SAN FRANCISCO -- U.S. equity investors were a day late in reacting to concerns about Argentina, leaving major proxies a few dollars short of all-time highs today. Major proxies all closed down, but recovered noticeably from some somewhat fearful moments in the early going.
After falling 8.7%
gained 4.6% as investors decided talk about a debt moratorium was merely that.
"It's nothing. It's a totally political thing," said Elaine Garzarelli, chairwoman of
. "Their deficit is 2% of GDP. They can finance anything they want. This is nothing like Brazil or Mexico. It's just a politician trying to get noticed
and he's just reversed his position."
Still, some players used the issue as an excuse to take profits after the market's big run-up and ahead of some key economic and earnings news.
Worries about (way) south of the border sent the
Dow Jones Industrial Average
as low as 11,085.10 early on. The index climbed within earshot of break-even by 11:15 a.m. EDT but the rebound faltered. As similar pattern emerged in the afternoon as the index climbed as high as 11,211.11 before closing off 25.96, or 0.2%, to 11,175.02. The
followed a similar path (although it never traded in record territory), closing down 5.54, or 0.4%, to 1393.56.
Nasdaq Composite Index
was hardest hit of the "Big Three" major averages but also closed well off its nadir. After falling as low as 2755.84, the index closed off 12.21, or 0.4%, to 2778.23.
The Comp was damaged by broad -- but not terribly deep -- weakness in tech bellwethers, notably recent standouts
. The last fell as low as 139 5/8 before closing off 2% at 144 3/8 after announcing plans to sell up to 4 million shares in a secondary offering.
closed down a fraction ahead of its second-quarter profit report. After the close, the chip giant reported profits of 51 cents a share vs. the 31-analyst estimate of 53 cents and year-ago results of 33 cents.
Intel was trading around 64 after-hours, according to
, after closing at 65 3/8 in the New York-session.
"It's a little under and they're trading about a dollar lower after-hours," said Jim Benning, a trader at
. "But the news makes sense. They're saying they expect a strong second half, which is usually a stronger time of year for them."
Earlier, Andy Neff, chip analyst at
, who'd expected 52 cents a share, wrote: "The key with Intel is what sequential growth can they show, given the
second quarter is a seasonally strong.
Also, can they keep gross margins in the 59-60 range?" (Intel said gross margins hit 59% in the second quarter and would be "up slightly" in the third.)
helped the Nasdaq avoid a wider loss, rising 9.1% after posting better-than-expected profits
TheStreet.com Internet Sector
index fell 5.69, or 0.9%, to 653.10 although Net bellwethers improved.
rose 7.5% after announcing an expansion of its online offerings into electronics and toys. Separately,
rose 4.5%, ending a string of losses, while
Other Net gainers included
, up 8.3%, and new issue
, which rose 235% from its IPO price of $20.
On the downside,
fell 8.5% after forecasting a wider-than-expected second-quarter loss and announcing an agreement to merge with
, which is owned by
fell a further 5.3% in ongoing disappointment over yesterday's deal with
Reflecting negative market internals, broader market averages closed down. The
fell 1.19, or 0.3%, to 458.11 while the
American Stock Exchange Composite Index
shed 3.21, or 0.4%, to 812.33.
"The market itself was pretty featureless," Benning said. "Some banks stocks were weak because of the situation Argentina,
but I'm not taking it all that seriously. It's not a replay of last summer."
Financials such as
were damaged by hints, however remote, of a debt moratorium in Latin America. The
Philadelphia Stock Exchange/KBW Bank Index
New York Stock Exchange
trading, 740.4 million shares were exchanged while declining stocks led advancers 1,715 to 1,278. In
Nasdaq Stock Market
action 999.3 million shares traded while losers led 2,183 to 1,771. New 52-week highs bested new lows 62 to 55k on the Big Board and by 133 to 35 in over-the-counter trading.
Bullish, but Wary
Garzarelli, who has struggled somewhat in recent years to get past being known solely for predicting the 1987 market crash, is "still bullish" about the current environment.
"I would think any correction would be limited to 20% at the worst and only if we get a bad CPI," she said. "Our numbers are neutral. To cause a bearish signal, the
one-year T-bill rate would have to get 1% above the discount rate."
The bill closed down slightly today to yield 4.968% vs. the 4.5% discount rate. Overall, the calming of tensions in Latin America took some shine of the bond market's recent rally, but the long end maintained a positive posture; the price of the 30-year Treasury bond rose 1/32 to 90 28/32, its yield unchanged at 5.91%.
However, the strategist believes more
tightening is in the offing, pegging the odds of an August rate hike at "60-40."
leading inflation index is "rising at a 7% rate of growth and had its fourth consecutive monthly rise," she noted. "Every time that's happened
has tightened. If it doesn't come down, he'll tighten."
Garzarelli compared the current situation to 1997, when the Fed tightened once and short-term rates rose but long-term rates declined; one reason for her continued positive outlook for stocks.
"I think the bond market saw it ahead of time," she said. "I think
long-dated bond yields stay where they are, maybe move down after a second tightening."
Among other indices, the
Dow Jones Transportation Average
fell 26.29, or 0.8%, to 3405.60 and the
Dow Jones Utility Average
closed unchanged at 320.30.
Elsewhere in North American equities, the
Toronto Stock Exchange 300
fell 54.26 to 7138.95 while the
Mexican Stock Exchange IPC Index
rose 75.23, or 1.3%, to 5844.60.
Tuesday's Company Report
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, ISP China.com rocketed 47 1/16, or 235.3%, to 67 7/64 after
priced its 4.2 million-share initial offering at $20. The offering's price range has been raised to $17 to $19 from $14 to $16.
wrote about the offering earlier this month.
