May 30, 2000

Market Data as of 5/30/00, 1:55 PM ET:

o Dow Jones Industrial Average: 10,429.81 up 130.57, 1.27%

o Nasdaq Composite Index: 3,353.53 up 148.42, 4.63%

o S&P 500: 1,403.01 up 24.99, 1.81%

o TSC Internet: 787.01 up 34.78, 4.62%

o Russell 2000: 467.64 up 10.27, 2.25%

o 30-Year Treasury: 102 08/32 down 12/32, yield 6.086%

In Today's Bulletin:

o Midday Musings: Oversold Tech Sector Rallies Hard, but Players Retain Skepticism
o Herb Greenberg: Herb's Hotline: Still Stuck on the Economy

Also on

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The Chartist: This Market Isn't 1998's

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The former Morgan Stanley banker, now hedge fund manager, tells how the game has changed.

Dear Dagen: What If a Company Goes Public and No One Buys?

It can happen when the issuer and the underwriter miscalculate demand for the new shares.

Midday Musings: Oversold Tech Sector Rallies Hard, but Players Retain Skepticism


David A. Gaffen

Staff Reporter

5/30/00 1:22 PM ET

For once, a broad-based rally that doesn't come with qualifiers. Well, except for the lousy volume.

Perhaps the surprisingly good weather in the Northeast this weekend has folks freshly scrubbed and confident today, as all major indices at midsession were well into the green, led by buying in the technology sector.


Nasdaq Composite Index was rallying, up 146, or 4.6%, to 3351, and the

Dow Jones Industrial Average had gained 150, or 1.5%, to 10,449, while the

S&P 500 was up 25, or 1.8%, or 1403. The small-cap

Russell 2000 was up 10, or 2.1%, to 467.

Some expected a negative reaction from this morning's release of the

Consumer Confidence Index, which rose to 144.4 in May, a four-month high after falling to a revised 137.7 reading in April. The survey demonstrates that job security and wage growth are more than offsetting the decline in stock prices in the mind of consumers, and analysts worry that the

Fed may remain in attack mode in its efforts to slow the economy.

Regardless, traders say that investors are balancing those concerns against the belief that the technology sector has been wrecked enough to provide a good buying opportunity.

Big-cap tech stocks are leading the way, including the

Nasdaq Stock Market's

most active,


(CSCO) - Get Report

, up 2 11/16 to 57 5/8 on 24.3 million shares;

Nextel Communications


, up 9.7%; and

Adobe Systems

(ADBE) - Get Report

, up 9.4%.

Major technology indices were strong, including the

Philadelphia Stock Exchange Semiconductor Index

, gaining 6.8%, and the

Nasdaq Telecommunications Index

, up 6.3%. New

Lehman Brothers

analyst Dan Niles transferred a lot of his coverage from his old shop,

Robertson Stephens

, and reiterated support of computer and chip stocks overall this morning. Internet Sector

index was up 37, or 5%, to 790, helped by the likes of


(EBAY) - Get Report

6.6% gain and a 6.3% advance in




As with all rallies, this one provokes traders to question whether it will sustain itself, especially with worries about the Fed, and the market's recent tendency to quickly give back what it has gained.

"People saw opportunities and then took them," said Randy Billhardt, co-head of block trading at


. "Certainly, the Nasdaq had been in oversold territory, and we're seeing strength there and in the financials, but there's not a lot of oomph behind the move."

It has investors thinking that the market may be in for a week similar to last week, where a day of mostly positive action alternates with a day of dreary, ugly selling. Already, there's a couple of important economic reports in the market's way this week, including the

National Association of Purchasing Management's

Purchasing Managers' Index, an important survey of manufacturing sentiment, and the May

employment report, due out Friday.

"People had a three-day weekend to look at prices and see some good, long-term values, and say, 'Let's go after them,'" said Allan Meyers, portfolio manager of the

Kent Growth & Income Fund

in Grand Rapids, Mich. "But as to whether it can hold these gains now, I'd say no. I think we still have some more churning to do."

