March 16, 2000

Market Data as of 3/16/00, 1:13 PM ET:

o Dow Jones Industrial Average: 10,510.22 up 378.81, 3.74%

o Nasdaq Composite Index: 4,556.70 down 25.92, -0.57%

o S&P 500: 1,431.71 up 39.57, 2.84%

o TSC Internet: 1,171.03 down 24.38, -2.04%

o Russell 2000: 558.10 down 0.77, -0.14%

o 30-Year Treasury: 102 27/32 up 15/32, yield 6.041%

In Today's Bulletin:

o Midday Musings: Dow Turns in Stunning Performance as Rotation Revs Up
o Herb on TheStreet: More Antics at Action Performance Community

You know's the place for great market commentary, but did you know it's also the place for intelligent investing discussion?

Check out Cramer's Latest board for insightful stock plays. Also, join the conversation in Jim Seymour's Tech Savvy, Gary B. Smith, Ben Holmes' IPOs and other commentary boards and share your thoughts about various aspects of the market. As TSC's Investment Challenge began another round this week, share trading strategies with other competitors on the Investment Challenge message board.

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"" on the Fox News Channel

Don't miss "" as guest Anthony Dwyer, chief market strategist at Kirlin Holdings, joins our panel of writers for this week's show.

"" is on Fox News Channel at 10 a.m. and 6 p.m. EST Saturday and at 10 a.m. EST Sunday.

Also on

Wrong! Rear Echelon Revelations: Anatomy of a Selloff

Cramer can't tell you the meaning of life, but he does know what went on yesterday just before the close.

Retail: Listening to CDnow: How Good Internet Retailers Make Poor Investments

Investors' distaste for business-to-consumer stocks plays out at the music firm's expense.

Mutual Funds: Internet Fund Signals Merrill's New Interest in Growth

After losing $13 billion to outflows last year, Merrill is trying to shed its value orientation.

Dear Dagen: Readers Say the S&P 500 Is Old Hat

Many wrote in to say they've moved their money into more tech-flavored investments.

Midday Musings: Dow Turns in Stunning Performance as Rotation Revs Up


Tara Murphy

Staff Reporter

3/16/00 1:22 PM ET

Those Old Economy


stocks that have been beaten down and oversold are finally a buy. So has tech mania finally bit the dust, or are those


darlings of sessions gone by just getting a dose of their own medicine?

This week, Wall Street insiders who have been trying to make sense of the market's recent activity seem to agree that we're about due for some follow-through. "More of the recent same, more Old Economy stocks and violent moves up and down," said Larry Rice, chief investment strategist at


. "It's a trader's utopia."

Lately the Dow Jones Industrial Average was soaring 397, or 3.9%, to 10,528, having traded as high as 10,584.37. It's on pace to top its previous record point gain, a rise of 380.53, or 5%, to 8020.78 on

Sept. 8, 1998. Financials

American Express

(AXP) - Get Report


J.P. Morgan

(JPM) - Get Report

were the index's highest flyers, while tech giant



was being a drag, down 4, or 3%, to 128.


Philadelphia Stock Exchange/KBW Bank Index

rocketed 7.7% and the

American Stock Exchange Broker/Dealer Index

bounced 2.4%.

Oil stocks were helping to fuel trading on the

New York Stock Exchange

. The

American Stock Exchange Oil & Gas Index

index was burning up 3.7%, with

Phillips Petroleum



Atlantic Richfield

(ARC) - Get Report

up on news that Phillips would acquire Arco's Alaskan oil and gas assets, paving the way for an Arco-

BP Amoco



So what's the deal? Just last week, investors were indulging in tech stocks with huge valuations and no earnings to show for themselves. According to Brian Finnerty, head of trading at

C.E. Unterberg Towbin

, the answer might lie in the recent economic data. "Since Friday, the psychology has changed," he said. "We have seen good numbers right in a row and know that we don't have any inflation, which is letting the financials and consumer nondurables be bought." He was referring to today's

Producer Price Index

, whose core figure was up only moderately, and yesterday's muted

industrial production


Peter Cardillo, chief investment strategist at


, agrees that the data are a major contributor. "Hints in the industrial production number and the weak unemployment claims indicate that the economy is slowing and as a result, the Old Economy is in play," he said.

