TheStreet.com's MIDDAY UPDATE
March 14, 2000
Market Data as of 3/14/00, 1:20 PM ET:
o Dow Jones Industrial Average: 9,944.49 down 2.64, -0.03%
o Nasdaq Composite Index: 4,832.40 down 74.84, -1.53%
o S&P 500: 1,377.93 down 5.69, -0.41%
o TSC Internet: 1,296.11 up 3.14, 0.24%
o Russell 2000: 581.24 down 8.90, -1.51%
o 30-Year Treasury: 101 27/32 up 24/32, yield 6.121%
In Today's Bulletin:
o Midday Musings: Nasdaq's Snapback Has Its Back Snapped as Biotech Plunges
o Herb on TheStreet: The Gaming of the Market, Continued: Software Spectrum's Turn
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The Chartist: A Lesson in Distribution Process
The Chartist shows the process that underlies the tender beginnings of an improvement in the NYSE.
Dear Dagen: Keep Swimming in That Index Pool
Ignore the naysayers. S&P 500 index funds, though light on tech stocks, are still a good core holding.
Midday Musings: Nasdaq's Snapback Has Its Back Snapped as Biotech Plunges
3/14/00 1:15 PM ET What once looked like a classic snapback rally had completely fallen apart by midsession.
Nasdaq Composite Index
cracked back through the 5000 barrier shortly after trading began, and managed to hold much of its early strength until about a half hour before noon, when selling started to pick up. The Comp was lately down 58, or 1.2%, to 4849, with big-cap component
off 10.1% and biotech big'un
The action in Amgen was symptomatic of the biotechnology sector in general, where the recent consolidation in a wide range of stocks was accelerating to an absolutely screaming pace. Check the damage on the darlings:
Protein Design Laboratories
, down a staggering 57 7/8, or 22.5%, to 199;
, off 14 3/4, or 8%, to 170 5/8;
, down 38 3/4, or 16.5%, to 196 3/4.
and U.K. Prime Minister
, whose pledge today to democratize data from the
Human Genome Project
for the benefit of science seems to have set off an all-out panic.
"It's very indiscriminate," said Sven Bohro, money manager at
. "Any thing related to genomics is selling off."
Blair and Clinton said in a statement: "To realize the full promise of this research, raw fundamental data on the human genome, including the human DNA sequence and its variations, should be made freely available to scientists everywhere."
, which hopes to patent its data on human genes research, was down 52 1/2, or 28%, to 136 1/1.
The severity of the market's reaction to those words might seem a bit excessive. But all moves, whether up or down, make sense in a hard-core momentum sector. "What was driving the upside is now driving on the downside," Bohro said. "All the momentum investors and retail guys who have been running up this sector are scared s---less. They're running for the exits."
Days like this don't do much for sentiment. While the general mood on desks wasn't necessarily panicky, traders were hardly relaxed. "It seems like there's a lot of doomsday scenarios circulating," said Paul McEnroe, trader at
Brown Brothers Harriman
. "So there is some sense of nervousness. But the same thing can be said now that was said 1000 points ago on the Nasdaq."
"But you can't help but feel as though it's a bubble," McEnroe continued.
Things were looking quite a bit better for the broader market. The
was down 4, or 0.3%, to 1379, while the
Dow Jones Industrial Average
was off a fraction to 9946 1/2. Dow component
plummeting 6.4% after agreeing to buy aerospace industry supplier
for $57 a share. Cordant, predictably, was flying on the news, up 87.5% to 55 7/16.
Internet stocks were mixed, with the upside exception of
, which was up 11.1% after unveiling six alliances to enter the mobile wireless market. But
was down 35 3/16, or 13.1%, to 233.
buyback announcement was helping the bond market edge higher, with the benchmark 10-year note up 11/32 to 101 9/32, putting its yield at 6.323%. Bondsmen (and -women) weren't unduly bothered by this morning's
news that retail sales grew 1.1% in the month of February.
