May 11, 2000

Market Data as of 5/11/00, 1:25 PM ET:

o Dow Jones Industrial Average: 10,517.53 up 149.75, 1.44%

o Nasdaq Composite Index: 3,467.53 up 82.80, 2.45%

o S&P 500: 1,403.65 up 20.60, 1.49%

o TSC Internet: 834.25 up 26.58, 3.29%

o Russell 2000: 484.30 up 10.02, 2.11%

o 30-Year Treasury: 100 27/32 down 16/32, yield 6.188%

In Today's Bulletin:

o Midday Musings: Rally Lifts Spirits but Doesn't Lift Volume
o Herb Greenberg: Herb's Hotline: Has Inflation Really Cooled?

Also on

1994 Redux?: 1994 Redux: The Source of the Pain

The trader compares what hurt most in 1994 to what makes the market wince today.

Building Blocks: Real Estate Giants Want to Move to Dot-Com Neighborhood

But a look at the details suggests there may be less here than meets the eye.

Media/Entertainment: Publicis Denies Report for Renewed Interest in Buying Young & Rubicam

The French ad firm said in a brief press release that it has not made an offer for Y&R and had no intention to do so.

Dear Dagen: Compounding Matters: Why Simple Percentages Don't Add Up Year to Year

You cannot simply subtract the return this year from the one last year to determine your actual return.

Midday Musings: Rally Lifts Spirits but Doesn't Lift Volume


Tara Murphy

Staff Reporter

5/11/00 1:23 PM ET This session's rally is proof that a little weaker-than-expected economic data can go along way. But would savvy investors kid themselves into thinking that the April

retail sales

number is good enough news to change the negative sentiment that has embedded itself into the market? According to Wall Street insiders, the bears are alive and kicking. Just take a look a volume.

This morning, the

Census Bureau

said April retail sales declined 0.2%, compared with a 0.4% increase forecasted by economists in a


poll. The number, which was the first decline since August 1998, sparked what would appear to be a strong rally compared to yesterday's big losses for both the

Dow Jones Industrial Average and the

Nasdaq Composite Index. But investors can't look only to point increases to gauge market sentiment. Volume, too, indicates whether buyers are confident that they will rake in returns rather than chalk up losses.

"We had a benign, or friendly retail sales number this morning," said Brian Conroy, head of listed trading at

J.P. Morgan

, referring to this morning's rally. "And we have a situation where many institutions are sitting on cash reserves and are looking for a reason to put money back in. But we're not seeing a lot of conviction from institutions, so I personally think we'll see a one-day, two-day rally and then a lower trend."

Lately, the Nasdaq was climbing 74, or 2.2%, to 3459, after losing 11% during the previous three sessions.

In Nasdaq trading,

Applied Materials

(AMAT) - Get Report

pushed itself into positive territory, lately up 3/4, or 0.9%, to 85 3/8. Despite posting second-quarter earnings that were in line with expectations and strong new orders, the chip equipment maker fell lower this morning. So why, when other tech blue-chips are rallying, would Applied Materials not be surging?

"It could be that everyone wanted blowout numbers for earnings and revenue," said Brian Gilmartin, portfolio manager at

Trinity Asset Management

. "But the fact is, analyst were raising the expectations for Applied Materials for the past month. There was a lot of optimism built into the stock already."

Elsewhere in tech, the

Philadelphia Stock Exchange Semiconductor Index

, which includes Applied Materials, was charging up 5.2%. Intel was making a comeback, up 7 11/16, or 7.3%, to 113 3/4, after motherboard woes left the stock bludgeoned during yesterday's session.

Investors were getting a stronger signal from telecom/wireless stocks, after a



downgrade from

Salomon Smith Barney

yesterday left the sector in a slump. Motorola was on the upside, advancing 4 7/16, or 5.1%, to 91 3/16. The

Nasdaq Telecom Index

was climbing 1.6%. Internet Sector

index was adding 23, or 2.8%, to 830, with



contributing to the pop.