The lack of conviction is supported by the lack of volume and some sector weakness. Strong sector advances include the commodity-related stocks, such as natural gas companies, and the brokerages, which were hosed last week after reports that

Goldman Sachs

(GS) - Get Report

may miss second quarter earnings estimates. The

American Stock Exchange Broker/Dealer Index

gained 2%.


American Stock Exchange Natural Gas Index

rose 1.9%, and the

Philadelphia Stock Exchange Oil Service Index

rose 1.3%.


Morgan Stanley Consumer Index

was lately down 0.3% in lackluster trading.

Sara Lee


had risen earlier but lately was off 1/4 to 18 5/16, after announcing plans to divest


leather and other businesses to focus on food, beverage and household products.


American Stock Exchange Pharmaceutical Index

was down 1.1%, and the

American Stock Exchange Tobacco Index

lost 2.1%.

"Across the board, there appears to be some selling of the old growth companies," said Ned Riley, chief investment strategist at

State Street Global Advisors

. "The health care, beverage, restaurant chains are weaker in face of the estimate of Fed hikes based on the consumer confidence survey."


Dow Jones Transportation Average

was up strong, gaining 1.8%, while the

Dow Jones Utilities Average

was down 1%.

Market Internals

Breadth was solidly positive on modest volume.

New York Stock Exchange

: 1,711 advancers, 1,066 decliners, 467 million shares. 29 new highs, 41 new lows.

Nasdaq Stock Market

: 2,444 advancers, 1,329 decliners, 756 million shares. 24 new highs, 85 new lows.

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

Herb Greenberg: Herb's Hotline: Still Stuck on the Economy


Herb Greenberg

Senior Columnist

5/30/00 12:53 PM ET

Never mind the market, I'm still stuck on the cross-currents of this economy. We asked for anecdotal signs that the economy isn't slowing, and got virtually


. But then came this, from

Paul Scarlato

, who writes:

"This weekend, two not exactly low-end houses listed in an area we have been looking at (in suburban Philadelphia) had prices significantly higher than what the other houses on the street sold for. Neither house was any great shakes. The first one, for sale by owner, was open for the first time on Sunday. There was a line to get in, and it sold at the open house. "The second one listed yesterday afternoon at 2 p.m. for a price the neighbors (I'm friends with one) characterized as obscene. I got a call first thing this morning from our Realtor. There were multiple offers on the house by late yesterday afternoon, and they are not taking any more offers, nor are they showing the house after 5 p.m. today." (So much for the interest-rate effect.) ...

Meanwhile, back at the ranch (actually,

Home Depot

(HD) - Get Report

): Reese Whitman Reed, a portfolio manager with

Bonfiglio & Reed,

a Phoenix firm that specializes in options, says that recent items

here raising a few questions about whether Home Depot was opening too many stores near one another "inspired us to do some checking with local Home Depots. We like to call and ask how many positions companies are currently trying to fill -- a sentiment indicator that has worked for us. Calls to many Home Depots were met with 'absolutely none.' One manager even told us that they are using every possible occurrence to let people go. ... Employees we spoke to said their store meetings were very downbeat in regards to sales figures." (Reed has no position in Home Depot, but says he is considering buying puts on any rallies. And before you blast me for raising this issue, go back and check the prior debate, right here, on this very topic. Reese just adds a new chapter to the saga.) ...

Meanwhile, maybe it was in the translation: Last week, in an

item on

Lernout & Hauspie


, I wrote: "Oh, gosh, I sound like a broken record here ... like a clock whose second hand is stuck at 12. I really didn't want to mention Lernout & Hauspie again. I know you're sick of it. I'm sick of it. The folks telephoning and emailing me with all kinds of threats are sick of it. All of Belgium is sick of it."

That prompted


of letters from Belgium insisting that Belgians are not sick of their darling Lernout. Well, on second read, I can see how you might think that's what I meant but what I


meant to convey is that everybody, including


of Belgium, is probably sick of me mentioning Lernout! ...

Finally: the Montvale, N.J., headquarters of

Benjamin Moore


, the paint company, is housed in a building alongside the Garden State Parkway that requires ... no paint. Just one of those things, just one of life's mysteries, as is this edition of ... 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.

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