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May 4, 2000

Market Data as of Close, 5/4/00:

o Dow Jones Industrial Average: 10,433.59 down 46.54, -0.44%

o Nasdaq Composite Index: 3,700.09 down 7.22, -0.19%

o S&P 500: 1,408.66 down 6.44, -0.46%

o TSC Internet: 876.30 up 7.08, 0.81%

o Russell 2000: 499.49 up 3.93, 0.79%

o 30-Year Treasury: 100 27/32 down 1 01/32, yield 6.174%

In Today's Bulletin:

o Midday Musings: With Greenspan Mixed, Markets Follow Suit
o Herb on TheStreet: Why One Longtime Bear (Surprise!) Isn't Bullish on Dell

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Midday Musings: With Greenspan Mixed, Markets Follow Suit


Tara Murphy

Staff Reporter

5/4/00 1:16 PM ET This morning, it was mum's the word for

Alan Greenspan, as the

Fed chairman addressed the

Federal Reserve Bank of Chicago

. Although his tone was cautionary, the G-man's comments did not ignite a stock-market selloff. In fact, by keeping the

fed funds rate on the down low, Greenspan actually boosted the bond market and buffered stocks against another set of economic data that indicated traces of inflation.

Today, the

Labor Department

reported that first-quarter

productivity rose 2.4%, below the


consensus poll forecast of 3.7%. But unit labor costs came in stronger than expected at 1.8%, topping the 1% outlook and surpassing last quarter's 2.5% decline. This sent an early-morning shiver down investors' spines, as they braced themselves for what could have been Round 3 of a selloff.

"This morning's numbers were benign, but the unit labor costs initially spooked the market," said Jim Volk, co-director of institutional trading at

D.A. Davidson

in Portland, Ore.

But shortly after the open, Wall Street insiders brushed off the number and waited for Greenspan's 9:30 a.m. EDT

speech to unfold. "We didn't see a jump in compensation, which would have validated last week's ECI report, said Mike Cloherty, senior market economist at

Credit Suisse First Boston

. "So given that, we saw a slight amount of pressure. But Greenspan didn't use his speech as an opportunity to signal any faster rate hikes," thus leaving investors to take no news, as good news.

So what about those rumors about an intermeeting hike? Most savvy investors are dismissing such action as uncalled for given the economic reports we've seen so far. "It would be extremely rare," said Cloherty, who's forecasting a 25-basis-point rate increase at the May 16

Federal Open Market Committee meeting and another quarter-point hike in June. "That's a sign of panic and there's no evidence in data that would require that kind of extremely aggressive action."

Lately, the

Dow Jones Industrial Average

, which was down 8.9% for the year through yesterday, was off 25, or 0.2%, to 10,455, with its retail components still up for sale after yesterday's bearish macro call out of

Goldman Sachs

. The firm cut its rating on several retailers, citing bracing for a possible slow down in consumer spending due to rising interest rates.

Home Depot

(HD) - Get Home Depot, Inc. Report

was off 1 1/4, or 2.3%, to 52 3/4, while


(WMT) - Get Walmart Inc. Report

, which posted a 10.9% increase in

same-store sales, was losing 1 5/8, or 3%, to 51 13/16.


S&P Retail Index

fell 2.4%.

On the

New York Stock Exchange,

British Telecom


was taking it on the chin after rumors circulated that it was scaling down its profit outlook. British Telecom denied the talk but was still down 6.2%.

Despite weakness in most Old Economy stocks, the oil sector was still fueled by stellar first-quarter earnings, which in turn were driven by oil prices.


American Stock Exchange Oil & Gas Index

was climbing 1.6%, with Dow component


(XOM) - Get Exxon Mobil Corporation Report

on the upside.


Morgan Stanley Commodity Related Equity Index

, which includes oil services stocks such as

Baker Hughes




(SLB) - Get Schlumberger NV Report

, was also faring well.

