Massive Rally Looks Really Real to Some
As the
New York Yankees
swept up Broadway for a
World Series
victory lap, Wall Street was having its own parade. Major proxies marched solidly higher as the strength of yesterday's broad rally easily spilled over in morning trading.
Technology stocks were at the head of the pack, with the
Nasdaq Composite Index
up 98, or 3.4%, to 2973 and on pace for a record close.
TheStreet.com Internet Sector
index was jumping 29, or 3.9%, to 748, while the small-cap
Russell 2000
was up 6, or 1.5%, to 429.
The
Dow Jones Industrial Average
was rising 166, or 1.6%, to 10,788, while the broader
S&P 500
was lifting 29, or 2.2%, to 1372. After a vigorous 227.64-point Dow jump and a 45.73-point S&P leap yesterday, things were looking pretty good for those long.
"This is not a one-day phenomenon -- yesterday felt like the real deal," said Bill Schneider, head of U.S. equity block trading at
Warburg Dillon Read
. "The party goes on." Characterizing yesterday's movement as a "broad and powerful rally" with solid volume, Schneider said there was a lot of pent-up demand and a sense that players had gotten too pessimistic about interest rates.
Investors cheered today's weak report on September
new home sales
, which dropped 12.8% to an 811,000 annual pace from a revised August pace of 930,000. And they were happy to look beyond the higher-than-expected headline number on this morning's
Chicago Purchasing Managers' Index
to concentrate on the good news: The prices-paid component came in at 65.4, down from the previous month's 71. October's headline number came in at 58.8, higher than the 56.8 expected by economists polled by
Reuters
and up from last month's 53.8.
After two benign economic reports yesterday, today's numbers inspired a further surge in the bond market. The benchmark 30-year Treasury was up 1 7/32 to 99 16/32, its yield at 6.16%. (For more on the fixed-income market, see today's early
Bond Focus.)
Amid the cheering, there are still plenty of skeptics though. Ricky Harrington, chief technical analyst at
Wachovia Securities
referred to last week's agreement on reform of the
Glass-Steagall
act, the longstanding law intended to keep banks, brokers and insurers separate, as one of the major influenced that kicked off a rally, and gave some leadership to financials that we had not seen for a long time. "We've got fairly good breadth and good strength in secondary stocks, but it remains to be seen whether this is a one- to two-week rally," said Harrington.
The financial sector was already relinquishing some of its earlier strength with the
Philadelphia Stock Exchange/KBW Bank Index
up just 0.2%, while the
American Stock Exchange Broker/Dealer Index
was slipping less than a point.
Though Harrington admits the trading range of 10,000 to around 10,900 is certainly wide, he predicted volatility will become more the norm when four new components --
Microsoft
(MSFT) - Get Report
,
Intel
(INTC) - Get Report
,
SBC Communications
(SBC)
and
Home Depot
(HD) - Get Report
ACTIVE="YES"/> -- are added to the Dow on Monday.
Breadth was strongly positive and volume was extraordinary, especially for a Friday. On the
New York Stock Exchange
advancers were trouncing decliners 2,088 to 855, on 668 million shares, while on the
Nasdaq Stock Market
laggards were beating leaders 2,129 to 1,584 on 845 million shares. New 52-week highs were leapfrogging over new lows 174 to 66 on the Nasdaq, while on the Big Board, new highs were topping new lows 101 to 60 -- a change from the recent trend.
Friday's Midday Watchlist
By
Tara Murphy and
Thomas Lepri
Staff Reporters
Mergers, acquisitions and joint ventures
Go2Net
(GNET)
was up 10 9/16, or 17.9%, to 69 5/8 after forging an agreement to provide
Net2Phone's
(NTOP)
online telephone and other services through its Web site. The transaction calls for the two companies to develop a joint messaging and communications feature on Go2Net's site that enables users to send and receive voice mail, faxes, e-mail and telephone calls. Net2Phone was up 2 7/16 to 54 7/8.
Interpublic Group
(IPG) - Get Report
unveiled its plans to unite its
Ammirati Puris Lintas
and
Lowe & Partners Worldwide
advertising units. Interpublic said it has tapped Lowe Group Chairman and CEO Frank Lowe to serve in those posts at the new agency. Interpublic was up 1 5/8 to 41 1/8.
Starwood
(HOT)
unit
Sheraton International
launched a $295 million cash takeover offer for the ordinary and savings shares it doesn't already own of Italian hotels operator
Ciga
. Sheraton already owns 72.91% of Ciga's ordinary shares and 30.85% of its savings shares. Starwood was up 1 3/8, or 6.4%, to 23.
Earnings/revenue reports and previews
Electronic Data Systems
(EDS)
last night posted third-quarter earnings of 51 cents a share, beating the 18-analyst estimate of 49 cents and the year-ago 39 cents, which included charges. It was 5 5/16, or 9.8%, to 59 5/16.
Lockheed Martin
(LMT) - Get Report
was down 4 1/2, or 19.6%, to 18 7/16 after posting third-quarter earnings of 57 cents a share, which includes two gains that contributed 9 cents to the quarter's earnings. The report beat the 15-analyst estimate of 47 cents but fell below the year-ago 83 cents.