Lately, the Dow was up 151, or 1.5%, to 10,519, with strength from tech components





(IBM) - Get Report


Today rally has shoved some of those "modest" sectors into the spotlight. The fizzle of the tech craze left investors looking for relatively inexpensive areas of the market to make a buck and found utilities and natural gas stocks as their answer.


American Stock Exchange Natural Gas Index

has rocked to an all-time high today, up 6, or 3%, to 192, using





(WMB) - Get Report

as fuel.


Dow Jones Utility Average

lifted 2.1%.


Philadelphia Stock Exchange Oil Service Index

was heating up to a record intraday high of 125.21. The index, which includes


(SLB) - Get Report

, was still up 3, or 2.2%, to 125.

Despite fears of a 50-basis-point hike, the interest-rate-sensitive financials were climbing. The

American Stock Exchange Broker/Dealer Index

was gaining 1.3%. Dow component

J.P. Morgan

(JPM) - Get Report

was advancing 4 3/8, or 3.6%, to 127.

Despite all sectors seemingly on the upside, market pundits still lack optimism due to the light volume. "You could pretty much take a snapshot of the screen as far as the volume goes," said Arthur Hogan, chief market strategist at


. "The key is volume, which will remain anemic until the Fed meeting on Tuesday. Everything is strong, its your classic snapback rally. But there's not really any credence in the rally until we get all the players back in the game."

The broad

S&P 500 was up 19, or 1.4%, to 1402, while the small-cap

Russell 2000 was adding 9, or 1.9%, to 483.

Market Internals

Breadth was positive on both the Nasdaq and the Big Board on very little volume.

New York Stock Exchange:

1,872 advancers, 899 decliners, 568 million shares. 49 new 52-week highs, 45 new lows.

Nasdaq Stock Market:

2,371 advancers, 1,380 decliners, 814 million shares. 22 new highs, 70 new lows.

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

Herb Greenberg: Herb's Hotline: Has Inflation




Herb Greenberg

Senior Columnist

5/11/00 12:29 PM ET

Welcome to another edition of the Hotline, the Hootline or what today might better be described as the cooline or


line. (Drats that sudden shifts in temps from 95 to 55, here in the Northeast, put a damper on my spirits and sinuses, which explains the absence of today's


column. Sorry 'bout dat.) So now, as I write this, futures investors are reacting (with predictable knee-jerk precision) positively to the weaker-than-expected April retail number after reacting negatively to the last series of inflationary reports. (By the time you read this the darn market'll probably be



This much I know, after having reported on this cycle after cycle after cycle on early morning TV in San Fran (where you always hafta have


to say). It's only positive, from the stock market's standpoint, until the


report. And then the next, and the next, and the next


and then, until housing prices on either coast either


going up


fast-food chains and grocery stores and specialty retailers stop advertising for help. I like to think of the "help wanted" signs as the secret inflation, because the only way some of these chains can attract employees who don't chew gum on the job -- is that just a Jersey thing? -- is to pay


minimum wage. That's


(Whaddaya mean I oughta stick to poking at the underbellies of individual companies and quit telling you what


think about this macro stuff. Considering how the economists, analysts and pundits can't get it right, why should my opinion count any


) Reminds me of the lunch I had with San Fran


Chief Robert Parry back in the late '80s or very early '90s when I was bending his ear about inflation and housing prices and how Silicon Valley companies were having trouble attracting talent because of what


were considered astronomical housing prices. He responded by saying that what I was saying didn't show up in his data -- the rearview mirror stuff. But then, as he thought more about it, he realized that his own branch of the Fed was having trouble hiring folks from out of state because of the area's high cost of living. The slump killed the Bay Area's housing market and the economy quickly followed.

