Despite the healthy green glow on trading screens, there was not a heck of a lot of action on Wall Street at midday. Just as well -- it gave investors more time to chew their nails over tomorrow's May
. Trying to figure out how the market might react is unnerving.
The general feeling on the Street is that the
Federal Open Market Committee
will raise rates at the conclusion of its June 29-30 meeting. The July fed funds futures contract has already priced in an 88% chance of a quarter-point tightening. Short-term Treasuries are pointing toward the Fed snugging rates as well.
Now a lot of portfolio managers are figuring that the best thing to do is to stick to the sidelines until after the meeting. Thinking that the
will only move once, or will at least hold off for a while before tightening again, they want to go into stocks on the downdraft. They would also like to have a bit more cash on hand to buy equities at what they think will be bargain-basement prices. They're planning to sell into any rallies.
This means there could be some strange reactions to the jobs report. If it comes in on the strong side, maybe all it will do is confirm the market's suspicion that the Fed is going to tighten -- and after some initial weakness you could see some buying of the fact. If it's on the weak side, it may still do little to deter the market's conviction that a hike is coming. The rally meets selling, selling wins, and people talk about how we're in a bear market because stocks go down on good news.
Confused? So's everybody else. Nobody knows what to do, so not much gets done.
"Investors are seeing both sides of the coin here," said Charles Crane, chief market strategist at
Key Asset Management
. "On the one hand, there's concern about the impact of a strong economy on inflation and interest rates. On the other, we have the positive influences of a strong economy -- mainly stronger earnings."
Tomorrow's jobs report, Crane thinks, will shift the balance toward one of those things or the other. If wages show little growth, investors may gather that the economy can continue to perk along at its current pace without raising the specter of inflation. If wage growth is strong, however, the market could see "a little bit of indigestion," said Crane.
With everybody focused on the report, trading today has been thin and basically range-bound. Much of the action has been driven by the
futures, which lately have bounced higher every time they touch their lows, only to stall out when they reach above 1300. "We take out some key levels, there's no follow-through, and we break back down again," said Kevin O'Brien, head index trader at
. "The market is marking time and trading sideways."
Dow Jones Industrial Average
lately was up 52 to 10,630. The
was up 3 to 1298. The
Nasdaq Composite Index
was off 13 to 2420.
TheStreet.com Internet Sector Index
was down 8 to 549 and the
was down a fraction to 437.
Oil services were the standout in the market, after a number of firms came out with positive comments on them. The
Philadelphia Stock Exchange Oil Service Index
was up 3.9%.
The bellwether 30-year Treasury was down 7/32 to 90 11/32, its yield rising to 5.95%. (For more on the fixed-income market, see today's early
Breadth was strong in the early going, but deteriorated a bit by midday. On the
New York Stock Exchange
, advancers were outpacing decliners 1,443 to 1,306 on 389 million shares. In
Nasdaq Stock Market
action, advancers were beating decliners 1,762 to 1,700 on 440 million shares. New 52-week highs were leading new lows 37 to 25 on the Big Board and 50 to 28 on the Nasdaq.
Thursday's Midday Movers
Oil service stocks continued this week's spurt higher with today's momentum coming from
analyst Terry Darling, who started the sector as overweight. The analyst, citing improving commodity prices and lower operating costs, expects to see a 10% increase in upstream spending in 2000 for industry companies.
, up 1 to 61,
, up 1 1/2 to 43, and
, up 1 7/16, or 5.4%, to 28 5/16, were added to the firm's recommended list.
Additionally, Goldman began coverage of the following names with market outperformer ratings:
, which was up 3/4 to 32 11/16;
, up 7/8 to 29 1/2;
, up 1 3/8 to 37 3/4;
, up 1 7/16, or 6.8%, to 22 11/16;
, down 1/16 to 11 13/16; and
, up 1 1/2, or 8.7%, to 18 11/16. Finally,
was up 2 1/16 to 44 1/2 after Goldman initiated coverage with a market performer and
Morgan Stanley Dean Witter
upgraded it to outperform from neutral.
Many retailers were gliding, with the
S&P Retail Index
rising 2.6%, following strong May same-store sales reports.
- Ames Department Storesundefined was rising 1/8 to 42 5/8 on sales up 6.4%.
AnnTaylor Stores (ANN) was rising 1 1/8 to 43 3/8 on sales up 10.1%.
Dollar General (DG) - Get Dollar General Corporation Report was rising 2 7/8, or 10.7%, to 29 13/16 on sales up 9.2%.
Kmartundefined was falling 1/8 to 15 5/16 despite sales up 3.7%.
May Department Stores (MAY) was falling 1/16 to 42 5/16 despite sales up 2.9%.
Pier 1 Imports (PIR) - Get n.a. Report was falling 1/2 to 11 3/4 despite sales up 5.9%.
Sears (S) - Get SentinelOne Inc. Class A Report was flat at 50 7/8 on sales up 1.9%.
ShopKoundefined was falling 1/16 to 35 despite sales up 9.4%.
Wal-Mart (WMT) - Get Walmart Inc. Report was rising 1 7/16 to 45 13/16 on sales up 7.7%.
In other news:
was up 1 3/16, or 6.6%, to 19 1/4 after
Salomon Smith Barney
started coverage of the stock with a buy and a price target of 30.
was tumbling 4 7/16, or 5.1%, to 82 1/16 after
said it intends to exercise a call option to acquire all the shares of the company it doesn't already own for $4.2 billion. After redeeming the shares, Roche said it intends to sell up to 19% of Genentech to the public, maintaining the biotech's status as a publicly traded, independent legal entity.
was up 1 9/32, or 33.6%, to 5 3/32 after saying its founder and former chairman and CEO, Ronald Unkefer, will rejoin the company July 1 as chairman and chief executive. He will replace Robert Gunst, who is resigning.
was down 4 1/4, or 8.3%, to 47 after saying John Correnti resigned as director, vice chairman, president and CEO. Chairman David Aycock will take over as president and chief executive.
was up 1 15/16, or 5.6%, to 36 7/16 after Morgan Stanley Dean Witter lifted it to strong buy from neutral.
was up 4 3/4, or 9.9%, to 52 5/8 after saying it sees first-quarter earnings of 20 cents a share, above the current 18-analyst
estimate of 13 cents. The company, which made 8 cents in the year-ago period, is scheduled to release quarter earnings June 15.
U.S. Xpress Enterprises
was down 2 5/16, or 19.3%, to 9 3/4 after last night saying it will record a second-quarter charge of $1.3 million related to a settlement of a dispute with
BT Alex. Brown
cut the stock to market perform from strong buy.
Volt Information Sciences
was up 2, or 11.3%, to 19 11/16 after posting second-quarter earnings of 38 cents a share, a dime above the year-ago 28 cents. First Call didn't have an estimate for the company.