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March 3, 2000

Market Data as of 3/3/00, 12:39 PM ET:

o Dow Jones Industrial Average: 10,435.14 up 270.22, 2.66%

o Nasdaq Composite Index: 4,884.65 up 130.14, 2.74%

o S&P 500: 1,410.15 up 28.39, 2.05%

o TSC Internet: 1,217.33 up 53.22, 4.57%

o Russell 2000: 596.21 up 12.17, 2.08%

o 30-Year Treasury: 101 19/32 up 1/32, yield 6.124%

In Today's Bulletin:

o Midday Musings: Market Fattens Up on Lean Jobs Report
o Herb on TheStreet: Beware of the Mother of Short Squeezes

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Midday Musings: Market Fattens Up on Lean Jobs Report


David A. Gaffen

Staff Reporter

3/3/00 12:48 PM ET

As hungry pedestrians grumble, shoving their way through Wall Street's narrow alleyways, taken over by

John McCain

and the blaring Straight Talk Express, traders inside are cheering.

In February, only 43,000 people took the


advice and got a job, much less than expected, and that's got all major indices booming on a heavily traded Friday.

Nonfarm payrolls

increased 43,000 in February, way short of the 206,000


consensus. The

unemployment rate

ticked up to 4.1%. A few more job reports like this, and the Fed, which has been baring its teeth at the markets recently, will turn tail.

The rally is a broad one, with the

Dow Jones Industrial Average

lately up 242.92 to 10,407.84, a 2.4% gain, led by



, up 6.8% and



, up 10.4%. The


was lately up 23.79 to 1405.55.

"If the specter of higher interest rates has a light at the end of the tunnel, then you've got to reward the stocks you've been punishing," said Arthur Hogan, chief market analyst at


. "All of the old economy stocks that have been tarnished, you've got to buy."


Federal Reserve

is aiming to slow growth through a series of rate hikes to stave off inflation, but some view its efforts as an attack on the stock market, because the central bank has become increasingly focused on what contribution the so-called wealth effect has on consumer demand. Any sign that suggests the Fed might ease up on interest-rate hikes is a positive for equities.

The companies that dominate the Dow and S&P have been knocked down as Fed officials have engaged in jawboning about high asset prices and as interest rates climbed. That, of course, includes the financials, among the most sensitive to interest rates.

J.P. Morgan


was up 2.2%;

Merrill Lynch


gained 3.1% and



rose 4.5%.

Keeping the Fed at Bay?

Lately, interest rates have stabilized, and though most still believe the Fed will raise the funds rate to 6% from 5.75% at the March 21 meeting, this morning's report has given the market a bit of hope that the Fed won't be quite so aggressive in coming months.

"Obviously these movements can be erratic from one month to the next, so it's too early to conclude anything fundamental has gone on yet," said Carol Stone, deputy chief economist at

Nomura Securities

. "We continue to look for one tightening move. Whether there's anything more than that, it will depend on how these employment trends develop in succeeding months."

A pessimist might say that one report does not a slowdown make, which would imply that today's activity is an overreaction, but then again, pessimists tend to be bond traders. The benchmark 10-year Treasury note was lately unchanged at 100 26/32, yielding 6.388%.


Nasdaq Composite Index

, meanwhile, treats economic data the way a college student treats pizza. When it's good, it's real good -- when it's bad, well, it's good anyway.

The tech-heavy index, which has been isolated from the Fed's jabbering, partially because many newer tech companies don't rely on debt for financing, was surging. It was up 122.93 to 4877.44, which would be a closing record, a 2.6% gain.

Ned Collins, executive vice president at

Daiwa Securities

, said the jobs report certainly gave the market a boost, but he noticed an improvement in tone midweek, compared with previous weeks. He sites the recent performance of what he called "New-Old Economy" stocks, such as






as evidence that some of the sting of higher interest rates has been reduced. IBM was lately up 5.8%, while Dell gained 2.9%.

"I think a lot of people were on the sidelines, and trying not to be involved because they were so convinced the correction was starting," Collins said. "When the market eked out a small gain Wednesday, and a little more yesterday, it caused people to have more confidence."

The Comp is being led by semiconductor stocks, including



, which has jumped 14.7% after several analyst upgrades, and



, which has tacked on 9.7%. The

Philadelphia Stock Exchange Semiconductor Index

was up 5.3%. Internet Sector

index was also enjoying the first hours of trading, up 43.29 to 1207.4. The index was led by



, up 9.5%, and



, rising 8.7%.