Lately, the

Nasdaq Composite Index

, which was already off 26.6% from its March 10 high through yesterday, was falling 4 to 3703. In 1999, the index shrugged off threats of Fed rate hikes, but so far this year, tech investors have become more attuned to the G-man's actions as they consider how an economic slowdown would put a lid on the hot issues. "I don't know if we'll test the lows on the Nasdaq, but I think we'll continue to sell off," said Volk.

In Nasdaq trading,



was a winner, after

Standard & Poor's

tapped the stock to replace

Reynolds Metals

(RLM) - Get Realm Therapeutics PLC Sponsored ADR Report

in the

S&P 500


On the tech front, the

Nasdaq Biotechnology Index

was lifting 3.9%.

Elsewhere, Internet Sector

index was in positive territory, up 11, or 1.3%, to 881, with gains from



. The software company announced a deal with


(NOK) - Get Nokia Oyj Report


The broad S&P 500 was off 4 to 1411, while the small-cap

Russell 2000

was up 3, or 0.7%, to 499.

Market Internals

Breadth was positive on both the Big Board and the Nasdaq, on moderately light volume.

New York Stock Exchange:

1,541 advancers, 1,208 decliners, 524 million shares. 32 new 52-week highs, 42 new lows.

Nasdaq Stock Market:

1,939 advancers, 1,742 decliners, 714 million shares. 14 new highs, 53 new lows.

For a look at stocks in the midsession news, see Midday Stocks to Watch, published separately.

Herb on TheStreet: Why One Longtime Bear (Surprise!) Isn't Bullish on Dell


Herb Greenberg

Senior Columnist

5/4/00 6:30 AM ET

Thursday thwack:

Dinging Dell -- again!:



(DELL) - Get Dell Technologies Inc Class C Report

reports first-quarter earnings May 11, it should have no problem meeting Wall Street estimates of 16 cents a share, "because they set the bar low enough," says money manager Bill Fleckenstein of

Fleckenstein Capital

in Seattle, who is short Dell's stock. He's referring to what in all likelihood will be earnings that are flat compared with those of a year earlier.

What concerns Fleckenstein, who was quoted

here in January accurately predicting Dell's miss of its fourth quarter, is Dell guidance regarding the second quarter. "There's absolutely no way they can get to the following quarter's estimate of 21 cents," he says. "Doing so would require them to be up 10% year-over-year in terms of earnings."

He cites the same thing he's been citing for months: Corporate PC demand has fallen off a cliff. (Not to mention that it's trading at 81 times last year's earnings after two missed quarters and one that is likely to be flat.) He doesn't know whether Dell will guide lower on its postearnings conference call or sometime the following quarter, but he doesn't see how it can avoid doing so. And if they don't, "I don't know whether they'll have Internet wampum (from investment gains) to make it, but operationally, there's no way they'll make 21 cents."

We'll see. In the meantime, please, enough with the emails about why I bother quoting someone like Fleckenstein, who was early in his PC industry concerns. I quote him because when it comes to the performance of PC-related companies, lately

he's been on the money!

And while we're at it: Don't waste your time asking me to ask him to disclose his investment performance. I really don't care about the performance of his fund; I care about his performance as a source.


It's been more than a year since

Family Golf Centers


was first mentioned

here. This'll probably mark the last time. The operator of driving ranges yesterday said it defaulted on loans under a $130 million credit facility by failing to make monthly interest payments and now may have to file for bankruptcy. Its stock now trades at just 5/16.

Analyst antics:

"Since you tend to view things with a healthy dose of skepticism (realism), did you notice that last week

Merrill Lynch's

crack analyst on


(CNC) - Get Centene Corporation Report


downgraded the stock from a buy to neutral?" asks one anonymous reader. "It was a buy for the last two years -- all the way down from 50 to 6. The same exact thing happened with

Boston Chicken


-- strong buy until the stock had dropped from 40 to something like 5, before finally announcing plans to reorganize, when it was downgraded to neutral." Always the last to know!

As originally published, this story contained an error. Please see

Corrections and Clarifications.

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,