Talk to me, Goose
Dow Jones Industrial Average
continued to fly below the 10,000 hard deck as another spike in oil prices and some disappointing earning news raised concerns.
The Dow closed down 51.06, or 0.5%, to 9879.41, nearing its early low of 9864.98 after a midafternoon rise nearly back to break-even.
, and financial components
were most damaging to the Dow.
Keeping the Dow's decline in check was
, up 7.4% thanks to an upgrade by
Salomon Smith Barney
closed down 8.56, or 0.7%, to 1297.82, frustrated by weakness in financials, consumer favorites and transports. The
fell 0.74, or 0.2%, to 398.43.
Among industry groups, the
American Stock Exchange Drug Index
, which fell 5.7% after
cut sales estimates for Prozac. Additionally, the
Philadelphia Stock Exchange/KBW Bank Index
fell 1.5% and the
American Stock Exchange Airline Index
Nasdaq Composite Index
slid 10.30, or 0.4%, to 2428.97.
was a big drag on the tech-manipulated index, while strength in
enabled it to close above its low of 2419.85.
was among the Comp's better performers early on, but the chip giant closed up fractionally at 120 1/2 vs. an intraday high of 122 3/8. The
Philadelphia Stock Exchange Semiconductor Index
gained 0.4%, largely thanks to strength in
Internet proxies were mixed.
TheStreet.com Internet Sector
index rose 4.28, or 0.7%, to a record 608.93 while
TheStreet.com E-Commerce Index
slid 0.18, or 0.2%, to 109.71.
entered the DOT after the close of trading, the
Philadelphia Stock Exchange
said. Inktomi replaced
, whose acquisition by
was completed today.
AOL, by the way, continued its recent assault on its all-time high levels, rising 3.3% to 108 7/8.
In other index news,
entered the E-Commerce Index after the close, the
American Stock Exchange
said. Beyond.com replaced
, whose merger with fellow E-Commerce Index component
is expected to be completed today. The merged CDnow/N2K will remain in the index under its new symbol, CDNWD.
Dow 10,000 'is an arbitrary boundary within an arbitrary portfolio,' Monty's Tom McManus said. 'It could only be significant in the psychology of some investors, who should do everything they can to rid themselves of psychological biases.'
"You can refer to Eli Lilly's concerns about 1999 sales or
, but that's small potatoes compared to the real issue," said Hugh Johnson, chief investment officer at
. "The biggest single issue is the rise in oil prices and decline in bond prices and what that means for earnings and price-to-earnings multiples, which is not good. You don't have to go any further to understand what's going on in the stock market today."
The price of the 30-year Treasury bond fell 17/32 to 96 7/32, its yield rising to 5.51%. (For more on the fixed-income market, see today's late
Bond Focus.) Meanwhile, crude oil futures rose 62 cents to $15.08. In reaction, the
Philadelphia Stock Exchange Oil Service Index
gained 7.9% and the
American Stock Exchange Oil & Gas Index
"What's good news for the stocks of oil companies is not-so-good news for profits of U.S. companies," Johnson said. "You shouldn't be alarmed about inflation and interest rates, but you have another reason to worry about
them and those are two things you don't want to worry about."
Johnson, who said on
Feb. 25 that the Dow could fall as low as 8500, remains "very cautious" short-term but optimistic longer-term.
"There are some very meaningful worries -- even though the stock market as measured by the Dow or S&P is going up, there are divergences," he said. "Breadth numbers are deteriorating, weekly new highs vs. new lows is poor."
Market internals today again belied the Dow's proximity to five figures.
New York Stock Exchange
trading, 756 million shares traded while declining stocks beat advancers 1,597 to 1,361. In
Nasdaq Stock Market
activity 859.5 million shares were exchanged while losers led 2,148 to 1,739. New 52-week lows led new highs 78 to 38 on the Big Board and by 95 to 55 in over-the-counter trading.
Telecom Deal Excites Market Bull
Rather than the retreat from Dow 10,000, Tom McManus, equity portfolio strategist at
NationsBanc Montgomery Securities
, said the most interesting development today was the $11.2 billion acquisition of
"The acquisition has caused people to reevaluate the prices awarded to some other bandwidth plays," McManus said, noting gains today by erstwhile energy plays
Williams, which rose 6.6%, was upgraded by
, but "I don't think it's the upgrade as much as the reevaluation of the company's underlying business," McManus said. "This is a telecom business, not the old gas pipeline. It's a pretty interesting theme that's going on."
Nasdaq Telecommunications Index
rose just 0.7% while the
American Stock Exchange North American Telecommunications Index
As for Dow 10,000, it "is an arbitrary boundary within an arbitrary portfolio," the strategist said. "It could only be significant in the psychology of some investors, who should do everything they can to rid themselves of psychological biases."
McManus acknowledged "it's possible some people will sell at 10,000," but he took exception to an article in today's
Wall Street Journal
that said options traders are "anticipating trading against a wave of buying from retail investors" when 10,000 is crossed.