Speaking of which: When I moved to Palo Alto in 1988 I bought a three-bedroom, two-bath, 1,400-square-foot ranch house


a family room

in a bidding war

for $385,000. We called it our apartment with a lawn, if you can call that a lawn. Two years later when I went to sell it I couldn't give it away, at least not at the price I wanted -- $525,000; wound up settling for $485,000 after months on the market. That same house now I'm told could probably fetch around $1.5 mil. For


And you don't see inflation. Hello! (OK, it's in Silicon Valley, but there are ripple effects, nonetheless!)

Short Positions

Blast from the past: Forget Herb's Hotline. How 'bout a moment of silence for the



Hotline? May it R.I.P. now that HMT has agreed to merge with longtime disk-making rival



. At last check, HMT traded at around 1 3/4 ... And glad to say



J.C. Penney

(JCP) - Get Report


and fans


. Learned that after an item

yesterday suggested the company, struggling to find a niche, was headed the same direction as what once was known as

Montgomery Ward

. From one longtime employee, who acknowledges that he hasn't always agreed with management: "I think most of our problems are on the mend, and with a little 'GOOD' Press you'll see things turn ... we do remain a healthy and profitable company and our merchandise mix right now is the best I've seen it in years." (Don't look for good press to turn the company around.


(S) - Get Report

had good press, too, and look how


stumbled. Nothing beats results, but thanks for sharing!) And from investor Colton Reichert (any relation to Carl, formerly of

Wells Fargo

(WFC) - Get Report

?): "What Carl Icahn knows that you don't is value of assets. JCP has the largest catalog sales of any retailer. They also have a fast growing Internet site unlike your soon to be bankrupt site. The value of JCP's assets is worth $35-75 per share. They do have sales over $1 Billion per month. Hardly an extinct entity. Sometimes I think you get off on being a jerk. Do some DD before you open your mouth." Well, uh ... uh ... with the exception of the last two sentences that's just what a guest on our

TV show on

Fox News Channel

said when he recommended JCP just before it blew its numbers ...



Final word on the subject from Jeff Brinkman, who writes: "I agree completely, it has been run into the abyss but that is in the stock. I can't forsee anything else that would cause JCP to head lower from here. I know what a dangerous statement that is but from 18 years of trading I have not come across such deep value in some time. Heavy call option activity of late also, large blocks (5,000) indicate someone knew his filing and the CEO being thrown out was coming." And the CEO wasn't booted fast enough. I coulda told them that buying the Genovese chain of drug stores would be a disaster. Can't wonder if he had ever been in one? The joke in these parts, where they converted the Genovese to Eckerd, is that Eckerd made Genovese look good!

More noise on


(JWN) - Get Report

: Yesterday's Hotline item regarding the demise of the Nordstrom piano, Greg Scherr writes: "Herb the piano in the Nordstroms here in Glendale Calif. has been removed for about 4 months. I miss it when using their men's room." Imagine how those old guys who used to snooze next to the piano holding their wives purses must feel!


and from Stephanie -- "formerly of Ridgewood

N.J., where I now live and now of Monmouth County

in the central part of the state: I appreciate your analysis and comments on various companies prospects, but could you please be careful about your comments on New Jersey?" She was referring to my line about how I've never seen or eaten a Jersey Tomato. "The farmlands," she writes, "are way south of you -- Central to South Jersey. There really is a Garden State here." I was beginning to wonder, but, alas, it's too late, signed ... Herb (currently of Ridgewood but soon of San Diego).

Finally, from the consumer desk: Don't squeeze the Charmin (a product of

Procter & Gamble

(PG) - Get Report

.) Mr. Whipple was right: my son's science fair project compared Charmin to Quilted Northern (Fort James) and A&P's 2-ply brand (???). Charmin won by a landslide. (Not only is it softer, but it's


) Most telling was the water droplet test: 10 drops of water on each. While I held the paper tight Andrew dropped quarters, one by one, on each until the paper broke. Charmin held something like 17. Northern, 7 and A&P, 3. Did it twice just to be sure. (Don't know about you, but that's enough reason for my family to switch! Another reason to read ... the Hotline.)

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,