Publish date:

midday03-22-00's MIDDAY UPDATE

March 22, 2000

Market Data as of 3/22/00, 1:31 PM ET:

o Dow Jones Industrial Average: 10,795.03 down 112.31, -1.03%

o Nasdaq Composite Index: 4,828.24 up 116.56, 2.47%

o S&P 500: 1,488.95 down 4.92, -0.33%

o TSC Internet: 1,261.05 up 30.26, 2.46%

o Russell 2000: 565.97 up 13.18, 2.38%

o 30-Year Treasury: 103 26/32 unchanged , yield 5.968%

In Today's Bulletin:

o Midday Musings: Whose House? Nasdaq's House! Techs Reassert Dominance
o Herb on TheStreet: Herb Part 1: Squeezed-Out Shorts Return to MicroStrategy

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Also, a look at BuildNet and the variables involved with a successful IPO.

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Yes, some mutual funds invest only in other funds. It was once a hot concept.

Midday Musings: Whose House? Nasdaq's House! Techs Reassert Dominance


Eileen Kinsella

Staff Reporter

3/22/00 1:25 PM ET Blue-chip stocks were feeling a little spent after yesterday's post-rate-hike race, but tech stocks got a second wind this morning and picked up right where they left off.


Dow Jones Industrial Average

slipped into negative territory after a fleeting gain this morning and was lately off 85, or 0.8%, to 10,822. The 30-stock average sprinted up 227 points yesterday, taking the news of 25-basis-point increases in both the fed funds and discount rates in stride. The tech-laden

Nasdaq Composite Index

was up 117, or 2.5%, to 4829, continuing to make up for any time it may have lost in recent action.

After hitting a record close yesterday, the

S&P 500

index was a little weaker, lately down 1 1/2 to 1492, while the small-cap

Russell 2000

was busy powering ahead with a gain of 13, or 2.3%, to 566.

"You're starting to see a little bit of a respite in the rush to megacap stocks, and a nice snapback in some of the small-to-mid-cap stocks," said Brian Belski, chief investment strategist at

George K. Baum

in Kansas City, Mo. The comeback kids he noted include





(CHIR) - Get Report




, all of which were in the green today.

"The quality names are taking a bit of a rest after the recent gains and the techs and the biotechs are starting to come back a little," said James Maguire Jr., managing director at


. "We have become a segmented market and now it seems we are getting a little bit of reversal" with respect to sectors, he said.


Nasdaq Biotechnology Index

was showing some muscle, lately up 7.2%, while the

American Stock Exchange Biotechnology Index

was hopping 9.4%.

Biotech stocks have certainly given investors a wild ride this year. Though both the Amex and Nasdaq biotech measures have plummeted more than 35% since their early-March highs, the indices each boast hefty gains for the year. The Amex biotech index is up about 27% since Jan. 3, while the Nasdaq biotechs are up about 20%.

Chip Sector Pays Little Mind to Micron

Chip and semiconductor stocks seemed to have no problem shrugging off the weak earnings report from

Micron Technology

(MU) - Get Report

which fell well below analyst estimates because of a drop in average selling prices for its semiconductor memory products. After falling more than 11 points in after-hours trading last night, the stock bounced out of the gate this morning and was lately up 15 1/4, or 12.8%, to 134 1/3.

For those unable to comprehend the absence of gloom and doom that usually surround such news, look no further than the optimistic defense quickly erected by a number of analysts who note that in the big picture, computer fundamentals are firming and demand in the second half of 2000 is expected to be strong.

Warburg Dillon Read


Deutsche Banc Alex. Brown

raised their price targets on the stock, while

Morgan Stanley Dean Witter

reiterated an outperform.

"Micron is a minor issue. This is a pricing problem and not a fundamental problem. The fact is that PC demand is very strong and pricing problems with DRAM are common," said Brian Finnerty, head of trading at

TheStreet Recommends

C.E. Unterberg Towbin

. Internet Sector

index was jumping 32 1/2, or 2.6%, to 1263, boosted by strength in bellwethers including



, up 3.2%, and

America Online


, up 3.8%.

Despite the mixed look of the markets today, most observers expressed optimism about the recent strength, particularly in blue-chip stocks. "I'm very encouraged by the fact that you are seeing decent earnings in the blue-chips," said Maguire, noting the recent positive earnings reports from financials including

Lehman Brothers



Goldman Sachs

(GS) - Get Report


Belski noted that a lot of the big-cap stocks have "come back to where they were originally and back in line with what people are thinking. People are trying to surmise how much premium to build into these but now we are at least back to fair value."

Belski also thinks the strength in regional banks and retail stocks is a sign that we are nearing the end of a series of interest rate hikes from the Fed. "The question is, 'Are they going to raise rates again?' Probably. Are they going to raise another 100 basis points like some people originally thought" earlier in the year? "Probably not," he said.

Lately in the bond market, the 10-year Treasury was up 15/32 to 102 25/32, its yield at 6.12%, while the 30-year Treasury was up 9/32 to 103 27/32, its yield at 5.98%.

Market Internals

Breadth was about even on the Big Board, and sharply positive on the Nasdaq, both on moderate volume.

New York Stock Exchange:

1,432 advancers, 1,431 decliners, 624 million shares. 53 new 52-week highs, 24 new lows.

Nasdaq Stock Market:

2,296 advancers, 1,687 decliners, 1 billion shares. 52 new highs, 55 new lows.

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

Herb on TheStreet: Herb Part 1: Squeezed-Out Shorts Return to MicroStrategy


Herb Greenberg

Senior Columnist

3/22/00 6:30 AM ET

Wednesday Wimp-Out


Short-sellers may have been clobbered on


(MSTR) - Get Report

on the way up, but longtime reader W.A. -- a former bike messenger in San Francisco who now designs Web sites -- says he did one of his best trades by shorting MicroStrategy on Monday at 95 and covering yesterday at 74.

Meanwhile, some pros were adding to or creating new positions yesterday (on upticks) even as the stock continued to fall. The reason, according to the partner of one large hedge fund, was, in part, that the company doesn't have products that change the world -- its software is used by Internet companies to help spot patterns among users -- yet it still has a $5.6 billion market cap (on annual sales of $205 million, before restatement) and it has been forced to restate its revenue. "They're under a microscope, which could severely hurt their business," he says.

Market mania:

After announcing my new role as market-timer in a column

Tuesday afternoon, reader G.C. Niles wrote, "Is 4,400 your bottom prediction?"

To which I responded: "I guess so."

(In other words, me as a market-timer

is a joke!

-- and a bad one at that!)


Called one of my hedge fund sources yesterday. His first words to me were, "Hey, I hear you're leaving





Goes to show how twisted a story can get. What I am doing, in four months -- the root of this story -- is moving


to California. (Yep, unstable ground and all.) New York simply hasn't agreed with my family. (No surprise to anybody who knows me -- and many who don't!) Instead of going back to the Bay Area, however, we're headed to San Diego. After all, if I can work from anywhere (long live

!), I might as well go where the sun always shines.

Got a problem with that?!

As for my gig on "" on the

Fox News Channel

, that's what they have satellites for! End of story.

Look for the second part of today's column later this morning.

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:

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

Join the discussion on our message boards and get a grip on this volatile March market. Check out Cramer's Latest for stock plays and strategies. Communicate with other TSC Investment Challenge participants on our Challenge message board. And share your thoughts on Jim Seymour's Tech Savvy, Gary B. Smith and Ben Holmes' IPOs.

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