Elsewhere in new issues,
swelled 7 7/8, or 49.2%, to 24 after
U.S. Bancorp Piper Jaffray
priced its 3 million-share IPO mid-range at $16. The company is a provider of Web-based email services.
Mergers, acquisitions and joint ventures
Air Products & Chemicals
added 1/4 to 41 1/2 after saying it and
are jointly acquiring Britain's
for a total of about $11.2 billion in cash. BOC slipped 5/8 to 41 15/16.
Online music retailer CDnow lowered 1 7/8, or 8.5%, to 20 5/16 on news it's merging with Columbia House, the club-based direct marketer of music and videos, which is owned equally by Sony and Time Warner. Sony and Time Warner each will have a 37% stake in the newly formed public company. CDnow's existing shareholders will own the remaining 26%. Sony rose 9/16 to an all-time high of 118 1/16; Time Warner shaved off 5/16 to 75 3/4.
Separately, CDnow said it expects its second-quarter loss to be narrower than the six-analyst projection for a loss of 83 cents a share.
hopped up 2 5/8, or 12.8%, to 23 3/16 after announcing a three-year agreement with
, a unit of
, to identify disease-causing genes. Rhone-Poulenc tacked on 5/16 to 48 11/16.
gained 2 1/2 to 96 1/2 after agreeing to buy
in a stock swap valued at $530 million. NetGravity sank 2, or 7.3%, to 25 1/2.
skidded 1 9/16 to 49 15/16 after saying it's acquiring
, which slipped 5/16 to 22. Excite@Home will issue about 8.3 million shares of stock, totaling about $425 million. It also will assume iMall's outstanding options and warrants.
Sunstone Hotel Investors
expanded 1/2 to 9 7/16 on word it's being acquired by
, an affiliate of
, and certain members of Sunstone's senior management for $10.35 a share in cash.
Earnings/revenue reports and previews
Amgen climbed 6, or 9.1%, to 72 5/16 after last night reporting second-quarter earnings of 50 cents a share, topping the 23-analyst estimate of 46 cents and moving up from the year-ago 41 cents. The even better news for Amgen was that the company is pushing up its rheumatoid arthritis drug,
Food and Drug Administration
said it was OK to file based on the two Phase II trials the company did on the drug. Amgen won't have to conduct Phase III trials. It will file for approval of the drug by the end of the year, way ahead of schedule. Today,
Morgan Stanley Dean Witter
upped its 1999 earnings estimate for Amgen to $1.97 from $1.80 a share.
Salomon Smith Barney
lifted its one-year price target for the stock to 112. And
upped it to strong buy from accumulate.
tanked 5 1/8, or 27.3%, to 13 5/8 after last night saying it expects to break even in its second quarter. The six-analyst view called for earnings of 12 cents vs. the year-earlier 6 cents. The company blamed severance costs for a former CFO for the expected shortfall.
BancBoston Robertson Stephens
dropped the stock to long-term attractive from buy.
declined 3 3/8, or 15.8%, to 18 after last night saying it sees second-quarter earnings coming in around 10 cents a share due to production realignment costs and promotional expenses at its
Mrs. Smith's Bakeries
business. The 10-analyst estimate called for a repeat of the year-ago 19 cents. Today,
Donaldson Lufkin & Jenrette
cut the stock to market perform from buy and Morgan Stanley Dean Witter lowered its 1999 earnings estimate for the company to 97 cents a share from $1.15.
Health Management Associates
lost 3 5/16, or 29.3%, to an annual low of 8 after warning it sees third-quarter earnings coming in even with the year-ago 15 cents a share. The 13-analyst estimate called for earnings of 18 cents. The company blamed lower-than-expected same-unit growth and timing of hospital acquisitions for the expected shortfall.
plunged 8 5/8, or 16.3%, to 44 3/8 after posting fourth-quarter earnings of 13 cents a share, on target with the six-analyst forecast and above the year-ago loss of 9 cents. But
Warburg Dillon Read
cut the stock to hold from strong buy.
collapsed 10 7/16, or 38.5%, to 16 13/16 after last night saying it sees third-quarter earnings of 40 cents to 42 cents a share due to the cancellation of about $6.5 million in orders and the deferral of about $4.5 million in other orders. The single-analyst forecast called for earnings of 67 cents vs. the 40 cents made a year earlier. Prudential lowered the stock to hold from strong buy.
tumbled 5 7/16, or 7.6%, to 66 3/8, apparently hit by a bout of profit-taking. Last night, the company announced third-quarter earnings of 24 cents a share, 1 cent ahead of the 13-analyst estimate and above the year-ago 18 cents.
In other earnings news:
Factory 2-U Stores
shot up 2 1/8, or 10.6%, to an all-time high of 22 3/8 after Piper Jaffray started coverage with a strong buy.
rose 1 1/4 to an all-time high of 101 15/16 after
Thomas Weisel Partners
started coverage with a buy.
jumped 2 1/8, or 16.4%, to an all-time high of 15 1/4 after
Deutsche Banc Alex. Brown
began coverage with a strong buy and a 12-month price target of 33.
stumbled 5 7/8, or 15.5%, to 32 1/4 even after
Credit Suisse First Boston
started coverage with a buy and a price target of 45.
initiated coverage with a market outperformer rating.
Amazon.com picked up 8 13/16, or 7.5%, to 126 1/8 after launching two new stores -- one selling electronics, one selling games.
flourished 3 17/32, or 38.3%, to 12 13/16 on word the company successfully completed Phase II trials of its antiviral drug for use in treating severe forms of respiratory infection.