March 6, 2000

Market Data as of 3/6/00, 1:28 PM ET:

o Dow Jones Industrial Average: 10,292.74 down 74.46, -0.72%

o Nasdaq Composite Index: 4,959.15 up 44.36, 0.90%

o S&P 500: 1,399.90 down 9.27, -0.66%

o TSC Internet: 1,269.99 up 48.89, 4.00%

o Russell 2000: 602.52 up 4.64, 0.78%

o 30-Year Treasury: 101 09/32 down 11/32, yield 6.148%

In Today's Bulletin:

o Midday Musings: Tech's Remarkable Run Extends Against All Odds
o Herb on TheStreet: Midway Disputes THQ's Claim Community:

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Midday Musings: Tech's Remarkable Run Extends Against All Odds


Justin Lahart

Associate Editor

3/6/00 1:05 PM ET

For a week there the divergence that has afflicted the market, where tech stocks rise and everything else does not, looked like it might have passed. For once it was not just the

Nasdaq Composite Index

, but the stodgy old-economy

Dow Jones Industrial Average

, that was rising.

But today it's been back to the yellow wood, with tech stocks following their well-trod path upward, while just about everything else has returned to the low road.

It's an amazing thing, the way tech keeps rising -- some are even beginning to suggest, only half jokingly, that perhaps tech stocks should be treated as a separate asset class. They don't seem to adhere to any of the old valuation rules. They rise despite the prospect of higher interest rates. They rise even though the

Federal Reserve

chairman has suggested again today that he does not want to see them head higher.

The gains in stock prices have created "additional purchasing power for which no additional goods or services have yet been produced,"

Alan Greenspan

told the

Boston College Conference on the New Economy

earlier today -- which is as much as saying that he worries that increased stock-market wealth will cause inflation.

Someone is courting hubris here -- either the chairman, for thinking he that he can slow the tech-stock behemoth, or tech investors, for blithely thinking that techs are somehow immune to the Fed.

Most people who try to make sense of tech stocks in valuation terms are just as confused as the chairman.

J.P. Morgan

chief equity strategist Doug Cliggott reckons that to justify current valuations, tech-sector earnings will have to grow 10% faster than the rest of the market's for 20 years.

"In the past five years, tech has grown earnings 7% faster," he said. "If you go back 12 years, the tech sector has actually grown earnings a little bit slower than the nontech part of the market." The funny thing, thinks Cliggott, is that implicit in the markets tech-growth expectations is the idea that nontech companies will continue to aggressively buy tech -- that they really see some of those promised productivity gains. But if they're going to see those gains, why isn't it reflected in their multiples?

The Dow lately was off 95, or 0.9%, to 10,273 while the broader

S&P 500

was down 10, or 0.7%, to 1399.

Meanwhile, tech proxies were solidly higher. The Nasdaq was up 29, or 0.6%, to 4944, having traded as high as 4980.15 earlier. The

Nasdaq 100

was up 51, or 1.2%, to 4494. The

Morgan Stanley High-Tech 35

was up 12, or 0.6%, to 2161, and Internet Sector

index was up 37, or 3%, to 1258.

The small-cap

Russell 2000

was up 3, or 0.6%, to 601.

The 10-year Treasury was down 10/32 to 100 18/32, its yielding rising to 6.42%.



announced the publication of

Proceedings of the National Academy of Sciences

, a peer-reviewed manuscript, reporting that a single dose of NeoRx's proprietary


technology cured human lung, colon and breast cancers implanted in mice. The company said the manuscript appears in the Feb. 15 issue of the journal. The stock has soared all morning and was recently quoted up 37 3/4, or 175%, to 60.

Market Internals

New York Stock Exchange:

1,161 advancers, 1,723 decliners, 583 million shares. 109 new 52-week highs, 130 new lows.

Nasdaq Stock Market:

2,143 advancers, 1,912 decliners, 1.2 billion shares. 444 new highs, 68 new lows.

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

Herb on TheStreet: Midway Disputes THQ's Claim


Herb Greenberg

Senior Columnist

3/6/00 6:30 AM ET


Gotta love it:

Was doing some research on

Midway Games


and ran across a Feb. 1 press release, from Midway, disputing



claim that THQ is the fourth-biggest video game maker. "Another industry participant incorrectly reported on Jan. 24, 2000 that it ranked fourth in video game console sales and second in third-party video game console publishing in 1999," Midway reported.

Midway then quoted an official of

NPD Group

, which tracks the data, as saying: "Strong sales of the NFL Blitz 2000 and Ready 2 Rumble boxing franchises, as well as sales from its extensive product catalog, helped Midway earn the number four position in the overall video game software market.''

THQ officials didn't return our call, and the NPD official quoted in Midway's press release couldn't be reached for comment.

E*Trade whispers:

Any idea why



is scrambling to pull future advertising orders. Could it be that they're cutting costs to make the quarter, or could it be something bigger -- like a merger? Sometimes companies do cancel future advertising prior to a corporate transaction. E*Trade officials wouldn't share their plans with me (can you blame them?), but the official line to those privy to the inside dope is that the firm simply has too much biz to handle. (Uh, OK.)

Read this:

"Herb, Don't DO THAT! :-)," was the start of this fabulous post from reader Matthew Paul on my


message boards, regarding my column about turning bullish. "I read your 3/1 article with mounting panic, thinking that the last sane voice in a nutty investing world was throwing in the towel ... phew ... funny article though ...

"Hey, you know that theory, that if you took an infinite number of monkeys on an infinite number of typewriters, for an infinite amount of time, sooner or later one of them would write the complete works of


("To be or not to be, that is the dshjdshjds ...") ... Well, we kind of have that now in the market -- an infinite number of monkeys, picking


hotties, watching them go up, and figuring that makes them Shakespeare/

Warren Buffett

/Investment guru of the decade -- and some of them even manage to bang out the odd email to you as well! Man, you can train these geniuses to do all sorts of tricks nowadays!"

Thanks, Matthew ... I needed




A number of you weren't sure what I meant when I said that the

demise of short-sellers removes "the natural cushion that keeps stocks from going into free fall.''

Shorts borrow shares of a stock that they then sell. If the stock falls, they buy it back, return it to the original owner and pocket the difference. Those purchases, as the stock is falling (on unexpectedly bad news), can provide a softer landing for the stock price. Without any natural buyers, the stock of a tarnished company can go thud.

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.

Copyright 2000,