TheStreet.com's MIDDAY UPDATE
June 12, 2000
Market Data as of 6/12/00, 1:20 PM ET:
o Dow Jones Industrial Average: 10,613.35 down 0.71, -0.01%
o Nasdaq Composite Index: 3,800.28 down 74.56, -1.92%
o S&P 500: 1,453.20 down 3.75, -0.26%
o TSC Internet: 916.59 down 31.92, -3.37%
o Russell 2000: 512.67 down 10.39, -1.99%
o 30-Year Treasury: 105 03/32 up 3/32, yield 5.879%
In Today's Bulletin:
o Midday Musings: Don't Know Why, There's No Sun Up in the Sky, Gloomy Trading
o Herb on TheStreet: Who Knew What When at Cyber-Care?
Also on TheStreet.com:
Wrong! Dispatches from the Front: Boxing Stocks: Corning Glass vs. Citrix
The market's tech sentiment is torn between two battling pieces of news this morning.
Silicon Babylon: Food for Thought
A recent merger demonstrates the limited value of Internet brands. When is a brand not a brand?
Internet: PurchasePro Inks a Deal With Hilton but Still Gets No Respect
With a large supplier base, the B2B exchange builder might get a second look.
Dear Dagen: Gypsies, Tramps & Brokers? Readers Take Sides on NASD Discipline
More reasons why so few brokers get reprimanded. Also, a spirited defense of the downtrodden broker.
Midday Musings: Don't Know Why, There's No Sun Up in the Sky, Gloomy Trading
6/12/00 1:30 PM ET It didn't take long for investors' early cheer to slip away this morning.
Fueled by some decent action overseas and a jump in futures prices during the overnight session, stocks jumped into the positive column at the opening bell this morning. But that foray into the green turned out to be brief, and by midmorning all the major indices had turned lower. Breadth has been negative -- particularly on the
Nasdaq Stock Market
-- and volume tepid. All in all a gloomy day.
Traders, however, were holding off on donning sackcloth.
"We're kind of in a trading range, and it looks like we're going to stay in that range for the next day or so," said Todd Clark, head of listed trading at
. "That's really pretty decent action, since we haven't given back too much of the gain" from the rally two weeks ago.
With a raft of key economic reports due later this week, Clark expects that the market will break out of its range, heading higher if the data comes in well, retesting the lows if it doesn't.
The report everybody is focusing on the most is the May
Consumer Price Index, due out on Wednesday. If the key inflation report comes in well, Wall Street economists reckon the
Federal Open Market Committee will hold off on raising rates at its meeting June 27 and 28. (Most expect that the Fed will have to raise rates at later meetings, however.)
"If these numbers are weaker, that will be a positive," said Peter Boockvar, equity strategist at
. "On the other hand, the market is getting concerned about pre-announcements."
We're in the period when companies whose earnings are not up to snuff start confessing their sins to investors. The latest is
, which said today that its second-quarter will come in well below analyst forecasts. The company has shed 44.2%. This follows warnings last week from
Procter & Gamble
Investors are worried that, with the
Fed working to slow the economy, there may be more company warnings. It also seems likely that when earnings are reported, even companies that have done well so far will be less optimistic about future earnings prospects.
"I think the message on earnings will be okay, but the growth in earnings will be slower than it had been," said Doug Cliggott, equity strategist at
. He remains cautious on the market and recommends an overweight in just two groups -- energy and consumer staples -- on the theory that these sectors are showing the best relative earnings growth and will continue to do well in a slowing economy.
Past the lunch whistle, the
Dow Jones Industrial Average
was off 1 to 10,613, while the broader
was down 4, or 0.28%, to 1453.
was down 74.60, or 1.93%, to 3800.20.
TheStreet.com Internet Sector
Index was down 32.25, or 3.5%, to 915.6.
There were some bright spots. Financial stocks were doing better, rebounding from a bad day on Friday. The
Philadelphia Stock Exchange/KBW Bank Index
was up 8.24, or 1%, to 830. Dow component
, up 1.9%, was one of the best performers there.
With crude up a $1.18 to $31.38 a barrel, energy stocks were also doing well. The
Amex Oil & Gas Index
was up 13.43, or 2.6%, to 540.4. The
Philadelphia Stock Exchange Oil Service Index
was up, or 4.6%, to 121.3.
The 10-year Treasury was up 6/32 to 102 27/32, dropping its yield to 6.104%.
New York Stock Exchange:
1,357 advancers, 1,391 decliners, 418 million shares. 48 new 52-week highs, 28 new lows.
Nasdaq Stock Market:
1,372 advancers, 2,439 decliners, 723 million shares. 61 new highs, 44 new lows.
Herb on TheStreet: Who Knew What When at Cyber-Care?
6/12/00 6:29 AM ET
Blast from the very recent past:
This column has railed for a long time against message boards, because you never know who is saying what. And from a corporate standpoint, they can be sieves for insider info. Enter
, the maker of an Internet-based patient-monitoring system, which has been the
focus of numerous items here
Just last Wednesday, someone who goes under the handle of "henlif" posted a message on
saying that he had talked to Cyber-Care's chief counsel Danny Bivins, who had told him the company had hired a new public relations firm. The next day, a press release was issued with the same info. Not earth-shattering, but considering the low price of Cyber-Care's stock at the time,
good news could be considered stock-moving news. And, indeed, Cyber-Care's stock rose on the news.
Interestingly, that's not the first time that someone has leaked insider info to the masses via the message boards under that name. Back in April, henlif posted a message saying that Cyber-Care CEO Mike Morrell had told him the company would issue a press release at 7 a.m. the next day announcing two big equity investments. True to form, at 7:02 the next morning, a release appeared. What does Cyber-Care have to say about the situation? My sidekick,
, tried calling the company's
PR firm but didn't get any further than a tape-recorded message asking him to leave his name and number. (He did!) Cyber-Care officials, meanwhile, didn't return his call.
Whew, who would've thought
many people were interested in earnings before interest, taxes, depreciation and amortization, or EBITDA? Dozens of emails arrived Friday from readers wondering how they could get a copy of
analyst Pamela Stumpp's highly touted (by me) report on EBITDA. Good news. It was scheduled to go up on Moody's Web site
www.moodys.com Friday night (and I suppose you could show up at her speech on June 15 before the
New York Society of Securities Analysts
And while we're on the subject, Dale Wettlaufer, an analyst at
mutual funds, adds:
I have found EBITDA to be a useful measure when I want to look at gross cash-generating ability across an industry, where different accounting methods may be employed. For instance, I was looking at defense companies a couple months ago and saw that General Dynamics (GD) - Get Report looked more expensive on some earnings-based numbers than some of its peers. But once you added back depreciation and amortization, you could see that GD was just as cheap on gross cash generating ability. One possible conclusion was that General Dynamics' depreciation and amortization schedules were shorter and thus more conservative than its peers. Of course, different product lines and sets of assets will call for different accounting procedures, but it was one more data point to look at. Given that General Dynamics has much less leverage and has a more attractive set of businesses than its peers (in my opinion), as well as a management that has done the right thing for shareholders in the past, it was a much easier choice at the same EV/EBITDA multiple as its peers.
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Surviving and profiting in treacherous markets
June 28, 2000, Marriott World Trade Center, New York City
For information and registration, go to
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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