Solutia
(SOI) - Get Report
reported third-quarter earnings of 53 cents a share, in line with the nine-analyst estimate and up from the year-ago 47 cents. The stock was down 5/16 to 17 1/16.
Offerings and stock actions
America Online
(AOL)
after yesterday's close set a 2-for-1 stock split, its seventh such split in seven years. AOL reported that more than 2 million individual investors will get one share for every share they own on Nov. 8, with the remaining shares up for grabs starting Nov. 22. After the split's effective date, the company will have 2.2 billion outstanding shares. According to AOL, a stockholder who purchased 1,000 shares for $11,500 at its IPO and held his position would now own 128,000 shares worth roughly $7.8 million. AOL lately was up 3 to 129 1/2.
Celestica
(CLS) - Get Report
said it has set a public offering of subordinate voting shares.
Morgan Stanley Dean Witter
and
RBC Dominion Securities
have been tapped to underwrite the offering. The stock was up 1 15/16 to 56.
eToys
(ETYS)
said its lead underwriter,
Goldman Sachs
, will release the lock-up restrictions on 10% of the company's shares on Nov. 2. That will increase eToys' float by as much as 9.5 million shares. The stock was down 6 5/8, or 9.4%, to 64.
--
Eileen Kinsella
Analyst actions
Commerzbank Global Equities
cut
Aegon
(AEG) - Get Report
to hold from buy. Aegon was up 7/8 to 91 13/16.
Morgan Stanley cut
American Express
(AXP) - Get Report
to outperform from strong buy, based on valuation but raised its price target to 179 from 175. The stock was down 7 1/2 to 153 1/2, retreating after yesterday's run-up.
Deutsche Banc Alex. Brown
cut
BFGoodrich
(GR)
to market perform from buy. The stock was up 7/16 to 23 13/16.
J.P. Morgan
started
Citigroup
(C) - Get Report
with a buy rating and set a price target of 61. The stock was up 7/8 to 55.
Merrill Lynch raised its intermediate rating on
Consol Energy
(CNX) - Get Report
to buy from accumulate and upped its second-quarter earnings estimate to 35 cents a share from 18 cents. The stock was up 1 1/4, or 10.9%, to 12 3/4.
Credit Suisse First Boston
downgraded
R.R. Donnelley
(DNY)
to hold from buy. The stock was down 3 11/16, or 13.4%, to 23 15/16.
Merrill Lynch
slashed its rating on
EchoStar Communications
(DISH) - Get Report
to intermediate-term accumulate from buy. EchoStar was up 1 to 62 1/2.
Warburg Dillon Read rolled out coverage of
E-Tek
(ETEK)
with a buy rating. It was up 3 3/16, or 5%, to 67 1/16.
CIBC World Markets
raised
Intel
(INTC) - Get Report
to buy from hold. Intel was up 5 7/16, or 7.5%, to 77 5/8 after saying late yesterday that it sees limited Y2K impact on its business.
Goldman Sachs started coverage of
Intimate Brands
(IBI)
, adding the stock to its recommended list. The stock was up 3 3/16, or 8.2%, to 42 1/8.
Warburg Dillon Read
upped its price target on
Manpower
(MAN) - Get Report
to 39 from 33. The stock was up 2 15/16, or 9.2%, to 34 7/8.
Wit Capital
cut
MarketWatch.com
(MKTW)
to outperform from buy. The stock was down 4, or 6.9%, to 54.
Merrill Lynch cut its intermediate-term rating on
Methode Electronics
(METHA)
to accumulate from buy. Last night, Methode warned investors that it expects to post second-quarter earnings 10% to 20% below the year-ago 26 cents a share. Methode said its second-quarter results would include a 6-cent charge from the bankruptcy of a large automotive customer. The four-analyst estimate has the company pegged to make 27 cents a share in the quarter. The stock was down 2 1/8, or 12.1%, to 15 11/16.
Warburg Dillon Read raised its 2000 price target on
Powertel
(PTEL)
to 60 from 40 and reiterated a buy rating on the stock. The stock was unchanged at 59.
Warburg Dillon Read started coverage of
SDL
(SDLI)
with a buy rating. The stock was up 10, or 9.2%, to 119 3/8.
J.P. Morgan initiated coverage of
Tower Automotive
(TWR)
with a buy rating. It was up 1/2 to 16 3/8.
Donaldson Lufkin & Jenrette
cut
Wachovia
(WB) - Get Report
to market perform from buy. Wachovia was down 1 to 86 3/4.
Merrill Lynch
upped forest and paper products firms
Willamette
(WLL) - Get Report
and
Boise Cascade
(BCC) - Get Report
to long-term buy from long-term accumulate. Merrill also upgraded
Weyerhaeuser
(WY) - Get Report
to long-term accumulate from long-term neutral. Willamette was up 2 5/8, or 6.7%, to 41 3/4; Boise Cascade was up 4 1/4, or 13.8%, to 35 1/8; and Weyerhaeuser was up 2 3/4, or 4.9%, to 58 3/8.
