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February 15, 2000

Market Data as of 2/15/00, 1:49 PM ET:

o Dow Jones Industrial Average: 10,617.57 up 97.73, 0.93%

o Nasdaq Composite Index: 4,322.95 down 95.60, -2.16%

o S&P 500: 1,387.22 down 2.72, -0.20%

o TSC Internet: 1,112.54 down 27.06, -2.37%

o Russell 2000: 535.76 down 4.18, -0.77%

o 30-Year Treasury: 99 27/32 down 12/32, yield 6.247%

In Today's Bulletin:

o Midday Musings: Rotation Wanes Amid Trader Skepticism on the Course Ahead
o Wrong! Dispatches from the Front: First the Good News

Also on

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Midday Musings: Rotation Wanes Amid Trader Skepticism on the Course Ahead


Thomas Lepri

Staff Reporter

2/15/00 1:21 PM ETLesson No. 743 of the late-stage bull market: It takes two sectors to rotate. Technology stocks were getting shellacked at midday, but a general skepticism among traders about the viability of the some long-neglected sectors was keeping rotation to a minimum.

Those technology stocks with the largest market capitalizations were taking the biggest beating, a trend that had the

Nasdaq Composite Index

down 86, or 1.9%, to 4333.


(MSFT) - Get Microsoft Corporation (MSFT) Report



(INTC) - Get Intel Corporation (INTC) Report





Level 3 Communications




(QCOM) - Get QUALCOMM Incorporated Report

-- they were all down, and down big.

The broader

S&P 500

was down 7, or 0.5%, to 1382. But some modest sector rotation was helping the

Dow Jones Industrial Average

stay above water. The Dow was up 79, or 0.8%, to 10,599, largely because of gains in its financial and cyclical components.

American Express

(AXP) - Get American Express Company Report


J.P. Morgan

(JPM) - Get JPMorgan Chase & Co. (JPM) Report

each were up around 2%.

Meanwhile, crude's ability to hang near the $30-a-barrel level was boosting oil stocks, including Dow component


(XOM) - Get Exxon Mobil Corporation Report

, which was up about 4.3%.

Traders were less than enthusiastic.

"The market looks like it's rotating every day," said John Manahan, head trader at

Brown Brothers Harriman

. "But once it rotates, it just rotates back to the tech stocks. As soon as they take them down a little, people come back and buy them."

It's little wonder. With the

Federal Reserve

still in tightening mode, the interest-rate environment is far from friendly to the financial sector. Thirty-dollar crude can't hurt the oil service stocks, but there's no consensus as to whether that price level will hold. And cyclical stocks, whose performance is tied to the contours of the economy, continue to suffer from a sort of late-expansion syndrome: The U.S. economy may be smoking, but it's not likely to get too much hotter.

The promise of organic growth remains the main fundamental driver of stocks. And when the market's favorite growth stocks start contracting, things quickly get volatile.

You'd be hard pressed to find a better poster-stock for volatility than


(INFY) - Get Infosys Limited Sponsored ADR Report

of late. After dumping 20% of its value yesterday, the stock had sunk another 32 points, or 12%, before investors started creeping back to the wreckage. Infosys was lately down about 2%.

Hardcore volatility like that is a little scary, to say the least. "I get concerned when I see stocks flipping around 50 to 100 points a day," said Barry Hyman, chief market strategist at

Ehrenkrantz King Nussbaum

. "The market is tolerant to a certain point, as it was with


(QCOM) - Get QUALCOMM Incorporated Report


Commerce One


. But then you take a look at these stocks and say, how much can you buy at $600 a share? Is it worth the leverage? Unless you're trading for the minute, the answer is no. And when you get to that limit, it's time to look for a new group of stocks."

One of those new stocks was software firm



, which lately has been constructing the sort of parabolic chart typical of a momentum darling. The stock was up 10 1/8, or 17.2%, to 69.

Notwithstanding the negative intermediate-term sentiment on their respective sectors, financial and paper stocks were enjoying good bounces from their recent lows. The

Philadelphia Stock Exchange/KBW Bank Index

was up 2.3%, while the

Philadelphia Stock Exchange Forest & Paper Product Index

was up 2.7%.

Meanwhile, while most of the tech sector was getting pummeled,


(RMBS) - Get Rambus Inc. Report

was flying. Rambus was up 13 1/16, or 11.7%, to 124 1/2, on what traders are calling a massive short squeeze. Today's move comes on top of yesterday's surge of 23 3/16, or 26.3%, to 111 7/16.

The bond market wasn't doing anything to improve the tone on Wall Street. The benchmark 10-year Treasury was down 1/32 to 99 17/32, putting its yield at 6.57%. The 30-year Treasury, meanwhile, was 16/32 higher to 99 26/32 and yielding 6.26%.

Small-caps and Internet stocks were generally lower. The

Russell 2000

was off 5, or 0.9%, to 535, while Internet Sector

index was down 23, or 2%, to 1117.

Market Internals

Breadth was ugly on moderate volume.

New York Stock Exchange:

1,306 advancers, 1,577 decliners, 630 million shares. 34 new 52-week highs, 141 new lows.

Nasdaq Stock Market:

1,506 advancers, 2,488 decliners, 1 billion shares. 176 new highs, 86 new lows.

For a look at stocks in the midsession news, see Midday Movers, published separately.

Wrong! Dispatches from the Front: First the Good News


James J. Cramer

2/15/00 10:28 AM ET

Another push opening, with tons good and tons bad.

Can't be happy about a delayed opening down for


(WMT) - Get Walmart Inc. Report

. That seemed like a real downbeat release, too. And the secondaries so far are just OK. I sure would like to see


(CSCO) - Get Cisco Systems, Inc. Report

stronger and am betting that way. Can't be sanguine with those bits of negativity.


LSI Logic

(LSI) - Get Life Storage, Inc. Report

is getting hit because it, too, filed for new supply. Oh man, the supply gods are angry.

But there are rays of hope: The drugs seem to be holding and the banks aren't slumping too badly. On the latter, the

American Banker

reports this morning that the


bank index, which includes the 29 largest banks, is now down to its lowest point since May 1997. The


was substantially lower then. I won't even hang a hat on it, but it does seem like the world has grown too negative. Probably related to the credit-card industry, which is hurting.

Can't be too bullish or bearish at the moment.

Random musings

: Click here if you want to go to London! Yep, our sister company,, came out of the chute today and it's a beaut. Easy registration and all. Go there.

James J. Cramer is manager of a hedge fund and co-founder of At time of publication, his fund was long Cisco. His fund often buys and sells securities that are the subject of his columns, both before and after the columns are published, and the positions that his fund takes may change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Cramer's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to comment on his column at

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