TheStreet.com's MIDDAY UPDATE
April 13, 2000
Market Data as of 4/13/00, 1:18 PM ET:
o Dow Jones Industrial Average: 11,067.12 down 58.01, -0.52%
o Nasdaq Composite Index: 3,879.94 up 110.31, 2.93%
o S&P 500: 1,472.71 up 5.54, 0.38%
o TSC Internet: 882.91 up 35.67, 4.21%
o Russell 2000: 501.12 up 7.68, 1.56%
o 30-Year Treasury: 105 18/32 down 17/32, yield 5.850%
In Today's Bulletin:
o Midday Musings: Traders Grab for Bargains in Tech Group, Sending Nasdaq Higher
o Herb on TheStreet: What's Up With Jack Welch and ZixIt?
"Ask Cramer" on TSC on Fox News Channel
You have another chance to ask Cramer about your favorite stocks Friday. Call 1-888-TELL-FOX (1-888-835-5369) Friday, April 14, at 6:45 p.m. EDT during our taping to get your question in. Then tune in to watch the show at 10 a.m. and 6 p.m. ET Saturday and at 10 a.m. ET Sunday.
Also on TheStreet.com:
Wrong! Dispatches from the Front: Fear Bottoms Out for the Bears
And JJC likes what he sees once again. Biotech has lifted, and earnings are good.
Retail: Sugarplum Visions Already Consume Spendthrift E-Tailers
With investors demanding progress on profits, laying the groundwork for a big holiday takes on even greater significance.
SiliconStreet.com: SciQuest's Misadventure Is a Sign of the Times
It was a great party, but now it's over. And companies like this have to face up to some valuation facts.
Dear Dagen: Funds That Hold Chip Stocks Have Great Records, Despite Sector's Volatility
Just be prepared for big short-term swings. Wednesday's plunge was a good example.
Midday Musings: Traders Grab for Bargains in Tech Group, Sending Nasdaq Higher
Christopher H. Schmitt
4/13/00 1:30 PM ETIf only movement could be mistaken for progress -- then maybe the stock market's midday performance might have delivered the big bounce so many people were hoping to see following
Instead, as much as the major indicators oscillated in the first half of the day, the overall picture was mixed. The
Dow Jones Industrial Average
see-sawed in negative territory for the morning, and at midday, was down 59, or 0.5%, to 11,066.
Nasdaq Composite Index
showed a decent rebound, but like everything about the Comp lately, even that didn't come easy. After opening higher, it quickly turned down, raising fears of Wednesday redux. By midsession, however, the Comp had shaken off downdrafts twice and was up 108 1/2, or 2.9%, to 3878.
"It's a very, very nervous market," said Brian Finnerty, head of trading for
C.E. Unterberg Towbin
. "We're trying to do better here, but it's very difficult." As at a grade school dance, buyers and sellers eyed each other warily across the gym floor.
Despite weakness that has knocked prices down, "buyers are afraid of being too early," Finnerty said. "They're saying, 'I want to come in a piece at a time.'" As for sellers, he said, "Who wants to look stupid, selling and then watching prices go up?"
ticked up 6, or 0.4%, to 1473. The small-cap
was up 7 1/2, or 1.6%, to 501, and
TheStreet.com Internet Sector
index was soaring 37, or 4.4%, to 884.
If there was any doubt, symbolically, at least, in the transcendence of Old Economy stocks over the New, rust-belter
settled the score. It reported record U.S. sales of cars and light trucks, and first quarter profits of $1.78 billion, or $2.80 a diluted share, which outflanked the consensus expectation of $2.66.
If you've tangled with those hulking SUVs that are taking over the roads, you know why GM beat the street: Vehicle sales in the U.S. market rose 9.2% from a year earlier, with high-margin gas guzzlers like the Chevy Blazer and Cadillac Escalade SUVs leading the way.
Another Old World stalwart,
, turned in a good quarter, saying first quarter earnings rose 20%, to $2.59 billion, or 78 cents a share. That was a penny better than the street forecast of 77 cents.
Bargain-Hunting in the Nasdaq
Still, most eyes were on the Nasdaq, following its 286-point plunge Wednesday, which chopped 7.1% off its value. After shaking off the initial decline, the Nasdaq zig-zagged around in positive territory. At one point, it faltered and fell even with yesterday's close, but it had moved higher by midsession.
"I think you're going to have these periodic bouts of bargain-hunting," said Charles Crane, chief market strategist for
Key Asset Management
in New York. "People say, 'Enough is enough -- this is a good company, its shares have come down, and I want to own that company.'"
Indeed, that seemed a good explanation for some of Nasdaq's bigger movers today.
, which led the pack down yesterday following a warning about slowing personal computer sales, rebounded 1 15/16 to 81 5/16.
