TheStreet.com's MIDDAY UPDATE
February 29, 2000
Market Data as of 2/29/00, 12:59 PM ET:
o Dow Jones Industrial Average: 10,114.12 up 75.47, 0.75%
o Nasdaq Composite Index: 4,671.20 up 93.35, 2.04%
o S&P 500: 1,361.68 up 13.63, 1.01%
o TSC Internet: 1,178.80 up 24.25, 2.10%
o Russell 2000: 572.16 up 14.48, 2.60%
o 30-Year Treasury: 100 31/32 up 5/32, yield 6.169%
In Today's Bulletin:
o Midday Musings: Nasdaq Reasserts Leadership Role While Dow Draws Skepticism
o Herb on TheStreet: How Salton Peppers the Press With Puff
Also on TheStreet.com:
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SiliconStreet.com: The Would-Be Man of Steel
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Market Features: The Hidden Bear Market: Investors Worry That Hibernation Is Almost Over
If tech starts to suffer, where are investors to go?
Brokerages/Wall Street: DLJ Lockup Policy Aims to Ease Dumping 180 Days After IPOs
The investment bank experiment would allow venture capitalists to sell stakes at intervals, only if the stock has appreciated.
Midday Musings: Nasdaq Reasserts Leadership Role While Dow Draws Skepticism
2/29/00 1:03 PM ETAfter yesterday's rare relief bounce in some beaten-down blue-chip names, most of the action has come back to where the market expects it.
The latest in the prodigious history of huge technology rallies had the
Nasdaq Composite Index
flying in record territory near midday. The Comp was up 95, or 2.1% to 4673, benefiting from strong performances from super-components like
, not to mention another massive surge in
. The index was on pace to set a closing record.
3Com has been lighting up the Nasdaq this year ahead of the initial public offering of its
unit, which raised its price range to $30-$32 a share from the original $14-$16 a share. 3Com plans to shed the remainder of its Palm holdings -- about 532 million shares -- by distributing them to existing shareholders.
3Com was up 10 7/8, or 13.8%, to 89 15/16.
Gains were more moderate in the broader big-cap market, with the
up 14, or 1%, to 1362. The
Dow Jones Industrial Average
, meanwhile, was up 71, or 0.7%, to 10,109.
You'd think that traders would be heartened by the fact that the Dow was faring as well as it was. Profit-taking in the proxy's financial components was minimal to nonexistent, with
each extending their strength, while
, which had surged 6.5% yesterday, was suffering mere fractional losses.
But sentiment is tepid at best.
"A minor bounce" was how Sam Ginzburg, senior managing director of equity trading at
, bluntly characterized yesterday's rally in the Dow. "We're not there yet. Not a believer whatsoever. Any stock with a three-letter symbol, you don't want to own it."
That negativity is underpinned by what has become a fairly unambiguously hostile interest rate environment. Make no mistake, there are those who think the market has gone too far in discounting future rate hikes, that we're closer to the end of the Fed's tightening cycle than the beginning. But most traders remain cautious.
poll shows about three-quarters of primary dealers of government debt thinking that the
will raise the fed funds rate by 25 basis points at each of its next two meetings. And
testimony didn't suggest to anyone that the Fed would likely stop there.
"It's very uncertain," Boockvar said. "You've still got the rest of the year facing rate hikes. And we've got an inverted yield curve. The banks don't make any money with an inverted yield curve." Any narrowing (much less inversion) in credit spreads puts pressure on banks' bottom lines because they borrow short-term and lend long-term.
The bond market was little changed, with the benchmark 10-year Treasury down 2/32 to 100 17/32, putting its yield at 6.43%. The 30-year Treasury, meanwhile, was 9/32 higher to 101 3/32 and yielding 6.17%. Bondsmen weren't particularly stirred by this morning's
Chicago Purchasing Managers' Index
, which came in at a softer-than-expected 56.7 for February. (For more on the fixed-income market, see today's
While banks were mixed, brokerage stocks were running hard. The
American Stock Exchange Broker/Dealer Index
was up 3.2%, with
each up more than 5%.
