Despite months of preparation by rumor, a jolted stock market plummeted on the not-particularly-shocking news
plans to resign from his post as
secretary and that he will be replaced by his deputy,
. But given an hour or two, stock traders went back to being their usual self-obsessed, conflicted selves, uttering "Rubin who?" and wringing worn handkerchiefs about valuations and interest rates.
"Very rarely does one person make a difference to the stock market," said Christine Callies, U.S. investment strategist at
Credit Suisse First Boston
"If you look at the last 30 to 40 years, you had popular presidents nearly die, actually die, suffer from heart attacks, and there weren't severe reactions," she went on. "If the economy is solid and there are no imbalances requiring a hostile response from the
, then the market is remarkably resilient when it comes to policymakers and their lives. And that's all this is. Mr. Rubin is making a life transition, but there is no crisis that requires a superhuman presence to keep the markets stable."
is expected to make a Rose Garden announcement this afternoon about Rubin's resignation, which will be effective July 4, but the White House already has confirmed the news.
What the market is doing, and has been doing for some weeks now, according to Callies, is making "a valiant attempt to interpret a lot of conflicting data. And it's not about 'OK, this piece says the economy is weak, and this piece says the economy is strong.' It's about the durability and the size of a bounce. And what the U.S. markets would like is for a global bounce to contribute to a major acceleration in U.S. profits but not so much it pushes up interest rates."
Callies doesn't think the Fed will make a move at Tuesday's meeting, but she does think the stock market will continue to keep its eye on rising bond yields amid heavy concerns about interest rates. "The stock market doesn't move on new information the first time it sees it," she said. "It takes six months to watch the trends and figure out if they're real or not. And the stock market can correct without the Fed, and it would be a much more gradual process than if the Fed took action."
Along with having been prepped for the Rubin news, the markets -- mixed at midday -- know that Summers is not expected to make any drastic changes in current policy (too risky for a neutral agency like the Treasury on the brink of an election, Callies said) and that maybe we all shouldn't get too attached considering the real possibility that
George W. Bush
will shake things up in a year.
"Originally, there was a knee-jerk reaction to what was considered bad news -- that Rubin is leaving and this new guy coming in isn't as good," a trader said. "So when the bids drop, sellers get panicky, but it only took 10 to 15 minutes to realize the world isn't going to end and the financial world won't be left in total collapse. It's just typical of how the markets react to anything intraday. It seems the bad earnings numbers don't come out intraday -- they're always putting them out premarket or after the close -- so I think maybe people respond more to intraday news because of that."
When asked if salesfolk were still talking about Rubin's resignation come lunchtime, the trader, who asked to remain anonymous, said, "No. After 20 minutes, people were back to doing what they were doing before
the Rubin news. ... Bonds yields are still rolling off people's tongues -- you know, 'Are we going to 6%? Are we going sideways?' We were down 25 ticks at one point yesterday. If anything, we're confused."
Although the only official reason given for Rubin's leave is his desire to "return to private life" (read: his wife in New York), many believe he was waiting for global economic conditions to calm. And while the markets have noted such increasing global stability in recent economic production data and stock rotation into economically sensitive names, there's probably no better confirmation than a nod from Rubin.
Said Callies: "Everyone is aware of Rubin's difficult role on the global stage and the stresses that imposed by the constant commuting. And to bow out at the top of your game -- we all strive to do that. ... I'm sorry to see
Rubin go -- he was a large part of making the markets so liquid and a magnet for international capital. The Asian problem did not drag the entire economy down, and it had the bona fide characteristics of contagion. He did a relatively good job of insulating the U.S. economy and keeping the U.S. afloat so that other countries could export and regain strength."
After falling as low as 10,812.81, the
Dow Jones Industrial Average
lately was down 27 to 10,999. Those among the gilded 30 representing sectors weren't making much of an argument either way.