, another key link in the PC food chain that suffered yesterday, was up 6 to 127 7/8.
, another loser yesterday, was up 8 1/4 to 133 3/8.
As if the market wasn't muddled enough already, it also had to thread its way through a gaggle of economic news.
Producer Price Index report for March looked bad at first glance -- up 1%. But buried beneath the surface, the core increase in producer-level inflation, which excludes food and energy, blipped up only 0.1%. Likewise, the consumer goods segment was up by the same small increment.
Retail sales rose 0.4%, twice as much as forecast -- good macro news, maybe not the best inflation news for people like
Federal Reserve Chairman
Alan Greenspan, who, speaking of which, put in an appearance at the
Senate Banking Committee
He repeated that the Fed is not targeting stock prices, but noted that investors who are enjoying gains in the market are driving up demand economy-wide. He said the Fed must watch this so-called "wealth effect" carefully for its impact on the economy. There are indications prices are going up, he said, but no evidence that sharp gains in productivity are about to slow.
Greenspan declined to directly address the recent swings, but said investors appear to be "groping" for the right balance between tech stocks and Old Economy issues.
New York Stock Exchange:
1,274 advancers, 1,511 decliners, 646 million shares. 29 new highs, 36 new lows.
Nasdaq Stock Market:
1,892 advancers, 2,126 decliners, 1.2 billion shares. 12 new highs, 169 new lows.
For a look at stocks in the midsession news, see Midday Movers, published separately.
Herb on TheStreet: What's Up With Jack Welch and ZixIt?
4/13/00 6:30 AM ET
ZixIt's secret weapon?
, the former
CustomTracks, hasn't been mentioned here for eons. Simply too hot to handle as the shorts and longs battle over the legitimacy of the Texas-based company, which claims to have the most secure software available for transmitting email. (Its recent full-page newspaper ads use the slogan, "Just say ZixIt.") The company was founded by David Cook, the former founder of
, the guy who developed the software Blockbuster uses to track its rentals.
Then, a few weeks ago, the company announced that
, chairman of
and former head of Blockbuster and
, was leading a group that planned to invest between $20 million to $44 million in the company.
The stock rallied on the news, before falling with the rest of the market, which leads us to the "secret weapon" part of the story: Late yesterday, in an 8-K filed with the
, ZixIt disclosed who is in the group, and how much they're putting up. Turns out the investors include a large contingent of execs from
led by GE CEO
, who invested $1 million. GE CFO Keith Sherin invested $99,984, as did GE chief information officer Gary Reiner, GE General Counsel John Samuels and Dennis Dammerman, CEO of
Also in the group are
CEO William Esrey ($99,984) and Sprint President Ronald LeMay ($1 million).
What do they know that the shorts don't? Are those companies, or their suppliers, about to strike deals with ZixIt? Does this mean ZixIt's technology (generally pooh-poohed by the shorts) has been validated? Hard to say. Sprint execs couldn't be reached and a GE spokeswoman would only say that they're "personal investments." But hey, no matter what it means, it certainly belongs in the "worth noting" category.
Yesterday's item on
mentioned how you could buy the entire utility industry with Cisco's market value.
Silly me. That money also could've been buying the grocery industry (which it is) and much of the retail industry (which it also is). What else could explain Wall Street's sudden infatuation with
, whose stock has leaped 42% in the past four weeks, or
43% rise, or even the rise at
Whole Foods Market
, up 22%? Not long ago, in fact, Whole Foods reported an excellent quarter and nobody cared. What has changed? Back then stocks of grocery stores didn't work. (Something
would say.) Now they do. (Also something Cramer would say.)
P.S.: Contrary to what you may think, I don't get joy watching this market collapse. Don't say you weren't warned (here, in fact) about what happens when the shorts are gone. (Nothing left -- no natural buyers -- to cushion the fall!) There's a school of thought, however, that you need some kind of washout to get things back into equilibrium.
What could pass, according to some observers, is that pressure on the Fed to raise rates may at some point lessen. Less rate pressure (or even lower rates, as the months roll on) would be good for the
companies -- and even the real-company wannabes. That could set the stage for another, albeit more measured, advance later this year. Or so some say.
Short-sellers, meanwhile, still aren't dancing in the streets. (Not that they would.) Many of the most heavily shorted names still haven't broken down in any significant way. Many of the others, especially the e-techs, have (in the blink of an eye) lost half their market value overnight. (Seen the likes of
lately? Off 42% so far this month.)
Meanwhile, this column's benchmarks for a broken market --
Lernout & Hauspie
-- both lost ground yesterday, but not anywhere near enough to sound the all-clear.
Final comment: Investors I talk to are already starting to rummage through the garbage. Plenty of good companies getting tossed out with the trash. Some that are there are trading near, at or below cash! Lemme see if I can grab together a list of
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