Market Is Mixed Ahead of Key Economic Data

There's some strength in tech, but low volume shows there are lots of sideline sitters.
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The Mummy

, that which was once left for dead was revived today. Reversing recent trends, Internet and other tech stocks flourished along with bonds, generating handsome returns for investors with faith and the prescience to buy during last week's weakness (not to mention

Universal Pictures

).

However, blue-chip averages were cursed by selling in former leadership groups such as drugmakers, and by the inability of either energy or financial stocks to rally on merger talks among players in the respective groups.

Net investors were excited by the reported disintegration of one deal --

USA Networks

(USAI) - Get Report

-

Lycos

(LCOS)

-- and the separate creation of another involving

General Electric's

(GE) - Get Report

NBC

unit,

Xoom.com

(XMCM)

and

CNet's

(CNET) - Get Report

Snap.com

.

TheStreet.com Internet Sector

index rose 21.18, or 3.5%, to 635.33. The

Nasdaq Composite Index

gained 22.77, or 0.9%, to 2526.39.

Lycos rose 17.5%, giving the DOT its biggest boost. Other big gainers among index components included

Inktomi

(INKT)

,

America Online

(AOL)

,

Amazon.com

(AMZN) - Get Report

and

CMGI

(CMGI)

.

As NBC moved proudly to create a new Internet venture, Xoom.com rose 9% and CNet, which owns Snap.com through a joint venture with NBC, gained 19.1%. (

TheStreet.com

examined the deal in a

story today.)

Dell

(DELL) - Get Report

was the standout among Nasdaq-traded tech bellwethers today, rising 5.3% following an upgrade from

BT Alex. Brown

. Weakness in

MCI WorldCom

(WCOM)

, off 1.8%, restrained the

Nasdaq 100

, which rose 0.8%.

In

New York Stock Exchange

trading,

EMC

(EMC)

gained 3.7% and

Motorola

(MOT)

rose 4.4%, to lead the

Morgan Stanley High-Tech 35

up 2%. Elsewhere,

Compaq

(CPQ)

gained 6.1%.

Additionally,

IBM

(IBM) - Get Report

rose 0.6% to an all-time high of 218 9/16. Big Blue close off its intraday best of 221 7/8 but, along with

United Technologies

, helped the

Dow Jones Industrial Average

avoid a bigger decline.

The Dow closed down 24.34, or 0.2%, to 11,007.25 after trading as high as 11,097.45 at midmorning and as low as 10,951.98 in the final hour. The

S&P 500

followed a similar path, closing down 4.70, or 0.4%, to 1340.40 after trading as high as 1352.01 and as low as 1334.00. Conversely, the

Russell 2000

was a paragon of strength throughout, rising 5.74, or 1.3%, to 441.85.

Blue-chip averages were hampered by weakness in drug makers such as

Johnson & Johnson

(JNJ) - Get Report

and

Pfizer

(PFE) - Get Report

. The

American Stock Exchange Pharmaceutical Index

shed 1.6%.

Financials were also weak and even

Republic New York

(RNB)

fell 2.8% despite a $72-a-share buyout offer from U.K.-based

HSBC Holding

.

Similarly, oil stocks failed to rally despite higher crude prices and reports of merger talks between

Chevron

(CHV)

and

Texaco

(TX) - Get Report

. Admittedly, talk of the deal helped the group

Friday.

In NYSE trading, 769.3 million shares were exchanged while losers led gainers 1,727 to 1,284. In

Nasdaq Stock Market

activity, 835.6 million shares were exchanged while gainers led 2,190 to 1,860. New 52-week highs led new lows 109 to 21 on the Big Board and by 90 to 36 in over-the-counter trading.

Despite otherwise impressive market internals, the relatively light trading volume evinced the session's relative lack of significance, traders said. Most market players say equities will be restrained until economic data are reported later in the week and the

Federal Open Market Committee

meets May 18.

Dow Due for Setback

Despite the bond market's gain -- the price of the 30-year Treasury bond rose 10/32 to 92 10/32, its yield falling to 5.79% -- Tony Dwyer, chief market strategist at

Ladenburg Thalmann

, said the Dow's decline today was not surprising.

Last week, Dwyer observed the Dow had gotten 21% over its 200-day moving average of 9116, a level which historically augurs a 12% decline for the average in the 59 days that follow.

Admitting today's decline was nothing alarming and "I could be off by a few days," the strategist suggested the action could be the tip of a decline in the index to as low as 9787 by mid-August.

Morover, the revival of tech stocks today fits his belief that recent selling in the group had gotten overdone.

