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March 8, 2000

Market Data as of 3/8/00, 1:00 PM ET:

o Dow Jones Industrial Average: 9,840.40 up 44.37, 0.45%

o Nasdaq Composite Index: 4,791.73 down 56.11, -1.16%

o S&P 500: 1,358.36 up 2.74, 0.20%

o TSC Internet: 1,254.02 up 4.72, 0.38%

o Russell 2000: 585.45 down 10.02, -1.68%

o 30-Year Treasury: 101 12/32 up 2/32, yield 6.144%

In Today's Bulletin:

o Midday Musings: Nasdaq Continuing to Wilt as Dow Gains Back Very Little Ground
o Herb on TheStreet: Which Retailer Will Be the Next Internet Blowup?

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Midday Musings: Nasdaq Continuing to Wilt as Dow Gains Back Very Little Ground


Eileen Kinsella

Staff Reporter

3/8/00 1:07 PM ET Technology stocks took a well-deserved breather this morning, while blue-chips began the heavy task of digging out from under yesterday's rubble, leaving major proxies broadly mixed at midday.


Nasdaq Composite Index

was down 32, or 0.7%, to 4816, while the

Dow Jones Industrial Average

was up 57, or 0.6%, to 9853. The blue-chip measure is still smarting from yesterday's 374-point beating, sparked by an earnings warning from

Procter & Gamble


. The small-cap

Russell 2000

sided with the Comp, down 8, or 1.4%, to 587, while the broader

S&P 500

took its cue from the Dow and added 5 to 1361.

The Dow's modest strength was scattered among a handful of stocks, and sectors were showing less than a unified front. Among financials, for instance,

J.P. Morgan


was rising 1.1%, while

American Express

was off 2.5%.

Procter & Gamble was still feeling the pain from yesterday's news, down 4.2%, while

Johnson & Johnson


was shining 3.2%.

The Dow's dive in recent days is troubling even bullish observers. "The downside momentum has gained some speed," said Peter Da Puzzo, president of

Cantor Fitzgerald

. "If the Dow can't get back up through 10,000 in the next few days or so, the slide will probably bring the Nasdaq down," he said.

Still, Da Puzzo said that with the exception of P&G's warning, he is expecting solid earnings reports and also thinks there is still a lot of money out there in mutual funds and individual hands. "Basically I'm bullish but selective."

Selective seems to be the watchword going forward. "We've continued to lack leadership, except for tech," said Steven Goldman, market strategist at


in Greenwich, Conn. "The groups that have generally rallied have been those that have been oversold. I think it's a wake-up call there are no safe havens. It will be a choppy and defensive road, until evidence comes out that the economy is slowing."

Stocks that took a beating yesterday were fighting back today. A retreat in oil prices was giving transportation stocks some gumption, with the

Dow Jones Transportation Average

rising 2.7% after yesterday's downturn. Health-care stocks were also showing some muscle after yesterday's punishment, with the

American Stock Exchange Pharmaceutical Index

soaring 5.7%.

"The drugs are really overdone and I think its really going to turn around," predicted Da Puzzo, who thinks the disconnect between drug stocks and their recently on-fire biotech brethren is strange. "There is a huge divergence, but its not like the biotechs have to come down. The successful drugs have to be sold to the drug companies."

Action in techland was also all over the map today, with pockets of strength popping up amid mostly subdued action.




i2 Technologies


were gaining on news of a B2B alliance with



. Meanwhile

Network Solutions


was down 19 13/32, or 4.8%, giving back some of the boost it received on yesterday's merger news. Internet Sector

index was up 12, or 0.9%, to 1261.

The 10-year Treasury was down 1/32 to 100 29/32, its yield at 6.38%, and the 30-year Treasury also was off 1/32, to 101 12/23, its yield at 6.15%.

Market Internals

Breadth was negative on moderately heavy volume.

New York Stock Exchange:

1,263 advancers, 1,578 decliners, 711 million shares. 35 new 52-week highs, 202 new lows.

Nasdaq Stock Market:

1,466 advancers, 2,563 decliners, 1.2 billion shares. 134 new highs, 110 new lows.

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

Herb on TheStreet: Which Retailer Will Be the Next Internet Blowup?


