Imagine the market as
Jabba the Hutt
, chaining squirming investors to its sluggish side. True, the market hasn't quite become the enemy, but it's not an intergalactic stretch either.
Quicker to the point today, the market's public face aborted early gains before the lunch hour, whereas yesterday's downturn waited until 3 o'clock tea to show up. But the
Dow Jones Industrial Average
has been bobbing its head up and down all morning, and was lately taking another stab at a small rally. Meanwhile, all this volatility is leaving many Wall Streeters unenthused and increasingly convinced a breakout to the upside is beyond the current horizon, if that.
Ken Ducey, director of trading at
, said: "Today's a disappointment. We had something going and then we just got tired -- early. It looks like there's no enthusiasm to take us higher. I think we could correct in here, and maybe it's gonna be a steady erosion. People are looking for 300, 400
Dow points to get it all over with but maybe it's gonna be up one day, down two days.
"With no news, we've got no steam, no direction and people looking to the bond market, thinking about inflation and Friday's
number. And we got these glamour stocks, the techs, that took us higher -- well, the bloom seems to be out of that rose. I think we're gonna re-evaluate here and pull back the horns before there's any buying."
"We're really stuck in tech muck here," agreed the usually bullish Eugene Peroni, director of technical research and portfolio manager at
Janney Montgomery Scott
in Philadelphia. "There will be no relief from these trading-range exercises we've been seeing -- it's here to stay. It will be difficult for technology stocks to hold onto any kind of rallies but they won't see a devastating decline. We're looking at a lot of churning and pressure for at least a month, probably until first-quarter earnings."
The technician believes it will be a couple quarters, however, until tech stocks -- wounded in recent weeks by analyst downgrades and building evidence of a PC slowdown -- "gather themselves together enough to make traders comfortable that earnings will be OK. ... Tech gains can be beautiful and exciting but the losses can be grueling and ugly."
In the meanwhile, the technician sees strength elsewhere in "good quality name stocks" with "good growth prospects" such as
Marsh & McLennan
. Peroni, who sees the Dow trading between 9100 and 9500, said he's also positive on insurers, financial and brokerage stocks, and broadcast stocks.
Somewhere between its session high of 2280.97 and session low of 2241.74, the tech-wedded
Nasdaq Composite Index
lately was rising 4 to 2263. Of no help to the index was another profit warning -- this time from
, recently down 12.5%.
were each off a fraction. The
Morgan Stanley High-Tech 35
was up 0.1% while the
Philadelphia Stock Exchange Semiconductor Index
was up 1.7%.
'We got these glamour stocks, the techs, that took us higher -- well, the bloom seems to be out of that rose,' said BT Brokerage's Ken Ducey. 'I think we're gonna re-evaluate here and pull back the horns before there's any buying.'
While Internet stalwarts such as
were being counted among the tech damaged,
was making a run for another new high.
was flying up 38.8% following a bullish forecast for its fourth quarter.
TheStreet.com Internet Sector
index (which includes AOL and Yahoo! among its members) was down 7 to 521, and
TheStreet.com E-Commerce Index
(which includes eBay among its members and which is adding Cyberian Outpost to its
component list after tomorrow's close) was down 1 to 96.
'Two or Three Days Does Not a Trend Make'
The Dow was up 8 to 9306, after rising as high as 9337.00 and falling as low as 9240.02. Dragging down the blue-chip measure the most were
was up 3 to 1228, while the small-cap
was off 1 to 393. Though the beaten small-cap proxy has enjoyed two straight days this week of outperforming its large-cap measures.
To this, Peroni said: "Two or three days does not a trend make. It'll take a lot more proving for
small-caps to replace any medium- or high-caps in the leadership. But it's a good thing to see money's still in the market, that there's an appetite for stocks. That this is a rotational and not a distributional market is healthy."
Market internals remained poor. On the
New York Stock Exchange
, decliners were outpacing advancers 1,452 to 1,287 on 415 million shares. The downs had the ups 1,991 to 1,483 on 499 million shares in
Nasdaq Stock Market
Among other indices, the
Dow Jones Transportation Average
was down 0.7% while the
Dow Jones Utility Average
was climbing 0.6%.
The bond market failed to receive any
for its recent depression while
chatted to a
subcommittee about non-monetary-policy issues. The bellwether 30-year Treasury was down 23/32 to 93 31/32, lifting its yield to 5.67%. (For more on the fixed-income market, see today's early
Peroni thinks bonds, which he said are more focused on the domestic economy and earnings comparisons than on the global picture these days, have made a short-term bottom, only to be trapped in the quicksand of 5.4% to 5.7% yields. If the long yield hits 5.8%, he said, "that would be very bad. This market has just got to get accustomed to a 5.6% yield." Peroni said he's not yet worried about any real inflationary pressure, "especially since we haven't seen any major moves in inflation-type names like oil and gold
Wednesday's Midday Movers
Aaron L. Task
It may not be Monday, but "merger mania" is afoot. One wonders if
crack writing team will revise the ill-fated "Wedding Wednesday" moniker to describe the action.
was down 3 13/16, or 14.8%, to 22 after agreeing to acquire Canada's
in a stock deal valued at $400 million. Architel Systems was up 4 1/16, or 26.2%, to 19 9/16.