Bank stocks, down on the Rubin news, were in general picking themselves up but some were hurting more than others. While
was rising 1 3/16 to 136 1/2,
was losing 1 3/8 to 126 7/16.
And cyclical names such as
-- which one might expect to gain strength on an indication that the global economy is improving -- were down.
, climbing a handsome 4 1/2 to 225 1/2, was the head gainer on the blue-chip index.
Which makes sense. Tech is shining for the fourth straight day, with the
Nasdaq Composite Index
up 35 to 2602, not tremendously far from its April 26 high of 2652.05. Those teen techs, the Internets, also continued to build on recent strength, and
TheStreet.com Internet Sector
index was up 1 to 656.
Bonds also seemed to be shrugging off the Rubin news. The 30-year Treasury was up 6/32 to 91 31/32, sending its yield to 5.82%. (For more on the fixed-income market, see today's early
was up 4 to 1360, and the small-cap
was up 2 to 448.
Market internals were mixed. On the
New York Stock Exchange
, decliners lead advancers 1,660 to 1,209 on 500 million shares. But the ups had the downs 1,937 to 1,709 on 583 million shares in
Nasdaq Stock Market
Wednesday's Midday Movers
Stocks were moving on much more microeconomic news than Robert Rubin's resignation at midday.
Like blowout earnings, for example.
was up 5 5/16 to 117 1/8 after it posted third-quarter earnings last night of 38 cents a share, 1 cent above the 29-analyst
consensus and up from the year-ago 30 cents. Cisco also announced a 2-for-1 stock split, its eighth split in nine years.
Buy the rumor, sell the news. Investors are throwing that maxim to the wind as they bid up shares of
on the official word that the Web portal is no longer being acquired by
. Lycos was up 10 1/16, or 10.2%, to 108 1/2.
, the deal's third wheel, had surged 3 3/16, or 11.7%, to 36 1/2 on the news. USA Networks got a more modest pop, lately up 2, or 5.6%, to 37 7/8.
In other news:
was up 4 7/8, or 13.4%, to 41 9/16%, bouncing back from Wall Street's negative reaction yesterday to the Internet streaming video host's secondary offering of 2.5 million shares at $36 apiece.
Aptly named to cash in on the Web portal vogue,
is exploding after Cisco said it bought 3 million shares of the customer management and billing software maker for about $39 million. Portal Software was up 16 15/16, or 54.2%, to 48 3/8.
Retail mortgage firm
was down 2 3/4, or 12.6%, to 19 after the company last night warned that its second-quarter earnings will be below its first quarter's 18 cents a share, and that it may not be able to meet analysts' expectations of $1.12 a share for the full 1999 fiscal year.
up 7 7/8, or 15.1%, to 59 7/8 after acquisitive
agreed to buy it for about $4 billion in stock and cash, or just under $64 a share. Cox, which is also acquiring the cable operations of
, was down 2 to 86.
up 4 15/16, or 23.4%, to 26 after
Morgan Stanley Dean Witter
started coverage on the stock with a strong buy with a price target of $33.
ADRs of Russian wireless telecom
were down 3 7/16, or 14.6%, to 20 1/8 amid renewed fears of political stability in its home country. Russian President
sacked Prime Minister
, appointing loyalist First Deputy Prime Minister
to act in his stead. The
reacted by passing a nonbinding resolution urging Yeltsin to step down.
Shares of medical products firm
were up 3 1/8, or 19.2%, to 19 3/8 after the company said it expects second-quarter earnings from continuing operations to exceed analysts' expectations of 34 cents a share. Cooper is due to report on April 30.
Federated Department Stores
was up 2 1/4 to 43 1/4 after the company reported first-quarter earnings of 40 cents a share, 9 cents above the 17-analyst call and up from the year-ago 27 cents.
was down 9/16 to 17 after it posted its first-quarter numbers. The company earned 14 cents a share, in line with the 17-analyst forecast and up from last year's dime.