Russell 2000

rose 12.19 to 596.23.

Most active on the

Nasdaq Stock Market



, lately up 5.4% on 29 million shares. The company's child,



, which gained 150% in its inaugural day of trading, was getting taken down a bit today, lately off 15.8%, on 13 million shares.


New York Stock Exchange's

most active stock was



, up 6.6% on 29 million shares.

Market Internals

Breadth was positive on heavy volume.

New York Stock Exchange

: 1,654 advancers, 1,167 decliners, 638 million shares; 89 new 52-week highs, 86 new lows.

Nasdaq Stock Market

: 2,463 advancers, 1,538 decliners, 1.133 billion shares; 364 new highs, 47 new lows.

Herb on TheStreet: Beware of the Mother of Short Squeezes


Herb Greenberg

Senior Columnist

3/3/00 6:30 AM ET

Fried-Day (and, Boy, Do I Mean It)

Squeeze 'em, cowboy -- yee haw!

It's really enough to turn your stomach. The mother of all short squeezes continues with full force, causing most shorts I know to seek the safety of storm shelters. (Most really have gone underground.) But as the squeeze intensifies, so does the risk to investors who think they're geniuses because it has been simply so darn easy to make money. Nobody,


, has ever seen any squeeze or anything quite like this. At least nobody I know, and while I hate to brag -- gee, gosh, golly -- I know a




full of people! (Did I say Palm Pilot?!)

So lemme repeat what I said on Tuesday: When the short-sellers are gone, so is the natural cushion of buyers (which shorts become when they cover their positions on the way down). If the companies really blow their earnings or disappoint in some other way, and the shorts are not there, it's "LOOK OUT BELOW!" It's drop a stone in a canyon. It's gravity at its best.

Lernout & Hauspie


: Oh, the pain to the shorts (yet the company's fundamentals haven't improved).

Ancor Communications


: Oh, the pain to the shorts (yet the company's fundamentals haven't improved).

Open Text


: Oh, the pain to the shorts (yet the fundamentals haven't improved).

This market is setting itself up for something -- I'm not sure what -- that they'll be talking about for years.

Of course, they've been saying


for years!


Lost in the shuffle of



sale of itself to

Clear Channel Communications


was the entertainment concern's fourth-quarter earnings. Well, it was easy to miss the fourth-quarter story because SFX didn't report the fourth quarter. It just reported year-end results.

Analysts who backed into the numbers from prior quarters, however, figure they know why the company didn't report the quarter (and why the company sold itself): Because it was lousy. Earnings before interest, taxes, depreciation and amortization -- the number SFX prefers to use -- were a mere $20 million. A mere, I say, because analysts had been looking for $30 million -- and that's


cutting estimates in December when the company warned that its earnings wouldn't meet estimates because of Y2K-rattled New Year's Eve ticket sales.

SFX officials, contacted earlier this week, haven't returned my call.

Conseco capers:

Remember the legal tussle



found itself in awhile back, after its credit card company continued to seek payments from customers who had filed for bankruptcy? Well, keep an eye on



. A class-action lawsuit, filed in the U.S. District Court for the Eastern District of California, claims Conseco's

Green Tree Financial

unit did just that, and assessed accrued interest charges, with a homeowner who had filed Chapter 7 bankruptcy.

Conseco has filed to dismiss the case because the Green Tree contracts call for arbitration, which would prohibit class-action suits. Lawyer Ron Goldser of Zimmerman Reed in Minneapolis, however, says a hearing is scheduled to determine whether the suit can continue. (He believes the arbitration clause ends when there has been a bankruptcy.)

It's unknown whether the practice was widespread, but Goldser told me there's no statute of limitations in the bankruptcy code regarding such lawsuits. In fact, he's about to file a second case involving another former Green Tree customer.

Tips for the timid:

Look for another installment later today of my "Tips for the Timid" -- clues to spotting financial trouble before it occurs.

Herb Greenberg writes daily for In keeping with TSC's editorial policy, he doesn't own or short individual stocks, though he owns stock in He also doesn't invest in hedge funds or other private investment partnerships. He welcomes your feedback at Greenberg also writes a monthly column for Fortune.

Mark Martinez assisted with the reporting of this column. Community:

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