 to 41 7/8 after posting second-quarter earnings of 33 cents a share, beating the three-analyst estimate of 30 cents, but down from the year-ago 35 cents.

PMC-Sierra

(PMCS)

was rocketing up 11 1/2, or 16.4%, to 81 1/2 on the heel's of yesterday's hot earnings report. The company said it earned 23 cents in the second quarter, a nickel above the 18-analyst view and up from the year-before 15 cents.

Seagate Technology

(SEG)

was slumping 3 3/16, or 10.6%, to 26 13/16 after yesterday reporting fourth-quarter earnings of 30 cents a share, 4 cents below the 11-analyst consensus and up from the previous year's 9 cents. Morgan Stanley started the disk drive maker with a cool neutral rating today.

Tribune

(TRB)

was off 5/16 to 87 1/2 after posting second-quarter earnings of 88 cents a share, excluding nonoperating items, a penny ahead of the 14-analyst estimate and up from the year-ago 75 cents, excluding nonoperating items.

Veritas

(VRTS) - Get Report

was up 5 3/8, or 10.1%, to 58 9/16 after it yesterday reported second-quarter earnings of 16 cents a share, 2 cents above the 17-analyst estimate and up from the previous year's 8 cents a share.

Offerings and stock actions

Efficient Networks

(EFNT)

isn't done yet. The high-speed DSL firm was lately up a further 10 3/4, or 21%, to 61 7/8, the day after it rocketed about 240% in its trading debut.

Paradyne Networks

(PDYN)

was booming up 35 1/2, or 209.1%, to 52 1/2 in its first day of trading. Lead underwriter

Donaldson Lufkin & Jenrette

priced Paradyne at $17 a share yesterday, above its $14-$16 pricing range.

Analyst actions

Alcoa was up 1 3/16 to 61 15/16 after Morgan Stanley upgraded it to strong buy from neutral.

Finova

(FNV) - Get Report

was falling 3 15/16, or 7.5%, to 48 1/2 in the face of another downgrade, this time from

J.P. Morgan

, which cut the company to long-term buy from buy. Yesterday

BancBoston Robertson Stephens

cut Finova to long-term attractive from buy on concerns over the financial services firm's profit margins. Finova reported second-quarter earnings of 83 cents a share yesterday morning, in line with the 17-analyst view and up from the previous year's 68 cents.

Miscellany

Gains from Net deals can disappear as quickly as they come.

Audiohighway.com

(AHWY)

was giving back 2 9/16, or 10.3%, to 22 5/16 after racing up 19% yesterday after it said it will put together an audiobooks channel on the Microsoft Network site

WindowsMedia.com

.

It's not clear why

GlobeSpan Semiconductor

(GSPN)

was clambering up 6 7/16, or 11.1%, to 65 3/4. But there it was, clambering nonetheless.