Concentra Managed Care
was up 3 1/4, or 28.3%, to 14 3/4 after agreeing to a merge with privately owned
. The roughly $1.1 billion deal includes $328 million of debt assumption and the right of all but 7% of Concentra's shareholders to receive $16.50 cash per share.
was down 3 1/16, or 11.8%, to 22 7/8 after confirming it is buying
Nine West Group
for $885 million in cash and stock, plus $515 million in debt assumption.
Morgan Stanley Dean Witter
cut its recommendation on Jones Apparel to outperform from strong buy. Nine West was up 3/8 to 23 3/16.
was up 3 1/8, or 7.2%, to 47 7/16 after
The New York Times
reported it is in merger negotiations with Dow member
. DuPont was up 7/16 to 51 3/4.
was up 11/16, or 4.1%, to 17 11/32 after
The Wall Street Journal
is preparing a full-blown proxy fight if the chipmaker won't enter friendly negotiations. Philips, up 5/8 to 68 15/16, made a $17 a share offer for VLSI on Friday.
Cyberian Outpost was up 6 3/16, or 38.8%, to 22 3/8 after forecasting fourth-quarter revenue of $33 million, up 307% from the year-ago period and up 40% vs. the third quarter.
was down 2 3/4, or 13.3%, to 17 7/8 after posting posted first-quarter earnings of 40 cents, excluding charges, up from the year-ago 37 cents but shy of the three-analyst view of 42 cents.
was down 1/2, or 17.4%, to 2 1/2 after recording a fourth-quarter loss of 12 cents a share, including one-time items. The three-analyst estimate called for earnings of 6 cents vs. the year-ago profit of a dime. The company also said it will restate downward earnings for the first three quarters of 1998 to correct errors identified during the year-end audit process.
Pacific Gateway Exchange
was up 2 9/16, or 11.6%, to 24 7/8 after reporting fourth-quarter earnings of 25 cents a share, a penny ahead of the 11-analyst consensus and up from 19 cents a year ago.
was higher by 2 5/16, or 7.9%, to 32 1/2 after posting fourth-quarter profits of 36 cents a share, 2 cents ahead of the 13-analyst view and up from 31 cents a year ago.
BT Alex. Brown
upped its recommendation to strong buy from buy.
was down 5 1/8, or 24.1%, to 16 3/16 after it reported second-quarter earnings of 15 cents a share, 4 cents short of the eight-analyst outlook and below the year-ago 18 cents. The company said it sees full-year earnings about 10% to 15% below last year's 92 cents a share and that it will take an unspecified third-quarter restructuring charge. Analysts called for 1999 earnings of $1.02.
was down 3 29/32, or 31/6%, to 8 1/2 after warning its first-quarter and full-year earnings will not meet expectations. The 10-analyst views are currently for earnings of 35 a share in the first quarter and $1.89 a share for all of 1999.
cut its recommendation to neutral from buy.
was down 1 1/16, or 20%, to 4 5/8 after reporting a fourth-quarter loss of $1.08 a share, well in excess of the lone-analyst prediction of a 28 cent shortfall and reversing a profit of 7 cents a share a year prior.
3Com was down 3 3/8, or 12.5%, to 23 5/8 after
late yesterday warning it sees third-quarter operating earnings of 23 cents a share because of seasonal weakness and a slowdown in U.S. and Latin American markets. The 26-analyst outlook called for the network equipment maker to earn 36 cents.
Credit Suisse First Boston
Morgan Stanley Dean Witter
and BT Alex. Brown separately cut recommendations on 3Com.
was down 4 3/8, or 7.6%, to 53 1/8 after reporting fourth-quarter earnings of 14 cents a share. The results beat the eight-analyst consensus of 12 cents but fell well short of year-ago results of 38 cents.
was down 1 3/8, or 13.5%, to 8 13/16 despite reporting second-quarter profits of 24 cents a share, 4 cents ahead of the 11-analyst view but down from 76 cents a year earlier. The company said fiscal second-half earnings will be "nominal."
In other news:
was up 2 1/8, or 9.7%, to 24 and
higher by 2, or 5.9%, to 36 on word the firms will jointly develop telephony and Internet server technologies.
Oil drilling and services firms were higher after the
American Petroleum Institute
reported an unexpected decline in inventories; the
Philadelphia Stock Exchange Oil Service Index
lately was up 6.3%. Gainers included
, up 1 5/16, or 9.7%, to 14 13/16;
, higher by 1 7/16, or 7%, to 21 15/16;
, up 1 9/16, or 5.5%, to 30 1/4; and
, up 2 1/16, or 8.2%, to 27 1/8.