"The media and talking heads have been telling you there's a rotation out of tech and into cyclicals," he said. "I don't think that's correct. There's been fundamental buying from value-oriented fund managers and profit-taking in tech stocks, but they're exclusive from each other. I find it hard to believe someone is going to sell

EarthLink

(ELNK)

to buy

U.S. Steel

(X) - Get Report

."

While not correlated, recent action in the respective groups "sets up a great opportunity to take some profits in economically sensitive issues that had gone too far, too fast, and take advantage of some lower valuations in the tech area," Dwyer said.

Still, cyclicals weren't bad performers today, save gold stocks. As the price of the metal fell $5.20 to $278.50 the ounce, the

Philadelphia Stock Exchange Gold & Silver Index

tumbled 6.5%. (In the spirit of

David Faber

: This reporter looked deeper into developments in gold

Friday.)

Additionally, the

Philadelphia Stock Exchange Forest & Paper Products Index

slid 1.3% as

Georgia Pacific

(GP)

shed 6.7% following a downgrade by

PaineWebber

.

Overall, the "fundamentals haven't changed," the strategist continued. "As long as that's the case, you buy market weakness and sell strength."

Asked if the recent rise in interest rates presents a change in fundamentals, Dwyer was unperturbed.

"Inflation has not reared its ugly head," he said. "The anticipation of inflation is there, but there ain't no sign. The market knows more than we do: If there was a real fear of tightening or inflation, the Dow wouldn't be at 11,000,

but I still think it's going lower."

Among other indices, the

Dow Jones Transportation Average

fell 10.93, or 0.3%, to 3731.90; the

Dow Jones Utility Average

shed 1.14, or 0.4%, to 314.81; and the

American Stock Exchange Composite Index

fell 0.21 to 787.08.

Elsewhere in North American equities, the

Toronto Stock Exchange 300

gained 38.27, or 0.6%, to 6997.13 and the

Mexican Stock Exchange IPC Index

continued its recent surge, rising 116.10, or 2%, to a record 6080.47.

Monday's Company Report

By Heather Moore
Staff Reporter

(

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, community Web site Xoom.com zoomed up 6 3/4, or 9%, to 81 7/8 after agreeing to a three-way merger with CNet's Snap.com Internet service and the Web assets owned by General Electric's NBC network. The new company, called NBC Internet, will be the seventh-largest Web site and the first public Internet company integrated with a major broadcast network. GE lost 1 3/16 to 108 3/4; CNet jumped 21 11/16, or 19.1%, to 136 3/16.

Elsewhere in Netland, Lycos hopped up 15 11/6, or 17.5%, to 105 1/4 following a report in

The Wall Street Journal

that USA Networks most likely will abandon its three-month-long bid for the portal company after determining that it probably can't win the approval of Lycos' shareholders. USA Networks slipped 1/8 to 35 1/4. PaineWebber lifted its 12-month price target for Lycos to 115 a share from 90.

Mergers, acquisitions and joint ventures

Case

(CSE)

leapt 2 3/4, or 7.6%, to 39 3/16 on speculation it will be taken out.

Compaq swelled 1 1/2, or 6.1%, to 26 1/4 after this weekend announcing a North American alliance with four long-term distributors:

Merisel

(MSEL)

, which grew 21/32, or 30.9%, to 2 13/16;

Ingram Micro

(IM)

, which grew 7/8 to 28;

Inacom

(ICO)

, which grew 7/16 to 12 3/8; and

Tech Data

(TECD) - Get Report

, which grew 2 15/16, or 10.1%, to 32.

Insight Enterprises

(NSIT) - Get Report

vaulted 2 1/16, or 7.7%, to 28 29/32 after Britain's

Action Computer Supplies Holdings

agreed to merge with the company in a deal valued at around $150 million in stock.

Nextel

(NXTL)

picked up 5/8 to 36 15/16 after

Microsoft

(MSFT) - Get Report

agreed to buy $600 million of the company's shares. In exchange, Nextel will offer its customers Microsoft wireless Internet services. Mister Softee lifted 11/16 to 79 11/16.

Republic New York gave back 1 15/16 to 68 1/16 after Friday's 14% pop on talk it would be acquired by HSBC Holdings. Today, HSBC confirmed it plans to buy Republic and

Safra Republic

, a Luxembourg-based bank in which Republic has a 49% stake, for $10.3 billion in cash.

ReSound

(RSND)

expanded 1, or 15.2%, to an annual high of 7 9/16 after agreeing to be acquired by Denmark's

GN Great Nordic Group

for $8 a share.

Rocky Mountain Chocolate Factory

(RMCF) - Get Report

shot up 2 13/32, or 73.3%, to 5 11/16 after

Whitman's Candies

said it began a $5.75-per-share tender offer for all shares of the chocolate retailer.