Herb Greenberg

Senior Columnist

3/8/00 6:30 AM ET

Wednesday wallop:

E-tail talk:

There was a time, just a few months ago, that a bricks-and-mortar retailer's Internet operations helped spur investor interest in its stocks. Remember



recent run up to 60? Investor enthusiasm, on the heels of rave reviews for its Web site, didn't hurt. Nor did it hurt



, which a few weeks ago announced a tracking stock for its dot-com.

But just look at what happened when Williams-Sonoma on Monday announced that higher-than-expected Internet costs would be a big factor in pulling down fourth-quarter profits: Its stock tumbled by 37%. And Staples, whose market value grew by $3 billion after announcing its dot-com spinoff, lost it all after disclosing that its Internet losses were bigger than expected.

They're learning what Cramer pointed out months ago in a landmark "Ten Internet Myths"

column about the Internet: It's harder, and more costly, than anybody thinks. Even

Lands' End


, a cataloguer that you would think would understand mail order, overestimated the Internet.

The thought was that it would help cut down on postage and paper costs as customers migrated from catalogs to the company's highly regarded Web site. Turns out many of its Web customers preferred to flip through the regular catalog while ordering via the Internet. The Internet, in other words, merely replaced the telephone. (Not what investors wanted to hear; Lands' End stock still hasn't recovered from


slide from 80 to 30 in recent months on bad earnings news, much of it related to the Internet.)

That raises the question: If Williams-Sonoma and Staples are reporting Internet-related disappointments, who's next? Will it be

Whole Foods


, which set up its e-commerce site so that the parent company won't get hit with Internet-related losses? (Some of my sources don't think so.) What about



, which has gone hog-wild trying to sell shoes over the Internet? (I find it hard to buy shoes in a store.)

Home Depot


is everybody's favorite, but will its Internet operation turn into a financial botch job? Others to keep an eye on include




Bed Bath & Beyond


. A Talbots spokeswoman said she doesn't expect a problem because "having an Internet site is very cost-effective. We have a catalog business in place, so the infrastructure is already in place as well. We have customer service and fulfillment already in place, too." (Well, so did Lands' End.)

I remember wondering why



was taking so long developing its Internet strategy. Why didn't it go full blast with an online version of the entire warehouse? Based on what's happening to some other retailers, maybe the bottom line is that an idea that looked compelling really wasn't.

In the end, for many of these retailers, e-commerce will be just another (albeit efficent) way of doing business -- if nothing else cannibalizing from existing customers. Oh, and that efficiency could result in deflation. (Yep, that's what some folks think.) But that's a story for another day.

You shoulda known

: Whenever Raymond, a 69-year-old stockbroker from San Francisco calls, I know what he's going to say: He always is fond of reminding me what he predicted and how right he has been. And usually he is! But often it's difficult to explain


he believes something will happen -- at least explain it in a way I can use in this column.

Such was the case a month or two ago when he called to warn that

Procter & Gamble


was on the verge of pre-announcing lousy earnings. So, what did he know? "I knew that the consumer products part of the business wasn't growing at the rate they said it was," Raymond says.

How did he know? "I've been in the business a long time, and these kids (analysts) don't know how to get a feel for anything. The reason they continue to buy the big-caps is because they want to do what everybody else is doing. But P&G's PE was twice that of its growth rate... " -- not a good sign for Raymond.

Besides, traders were telling him that market makers in these stocks weren't willing to carry overnight positions in P&G -- another bad sign, because traders always are looking for ways to hold onto positions that they can mark up the next morning. "It was what I like to call priced for perfection," Raymond says, "and nothing's perfect."

What else is priced for perfection? "



," he says. "It's being recommended at this level by everyone. That's another clue..."

Oh, and he's also been telling me for weeks that



was about to pop upward. (It has.) "All you have to do is talk to an



salesman about who is getting all of the server business, and they'll say NCR."

Raymond, who also uses charts to aid in his trading, also likes



. One reason is because all of the Goodyear employees he talks to (like the managers of Goodyear stations) tell him they're buying the company's stock. Another is that he doesn't believe higher interest rates will hurt Goodyear.

Before you go saying that Raymond sounds like a kook, lemme tell ya: His track record, based on our years of conversations, is better than most of the supposed pros I talk to.

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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