Banks and brokerages were also seeing mixed action. The
American Stock Exchange Broker/Dealer Index
was up 1.2%, while the
Philadelphia Stock Exchange/KBW Bank Index
was 0.3% higher.
Small-caps were getting hit hard, with the
down 8 1/2, or 1.4%, to 582.
Breadth was negative on strong volume.
New York Stock Exchange:
1,355 advancers, 1,468 decliners, 658 million shares. 32 new 52-week highs, 93 new lows.
Nasdaq Stock Market:
1,644 advancers, 2,406 decliners, 1.2 billion shares. 154 new highs, 67 new lows.
For a look at stocks in the midsession news, see Midday Movers, published separately.
Herb on TheStreet: The Gaming of the Market, Continued: Software Spectrum's Turn
3/14/00 6:30 AM ET
More gaming the market:
There are so many names for the current stock market game that I'm having trouble keeping them straight. There's the "put a higher target on the stock without raising estimates" game -- a la recent analyst action on
There's the "let's squeeze 'em till they die game" -- a la
Lernout & Hauspie
. And there's the "let's claim to have an alliance with a big company" game, which brings us to
, a software distributor whose stock was bloodied a few months ago because of disappointing earnings.
Normally, a company the size of Software Spectrum, with a market cap of only $130 million, wouldn't even catch my attention. But it epitomizes the games being played on Wall Street these days, especially with smaller companies that have no analyst coverage and whose stocks are getting whipped into a frenzy by message-board euphoria.
The frenzy started lifting Software Spectrum's stock Friday on message-board chatter that the company had struck a deal with
. The deal, it turns out, was announced last week in Europe to the trade press. Friday alone the stock lifted 38%, only to gain another 26% yesterday after the Dallas-based company made it official: It had "strengthened" its "global Alliance with IBM through an increased focus on e-business."
E-business. E-commerce. Business-to-business. This press release included all of the right buzzwords to keep investors hooked.
But beyond the buzzwords, what was the company really saying?
Well, according to the press release, "The Alliance with IBM is designed to accelerate the growth of Software Spectrum's expertise in business-to-business Internet development."
However, we also learn that "Our Alliance with IBM has been in place for three years," but that "the focus and scope of the Alliance have changed..."
In other words, nothing is really new. It's like an auto dealer saying, "Instead of selling the '96 Buick, we'll now be selling the '99 Buick."
So, what's the news? What warranted such a big pop in the stock? Hard to say. When you get beyond the buzzwords, the new IBM alliance is really nothing more than an extension of the company's old IBM alliance, which really amounts to little more than IBM training Software Spectrum to sell IBM's products as part of the "consulting" side of Software Spectrum's business.
The alliance itself, a spokeswoman says, is not revenue generating.
Of course, that
in the press release.
Lernahooligan alert (otherwise known as beating a dead horse):
Speaking of announcements for the sake of announcements, get a load of Lernout & Hauspie's from yesterday. Our old friend, whose stock is somewhere in the stratosphere these days -- it closed yesterday at 123 3/4 -- announced that it has a new licensing agreement with
. Can't get any better, from the sex-and-sizzle standpoint, than that.
Care to bet how high the stock pops on
If it does go higher, it won't be because investors tried to find out details of the deal. One of my sources did. He quotes a spokeswoman as saying that Lernout already licenses its products to
, which is owned by AOL, so the new deal won't generate any significant revenues. Asked why the announcement was made, the spokeswoman reportedly said that it was a "momentum announcement" to let the Street know that they were out there closing deals.
A momentum announcement?! At least they're honest. (Can ya believe the nerve?!)
Oh, if you're wondering why I'm relying on a source to tell me what Lernout said, rather than getting it directly from Lernout, I quote my trusty sidekick,
, who tried to call and get info, but was told by the same spokeswoman, "We don't talk to you guys."
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
firstname.lastname@example.org. Greenberg also writes a monthly column for Fortune.
Mark Martinez assisted with the reporting of this column.
Copyright 2000, TheStreet.com