What can you say about the biotechs? Just that the
American Stock Exchange Biotechnology Index
was up another 5.2%. BTK component
Protein Design Labs
had picked up 24, or 11%, to 242.
Semiconductor stocks were soaring, led by another eye-popping gain in Rambus, which has been bursting higher session after session on momentum and optimism over the upcoming release of
, whose DRAMs, made by
, are based on Rambus technology. Rambus was lately up a whopping 51, or 21.2%, to 292.
Rambus isn't alone up there today: The
Philadelphia Stock Exchange Semiconductor Index
was up 7.8%. The chips were getting lift from
Deutsche Banc Alex. Brown's
Erika Klauer, who wrote today that the market is at "the beginning of a substantial semiconductor industry up-cycle." Klauer resumed coverage of
was flying up 14, or 2.5%, to 572.
Net stocks were also boffo, with the
TheStreet.com Internet Sector
index up 23, or 2%, to 1178.
Breadth was positive on strong volume.
New York Stock Exchange:
1,610 advancers, 1,222 decliners, 619 million shares. 56 new 52-week highs, 94 new lows.
Nasdaq Stock Market:
2,454 advancers, 1,509 decliners, 1.1 billion shares. 332 new highs, 65 new lows.
For a look at stocks in the midsession news, see Midday Movers, published separately.
Herb on TheStreet: How Salton Peppers the Press With Puff
2/29/00 6:30 AM ET
Hyped to the hilt:
Nobody can ever accuse
CEO Leon Dreimann of not looking out for his shareholders. Only it's the way he does it that may (or should) make some investors queasy. The unwritten rule of corporate America is for companies
to publicly hype their stocks. It looks bad. It smells bad. And it usually ends badly.
Yet, that's just what Dreimann, whose company was
recently chided here for getting a tad too aggressive with retailers, has been doing lately. For example, in an interview with
on Feb. 18, he bragged about how the company would beat Wall Street estimates for the current fiscal year.
Then he discussed concerns that the company won't be able to continue the phenomenal growth it has experienced, thanks to the George Foreman Grill, saying:. "The momentum can be maintained through mergers and acquisitions and changing the company from a small-cap to a mid- to large-cap, but it's difficult to do that when the stock price, which is normally used as an asset to make acquisitions, is so far below its market."
The interview did nothing for the stock, so (surprise, surprise) a few days later Salton issued a press release reiterating what Dreimann said in the
interview, with this additional twist: "Salton," Dreimann said, "was also recently cited as one of the highest-rated stocks, based on analyst comments contributed within the past month to
Recently cited as one of the highest-rated stocks?!
It's easy to understand why the guy is proud, but that's just
the type of thing companies usually brag about in public.
For good reason: It's called touting your stock, and shareholders tend to take it personally if the company doesn't live up to the hype. As for being the highest-rated stock, analysts are often wrong. What's more, it especially looks bad if the company is trying to do some kind of offering of its stock which (oh, didn't I tell you?) is just what Salton has been telling Wall Street it intends to do in the way of a private offering.
But, then again, Salton has never been shy of being promotional, so at least you can say they're consistent.
A Salton spokesman said company officials were unavailable for comment.
Message board melee:
, who has never read message boards, made the mistake of venturing onto one of the
message boards (not on our site) over the weekend. "I was shocked at the messages," he relates. "Threats, name calling, misleading Information ... very scary ... It was amazing to see the message-board responses (to several, recent negative reports).
probes? Death threats? If the
wanted to investigate price fixing in a particular industry, let them take a good look at these boards."
, it's outa control,
outa control, I tell ya.
Finally, short stories:
If you've been whooping it up because just about every short-seller I know has been squeezed to the point of shutting their doors, as some I believe are close to doing, remember that when the shorts are gone, so is the natural cushion that keeps stocks from going into free-fall.
Eeeeeeehw! (That's the popular message board rallying call, "wheeeeeee" -- in reverse.)
Herb Greenberg writes daily for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, though he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. He welcomes your feedback at
email@example.com. Greenberg also writes a monthly column for Fortune.
Mark Martinez assisted with the reporting of this column.
Copyright 2000, TheStreet.com