Referring to an op-ed piece in the daily, he said: "I don't necessarily believe the Dow ought to be trading at 36,000 today, but it will get there. There are a lot of reasons why stock prices can be higher."
Echoing comments he made
March 4, McManus observed the market's "resiliency" to the sharp rise in interest rates earlier in the year. "All you needed to do was slow the rate of rise and the market broke out," he said. "That tells me if you combined a better earnings picture with falling interest rates, then you'd be adding jet fuel to this situation."
McManus has a year-end target of 1400 for the S&P 500.
Among other indices, the
Dow Jones Transportation Average
51.77, or 1.5%, to 3336.79; the
Dow Jones Utility Average
gained 0.87, or 0.3%, to 302.41; and the
American Stock Exchange Composite Index
fell 0.48, or 0.1%, to 715.83.
Elsewhere in North American equities, the
Toronto Stock Exchange 300
fell 26.02 to 6593.80 and the
Mexican Stock Exchange IPC Index
lost 35.22, or 0.7%, to 4855.17.
Wednesday'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, Intel added 3/16 to 120 1/2, off its session high of 122 3/8, after the
Federal Trade Commission
approved an antitrust settlement with the chipmaker. Back in June, the feds argued that the company illegally used its market power when it denied three customers continuing access to advance technical information and product samples necessary to develop computer systems based on Intel microprocessors.
leapt 4 15/16, or 19.8%, to 29 15/16 on market rumors the water treatment company will be taken out. The stock was a big play for investors buying calls in today's options market.
, which lost 1 9/16 to 108 7/16,
, which lost 1 3/8 to 73 7/16, and
, which lost 1 9/16 to 44 7/16, were named as potential buyers.
Mergers, acquisitions and joint ventures
climbed 2 13/16, or 23.3%, to 14 7/8 after announcing it received an unsolicited, $15-a-share buyout bid from an unnamed suitor. The company hired
Simmons & Co. International
to help it evaluate strategic alternatives.
Frontier expanded 5 7/8, or 13.2%, to an all-time high of 50 1/2 after Bermuda-based Global Crossing agreed to buy the long-distance and local carrier for $11.2 billion in stock. Global Crossing shed 4, or 7.8%, to 47 1/8. The companies said the merger will create the first owned and operated global Internet protocol-based fiber-optic network able to provide customers with integrated worldwide Internet, data, long-distance, local telephone and conferencing services.
closed up 6 5/8, or 5.8%, to 121, dropping from its session high of 133 7/8, after
denied a report in
The Wall Street Journal
that said Mister Softee was renewing a collaboration with RealNetworks. Microsoft lowered 1 15/16 to 167 1/8.
took at closer look at the situation in a
piece this afternoon.
scored 2 11/16, or 35.5%, to 10 1/4 after agreeing to be acquired by
in a stock deal valued at $82.95 million. Plexus, which will issue 0.4 of a share for each SeaMed share, skidded 3 7/16, or 10.4%, to 29 3/4.
expanded 2 3/4, or 9.8%, to 30 3/4 after signing a deal with a division of General Electric's
unit to a create an advertising team focused exclusively on the convergence of the Internet and television. GE slid 1 9/16 to 108 7/16.
Earnings/revenue reports and previews
Dollar Thrifty Automotive Group
soared 2 3/8, or 19.5%, to 14 9/16 after saying it expects first-quarter earnings to exceed 15 cents a share, sharply above the current four-analyst consensus estimate of 6 cents. Goldman Sachs upped its recommendation to market outperform from market perform.
tanked 2 1/4, or 29.8%, to an all-time low of 5 11/32 after forecasting a fourth-quarter loss of $1.37 a share, including charges. No estimates were available; a year ago, the company earned 20 cents a share in the fourth quarter. Additionally, Foamex named John Johnson Jr. president and CEO, replacing Andrea Farace. Marshall Cogan was elected chairman. The company also said it hired
to explore strategic alternatives.
gained 1, or 14.8%, to 7 3/4 after reporting second-quarter earnings of 23 cents a share, 1 cent higher than the four-analyst forecast but behind the year-ago 33 cents.
sloughed off 1 7/32, or 26.4%, to 3 7/16 after warning its first-quarter profits will be "significantly below" the three-analyst estimate of 8 cents a share. In fact, the company said it expects a loss of up to 13 cents a share.
