March 31, 2000

Market Data as of Close, 3/31/00:

o Dow Jones Industrial Average: 10,921.92 down 58.33, -0.53%

o Nasdaq Composite Index: 4,572.83 up 114.94, 2.58%

o S&P 500: 1,498.58 up 10.66, 0.72%

o TSC Internet: 1,107.07 up 11.73, 1.07%

o Russell 2000: 539.09 up 7.52, 1.41%

o 30-Year Treasury: 105 25/32 up 17/32, yield 5.846%

In Today's Bulletin:

o Midday Musings: Nasdaq Fading, as Investors' Love for Tech Wanes Ahead of the Weekend
o Wrong! Tactics and Strategies: Move Away From the Dichotomy of Old and New 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 the market. Check out Ben Holmes' IPOs board for discussion on the latest offerings hitting the market this week. Also, visit our Cramer's Latest, Jim Seymour's Tech Savvy and Gary B. Smith's message boards for the hottest, most insightful Wall Street discussions on the Net.

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"" on the Fox News Channel:

Don't miss "" as guest Thomas Madden, executive vice president and chief investment officer at Federated Investors, joins our panel of writers for this week's show. "" is on Fox News Channel Saturdays at 10 a.m. and 6 p.m. ET and Sundays at 10 a.m. ET.

Also on

Smarter Money: The Peril of Hedge Funds

What happened to Julian Robertson is a parable for what can go wrong in this tough business.

Online Brokers: Online Brokers 2000: IPO Policies Leave Investors Hungry

It's still tough to get in on the good ones, and respondents want more access.

Brokerages/Wall Street: Wall Street's Return to Paranormalcy

This is no April Fool's joke: a Wall Street trade group's lunch with a psychic investor.

Fixed-Income Forum: Do Zero-Coupon Muni Bonds Ever Generate Tax Bills?

If you buy them in the secondary market at a sufficiently low price, the answer may be yes.

Midday Musings: Nasdaq Fading, as Investors' Love for Tech Wanes Ahead of the Weekend


David A. Gaffen

Staff Reporter

3/31/00 12:58 PM ETIt's Friday, and as far as tech is concerned, nobody's in love.

What's been the rule for most of the week is continuing today, as investors continue to sell the

Nasdaq Composite Index

and put money in less volatile stocks that dominate the

New York Stock Exchange


After yesterday's head-spinning

debacle that ended with the Nasdaq down 186 points, the losses have been more restrained today. After an initial bounce, investors are showing an aversion to buying technology names, lest they hurt their performance on the last day of the quarter.


Nasdaq Composite Index

leapt out of the gate 92 points higher, but has eroded steadily, led by the Internet stocks, which have slumped into the abyss.


Dow Jones Industrial Average


S&P 500

, aren't outstanding, but they're firmer on the last day of this volatile quarter. Lately the Dow was up 31.95 points to 11,012.20, a 0.29% gain, while the broader S&P 500 is up 4.07 to 1491.99.

It hasn't been a surprise that the tech-heavy index faded after an initial bounce. Heading into the afternoon, strategists were attempting to gauge whether the sector would remain a minefield.

"The smart buyers didn't buy at the open, because you don't want to buy at a peak open," said Peter Da Puzzo, president of

Cantor Fitzgerald

. "People hold on and say, 'which way is this going to go?' There's still a good chance we'll get late afternoon window dressing, but if it gets worse, they'll stay on the side and sellers will have their way."

Two of the Dow components responsible for the industrial's negative drag yesterday --


(MSFT) - Get Report



(INTC) - Get Report

-- were exerting a positive influence today. Microsoft rose 2.1%, while Intel gained 3%.

The Composite extended its early gain to 100 points, fell back shortly after the open and was lately trading in negative territory, down 39.80 to 4418.09. At one point, the Comp fell to 4381, but it's since managed to recover somewhat.

Internet stocks are leading the way down, as



has lost 1.5%,

(AMZN) - Get Report

has lost 2.8% and


(EBAY) - Get Report

is off by 10.8%.

America Online


was off 5/16 to 64 11/16, and it was the NYSE's most active, with 11.7 million shares traded. Internet Sector

index was down 3%. The

Russell 2000

was down 0.4%.

"Nobody rang a bell that said sell the Internet today, but it is perhaps the sector most vulnerable to bouts of reality," said Charles Crane, chief market strategist at

Key Asset Management

. "Save for the Internet portion, it is a relatively quiet day, and a relatively solid day, but we've got hours to go, and things can change dramatically."


Nasdaq Biotechnology Index

gained 2.5% today, but that index has still lost one-third of its value since peaking in early March. The performance in that index lends some perspective that can't be seen by simply looking at the overall Comp, which has been bolstered by the performance of the stocks with the largest market capitalization in that index.