Undoubtedly, investors are changing their ways, but everyone knows old habits die hard. "The market will pay for growth again when it gets down enough, that's for sure," said Finnerty.

Rice added, "Another day of this and the Old Economy will be overbought, and money will bounce back into tech."

But just as the Dow toyed with, then broke below, the key 10,000 support level, the Nasdaq has a rubicon of its own, Cardillo said. "The divergence is in favor of the Old Economy," he said. "The real test is for the Nasdaq is 4500. A close under 4500 could signal a correction that could take us down another 5% to 10% below where we're at."

Lately the Nasdaq was continuing to struggle, down 15 1/2, or 0.3%, to 4567. It earlier traded as low as 4455.10. Yesterday's losses left the Composite down more than 9% from

Friday's record, less than a percentage point short of a 10% correction.

Semiconductors were losing ground. The

Philadelphia Stock Exchange Semiconductor Index

fell 1.8%, with


(RMBS) - Get Report

plummeting 30 3/4, or 7.2%, to 391 1/4.

Elsewhere in techland,

The Internet Sector

index lost 22, or 1.9%, to 1173.



was bouncing back from the losses it sustained yesterday, after


Tuesday-night report of a possible merger with


(EBAY) - Get Report

. The auction giant was also in recovery mode.

The broader

S&P 500

leapt 41, or 3%, to 1433 1/2, while the small-cap

Russell 2000

slipped a fraction to just under 559.

Market Internals

Breadth on the NYSE was positive on moderately heavy volume.

New York Stock Exchange:

2,234 advancers, 696 decliners, 923 million shares. 37 new 52-week highs, 33 new lows.

Nasdaq Stock Market:

1,829 advancers, 2,272 decliners, 1.2 billion shares. 45 new highs, 77 new lows.

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

Herb on TheStreet: More Antics at Action Performance


Herb Greenberg

Senior Columnist

3/16/00 6:30 AM ET

Thursday Thud:

Action antics:

The last we

heard from

Action Performance


, its stock was battered after a series of financial missteps and financial management sidesteps.

Now this: Yesterday the company issued a press release saying that


(HAS) - Get Report

Prez Herb (whatta name!) Baum was joining Action's board. Just one question: Why did they announce it yesterday when, according to Action's March 1 proxy, Baum has been on the board since Feb. 1. (Gotta watch these guys!)

The buzz on the boards, prior to this announcement, had been that Hasbro is likely to buy Action, which owns the license to Hasbro's Winner's Circle die-cast metal race cars. Action's stock, which was 7 3/4 as recently as three weeks ago, closed yesterday at 11 15/16. The press release with Baum's appointment didn't hurt the rumor mill.

But another explanation could be that Hasbro is looking out for its own interests. According to stats from the

U.S. Toy Manufacturer's Association

Web site, the Winner's Circle cars dropped from No. 6 to No. 19 in unit sales last year. Even worse, in terms of dollar sales, the cars ranked No. 17 in 1998 and didn't make the top 20 in 1999. (Ouch!)

And think about this: If Hasbro was going to buy Action, would it put an exec on its board?

Hasbro officials declined comment; Action didn't return our calls.

Garbage is good:

A sign of the quality (or lack thereof) of a market is the quality of the stocks that are behind its rise. (I'm actually just making that up but it sounds as good as anything else I've read.) Keeping that in mind, I went back and looked at the performance of the

Greenberg Garbage Index, formed last December. It's filled with companies whose stories, historically, have been better than their substance. Since inception, the Garbage Index is up 84%.

That's 84% in 3 months!

If you go back to the

original column, I mentioned that when



, one of the oldest names in short-selling circles, starts rising, then we're all in trouble.

Well, the biggest gainers are

Myriad Genetics

(MYGN) - Get Report

-- part of the biotech bubble -- with a gain of 335% and (you guessed it) CopyTele, up 254%. (Awright, it's up to 2 31/32 from 84 cents, but it's the principle that matters! Seen the



More tomorrow:

Pulled something at the last minute!

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,