New England Business Service
declined 4 1/16, or 13.4%, to an annual low of 26 3/16 after forecasting its third-quarter earnings will not meet the four-analyst consensus of 50 cents a share.
excelled 2 13/16, or 9.5%, to 32 9/16 after posting first-quarter earnings of 35 cents a share, 7 cents ahead of the four-analyst consensus and up from 19 cents a year ago.
gave up 1 1/2, or 5.2%, to 27 7/16 after
last night reporting fourth-quarter earnings of 97 cents a share, on target with the 14-analyst view and ahead of the year-ago 77 cents. But the retailer said it will record almost $35 million in first-quarter charges and extraordinary losses.
advanced 2 7/8, or 6.2%, to 49 5/8 after forecasting first-quarter earnings, excluding a 10-cent gain, in a range of 57 cents to 64 cents a share, better than the current four-analyst consensus estimate of 41 cents.
grew 1 7/8, or 7.9%, to 25 1/2 after recording fourth-quarter earnings of 26 cents a share, on target with the 12-analyst view and above the year-ago loss of 32 cents.
plunged 2 15/16, or 27.2%, to an annual low of 7 15/16 after warning its first-quarter earnings will fall below both the six-analyst forecast of 11 cents a share and the year-ago dime due to lower product revenue.
BT Alex. Brown
cuts its recommendation to buy from strong buy.
popped up 2 5/16, or 10.4%, to 24 5/8 after posting first-quarter earnings of 48 cents a share. That's down from 85 cents a year ago but well ahead of the nine-analyst consensus of 23 cents.
added 2, or 7.3%, to an all-time high of 29 1/4 after forecasting first-quarter earnings, excluding a penny gain, to come in at 22 cents to 23 cents a share, above the current 10-analyst consensus estimate of 21 cents.
Williams-Sonoma plummeted 7, or 19.4%, to 29 after posting fourth-quarter earnings of 75 cents a share, up from 61 cents a year ago but a penny shy of the eight-analyst consensus. Goldman Sachs removed the retailer from its recommended list and downgraded it to market outperform.
rose 1 7/8, or 13.4%, to 15 7/8 after reporting second-quarter earnings of 45 cents a share, blasting away the single-analyst outlook for 26 cents and the year-ago 18 cents.
Offerings and stock actions
lifted 1 9/16 to 84 after announcing a 3-for-2 stock split.
revved up 1 3/8, or 17.5%, to 9 1/4 after announcing plans to purchase of up to 400,000 shares of its outstanding common stock for $8 to $10 a share in a Dutch auction.
Donaldson Lufkin & Jenrette
shaved off 3 1/16 to 65 3/4 after it filed a preliminary registration statement with the
Securities and Exchange Commission
for an IPO of a new stock that will track its online brokerage unit,
. DLJ's shares had risen precipitously in anticipation of the filing.
shot up 19 5/8, or 140.1%, to 33 5/8 after
BancBoston Robertson Stephens
priced its 3 million-share IPO above range at $14 a share.
(NOKA:NYSE ADR) added 1 5/16 to 147 1/8 after its board approved a 2-for-1 stock split at its annual general meeting.
Construction and equipment-manufacturer names rallied after Salomon Smith Barney upgraded several in the sector. Raised to buy from neutral were Caterpillar, which moved up 3 1/4, or 7.4%, to 47 1/4;
, up 3 3/8, or 10.2%, to 36 1/2; and
, up 2 7/16, or 11.3%, to 24. Upped to outperform from neutral were
, which moved up 1/2, or 8.3%, to 6 9/16, and
, up 3/8 to 9 7/16.
expanded 3 3/8, or 17.8%, to 22 3/8 after
Credit Suisse First Boston
reiterated its strong buy recommendation and upped its earning estimates for fiscal year 2000 to $1.29 from $1.25 a share.
Eli Lilly tumbled 5 5/16, or 5.7%, to 88 3/4 after SG Cowen drug analyst Steve Scala said his $2.32-a-share earnings estimate on Lilly for the year might be 2 cents high. The company's Prozac sales are being hurt by
, the new anti-depressant from
. Also, there is less demand this quarter because there was heavy stocking of Prozac by wholesalers in the fourth quarter. Merrill Lynch analyst Steve Tighe made the same call last week, which put pressure on the stock. He said that in the first quarter, Prozac is likely to be flat from last year's first-quarter sales of $617.6 million.
Ballard Power Systems
jumped 5 9/16, or 19.4%, to 34 5/16 after
unveiled an environmentally friendly compact car powered by the company's fuel cells. DaimlerChrysler lost 1 5/16 to 92 1/16.
vaulted 2 1/8 to 51 7/8 on news it began selecting patients for its Phase III clinical trial on
to treat chronic hepatitis B virus infection.
flew 7 1/2, or 26.6%, to an all-time high of 35 7/8 after gaining 25.3% yesterday, with company officials unable to explain the stock's moves. On Monday,
issued a research note about several of the company's recent deals, including an agreement to provide video-streaming Internet services to
climbed 7/16, or 8.8%, to 5 7/16 after hiring
as an adviser to explore alternatives for paying off its $275 million term loan. The alternatives include a sale of certain assets, a private equity placement, refinancing of the principal through conventional and/or commercial mortgage-backed securities, and drawing on its existing credit facility.
Senior Writer Jesse Eisinger contributed to Wednesday's Company Report