(DELL) - Get Report

, for one, was up 21% in March through yesterday, and had added another 3.4% today;


(CSCO) - Get Report

was up nearly 12% for the month through yesterday, and has tacked on 2.2% today. It was the Nasdaq's most active, with 28.7 million shares traded.

TheStreet Recommends

So while the Comp, overall, has only shed about 0.3% of its value, the

Russell 2500 Growth Index

, which represents the Russell 2500 companies with higher price-to-book ratios, is off 14.4% since peaking in early March. The

Philadelphia Stock Exchange Semiconductor Index

is off more than 12% since early March and was down 0.5% today.

It shows that the

Federal Reserve

, through its five interest-rate increases since June,


having an effect on the market, and it shows again today in the Nasdaq's sorry excuse for an advance/decline line. (See below for Market Internals.)

The recent activity has Peter Green, technical strategist at

Gerard Klauer Mattison

, thinking the Nasdaq is on its way to 3900 before it can show some recovery. He considers it a negative that some stocks, such as

Applied Materials

(AMAT) - Get Report

, down 3.6% today -- are close to dropping below their 50-day moving average.

Meanwhile, the

New York Stock Exchange

is exhibiting continued signs of strength. Breadth is positive, although not quite at the 2-to-1 level, and most of the industrials are higher today.

Cigarette maker

Philip Morris

(MO) - Get Report

was one of the day's most active, gaining 1.5% on 9.1 million shares. The Dow component was helping the

American Stock Exchange Tobacco Index

to another healthy gain, up 2.3% on the day.

"The market as a whole is doing quite handsomely," said Crane. "The benchmarks aren't soaring today, but the market has a lot more stocks going up than down."

Telecommunications companies were higher.

Nextel Communications


gained 1.6%, and

Sprint PCS


rose 1.2%.


(T) - Get Report

announcement that it will acquire 39% stake in Internet telephony company



has owners of that stock calling to say "I love you." The stock rose 11% to 61 7/16, while AT&T shed 0.8%.

Teams are only as strong as their weakest link, and the Dow's dead wood today is


(IBM) - Get Report

, which was off 3.6%.

Commodities stocks were stronger again. The

Philadelphia Stock Exchange Forest & Paper Products Index

rose 3.9%, and the

Philadelphia Stock Exchange Gold & Silver Index

was up 1.7%.

The 10-year Treasury note was lately up 4/32 to 103 14/32, dropping the yield to 6.031%. The 30-year bond was up 17/32 to 105 25/32, dropping the yield to 5.837%.

Market Internals

Breadth was mixed today on pretty light volume.

New York Stock Exchange

: 1,706 advancers, 1,129 decliners, 562 million shares. 49 new highs, 42 new lows.

Nasdaq Stock Market

: 1,724 advancers, 2,280 decliners, 997 million shares. 23 new highs, 152 new lows.

Wrong! Tactics and Strategies: Move Away From the Dichotomy of Old and New


James J. Cramer

3/31/00 1:06 PM ET

Stop it with the Old Economy/New Economy stuff already.

It is a dichotomy that makes you no money. We think the world is divided between companies that rely principally on the Net to make money, and companies that rely on the whole economy to make money.

Sometimes they intersect.


(ORCL) - Get Report

, for example, gets most of its earnings away from the Net but gets its buzz from its B2B work. So we think that Oracle is an important tell. But


(LSI) - Get Report


Texas Instruments

(TXN) - Get Report

are not principally Net, so they might be okay.

We can't be in

Commerce One


now because it is total Net infrastructure, which is in the hands of the most margined players. We can be in

Bank of America

(BAC) - Get Report

, even though some of the earnings might come from the Net. It has no buzz from the Net whatsoever to lose, even though it has the most online accounts of

any bank


For us the toughest is



. We are long it. We think its prospects are great. We think that its business is not susceptible to the kinds of pressure the analyst at


was talking about when it comes to B2B. But it is owned by margined players, so we can't be aggressive in any purchases of it. So we use a

very wide

scale to leg in.

Keep in mind, by the way, that the panic level among the mutual funds and hedge funds who are in these highfliers is extremely high, because they have gone from wanting to show they owned these stocks to wanting to show they are short these stocks or not in them --

in five days


Now that's a rotation.

James J. Cramer is manager of a hedge fund and co-founder of At time of publication, his fund was long Texas Instrument, Bank of America, Exodus and LSI. His fund often buys and sells securities that are the subject of his columns, both before and after the columns are published, and the positions that his fund takes may change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Cramer's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to comment on his column at

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