Saga Petroleum

(SPM)

excelled 3 1/8, or 28.1%, to 14 1/4 on word

Norsk Hydro

(NHY)

launched a bid to acquire the exploration-and-production company at a 35% premium. Norsk Hydro picked up 11/16 to 45 15/16.

Unisource Worldwide

(UWW)

soared 2 3/4, or 31.4%, to 11 1/2 after receiving an unsolicited $840 million cash bid from Georgia Pacific, topping a two-month-old friendly deal with

UGI

(UGI) - Get Report

. After PaineWebber cut it to attractive from buy, GP skidded 6 9/16, or 6.7%, to 92; UGI rose 2 1/2, or 14%, to 20 5/16.

Voice Control Systems

(VCSI)

advanced 11/16, or 22%, to 3 13/16 after

Royal Philips Electronics

(PHG) - Get Report

agreed to acquire the company for about $59 million, or $4 a share. Royal Philips Electronics tacked on 1 5/16 to 89 7/16.

Earnings/revenue reports and previews

Autocam

(ACAM) - Get Report

vaulted 1 5/8, or 16.3%, to 11 3/4 after reporting third-quarter earnings of 26 cents a share, beating the three-analyst estimate by 4 cents but falling below the year-ago 38 cents.

Comcast

(CMCSK)

lifted 15/16 to 40 1/16 after posting a first-quarter profit of 13 cents a share, reversing the year-ago loss of 11 cents and topping the three-analyst forecast by 2 cents.

Eco Soil Systems

(ESSI)

sank 15/16, or 16.5%, to 4 7/8 after reporting a first-quarter loss of 28 cents a share, 11 cents wider than the three-analyst estimate and 17 cents wider than the year-ago loss.

Enzon

(ENZN)

flew 13/16, or 7.2%, to 12 1/8 after recording a third-quarter loss of 4 cents a share, in line with the three-analyst forecast and 2 cents narrower than the year-earlier figure.

Omnipoint

(OMPT)

added 1/4 to 17 1/4 after reporting a first-quarter loss of $3.42 a share, wider than both the 15-analyst outlook for a loss of $3.13 and the year-ago loss of $2.38.

ABN AMRO

upgraded the stock to buy from outperform and lifted its price target for the stock to 25 from 20.

Osicom Technologies

(FIBR) - Get Report

jumped 3, or 38.4%, to 11 after saying revenue from its core operations rose 28% to about $19 million during the first quarter.

Tarrant Apparel

(TAGS) - Get Report

slid 2 3/4, or 6.1%, to 42 3/16 even after reporting first-quarter earnings of 30 cents a share, beating the six-analyst view by a penny and the year-ago figure by a dime.

Offerings and stock actions

Exchange Applications

(EXAP)

tumbled 4 5/8, or 16.5%, to 23 3/8 after filing for a secondary offering of 3 million shares.

KBW

, a holding company for

Keefe Bruyette & Woods

, an investment bank that specializes in commercial banks and thrifts, pulled its planned 4.7 million-share IPO, according a person close to the deal. The source, who wished to remain anonymous, said the offering was canceled amid speculation that KBW is considering a buyout, merger or other option.

Analyst actions

Dell rose 2 1/8, or 5.3%, to 42 1/4 after BT Alex. Brown raised it to buy from market perform.

Penton Media

(PME) - Get Report

climbed 1, or 5.1%, to 20 1/2 after

Salomon Smith Barney

started coverage with a buy.

Protein Design Labs

(PDLI) - Get Report

spiked up 2 3/8, or 14.2%, to 19 after PaineWebber upgraded it to buy from attractive.

Miscellany

Global Sports

(GSPT)

tanked 12 7/16, or 37.6%, to 20 3/4 even after announcing a new e-commerce unit for sporting goods retailers.

Lexmark

(LXK)

added on 3 1/2 to 122 1/2 after the printer maker's CEO told

CNBC

Lexmark's business strategies have enabled it to post improvements in its financial results.

Tandy

(TAN) - Get Report

leapt 3 15/16, or 5%, to an all-time high of 83 1/8 on the heels of last week's strong sales figures and analyst upgrades.

Zonagen

(ZONA)

plunged 9 5/16, or 46.7%, to an annual low of 10 11/16. Citing the need for more data, Zonagen and

Schering-Plough

(SGP)

agreed to forego a scheduled June review for

Vasomax

by an

Food and Drug Administration

advisory panel. The drug is Zonagen's oral treatment for erectile dysfunction. SGP tacked on 7/16 to 50 7/16.