TheStreet.com's MIDDAY UPDATE
June 14, 2000
Market Data as of 6/14/00, 1:35 PM ET:
o Dow Jones Industrial Average: 10,703.15 up 81.31, 0.77%
o Nasdaq Composite Index: 3,839.07 down 11.99, -0.31%
o S&P 500: 1,475.72 up 6.28, 0.43%
o TSC Internet: 908.63 down 5.00, -0.55%
o Russell 2000: 515.02 up 1.27, 0.25%
o 30-Year Treasury: 104 30/32 up 21/32, yield 5.898%
In Today's Bulletin:
o Midday Musings: Everything Old Is Cool Again: Blue-Chips Rally While Nasdaq Drifts
o Herb Greenberg: Herb's Hotline: Never Mind the CPI
Also on TheStreet.com:
Wrong! Tactics and Strategies: Rationality Returns to the Dot-Coms
Instead of buying eBay mindlessly on any old news, investors gave the company's latest deal a thumbs-down.
SiliconStreet.com: The Man With a Plan to Make Tech Service Pay
Lante's Rudy Puryear says the company can generate fatter returns than your average body shop.
Market Features: Slowing Cheap PC Sales Threaten to Squeeze Big Boxmakers
H-P, Compaq and eMachines appear most vulnerable to the consumer-demand slowdown.
Dear Dagen: Special Reports: Some Funds' Periodic Statements Have Real Value
Reports from Magellan and others are outdated and dry, but a handful deliver thoughtful explanations.
Midday Musings: Everything Old Is Cool Again: Blue-Chips Rally While Nasdaq Drifts
6/14/00 1:08 PM ET Investors applauded the latest round of benign inflation data, as hopes rose that the curtain will soon descend on the
Fed's rate-hike roadshow. Old Economy stocks were still enjoying an encore at midday, while technology stocks got shoved off to the wings.
Consumer Price Index edged up 0.1% in May, compared with expectations for a 0.2% gain. Core CPI, which excludes food and energy prices, rose 0.2%, in line with consensus forecasts. For more on the latest
CPI stats, see a separate story from
Dow Jones Industrial Average was lately up 87, or 0.8%, to 10,708, the
S&P 500 was up 7, or 0.5%, to 1476 and the
Russell 2000 was up 1 to 515, while the
Nasdaq Composite Index was off 12 to 3839.
Today's action is "more or less a continuation of the backdrop where interest rates have moderated. It has kind of removed some of the fear," said Steven Goldman, market strategist at
in Greenwich, Conn. He points out the strong market internals and sector performance over the past few months which he said has been overshadowed by volatility.
Goldman noted a strong showing by utilities, financials and consumer cyclicals since mid-March. Indeed, from then through yesterday, the
Dow Jones Utility Index
was up 15.9%, the
Philadelphia Stock Exchange/ KBW Bank Index
was up 18.2% and the
Morgan Stanley Consumer Index
was up 13.8%.
Old Economy stalwarts were at the head of the pack today as investors went bargain-hunting in some of the beaten-down cyclicals including
, up 2.1%,
, up 3.6%, and
, up 4.9%. The
Philadelphia Stock Exchange Forest & Paper Products
index was up 3.2%, while the
Morgan Stanley Cyclical Index
was up 1.7%.
"People might have been lost in all the talk about a slowing economy," said Goldman. "It's common for that to happen when the Fed is in the late innings of a series of interest-rate hikes." But, in retrospect, he explained, you'll see the market has done well in that period. "As corporate profits are slowing, the market gives further impact to expanding price-to-earnings ratios," said Goldman.
was enjoying the legal equivalent of a good hair day after the
U.S. Court of Appeals
agreed yesterday to speed its review of the case while government lawyers formally requested the matter instead be sent directly to the
. The stock, which is a component of both the Dow and the Comp, was up 2 5/16, or 3.4%, to 70 3/16.
Other tech stocks were not performing so well, with the Comp dipping into negative territory after it enjoyed decent gains for most of the morning. Internet, semiconductor and PC makers were all weaker while biotechnology stocks were flat.
TheStreet.com Internet Sector
index was down 3, or 0.4%, to 910; the
Philadelphia Stock Exchange Semiconductor Index
was off 1.6% and the
Philadelphia Stock Exchange Computer Box Maker Index
was down 0.8%. The
Nasdaq Biotechnology Index
was down 0.7%.
Doug Myers, vice president of equity trading at
in Atlanta, thought today's upside was due more to a lack of selling pressure. "The market is sort of in a fashion where there is just not much on the downside. There is just a sense that you can nibble on specific stocks. I don't know that all the market timers are ready to jump back in," he said. Still, he added on a more optimistic note, "hopefully it holds and gives us a nice foundation to move upward."
Luxury goods retailer
and chip-equipment maker
had a little extra spark today after
Standard & Poor's
said it would add the stocks to its benchmark S&P 500 index. Stocks usually respond well to inclusion in the index since a number of portfolio managers will now need to add the stock to their holdings. Tiffany was up 2.5% and Novellus was up 10.1%.
Oil stocks were on the rise as crude oil futures on the
New York Mercantile Exchange
moved up from an earlier dip amid uncertainty about
output plans. The
American Stock Exchange Oil & Gas Index
was up 1.1%, while the
Philadelphia Stock Exchange Oil Service Sector Index
was up 2.3%.
The 10-year Treasury lately was up 11/32 to 103 4/32, its yield easing to 6.07%.
Breadth was narrowly mixed on light-to-moderate volume.
New York Stock Exchange:
1,584 advancers, 1,182 decliners, 526 million shares. 77 new 52-week highs, 27 new lows.
Nasdaq Stock Market:
1,800 advancers, 1,910 decliners, 813 million shares. 57 new highs, 44 new lows.
For a look at stocks in the midsession news, see Stocks to Watch, published separately.
Herb Greenberg: Herb's Hotline: Never Mind the CPI
6/14/00 12:50 PM ET
Ego Central: You've got to hand it to The Hotline for once again getting it
on the economy. (Don't you just hate braggarts?! I know I do, especially when what they're bragging about was such a no-brainer! My mother, who regularly reads this column and knows virtually
about investing or the economy -- she reads it
she's my mother -- could've figure it out! Watch, and now she won't talk to me. I didn't mean it as an insult, ma, honest! Take me back!! But I digress ... ) First it was the prediction of weak
. Then it was the prediction of a chilly
CPI. What next? Raymond, the 70-something stock broker who makes an appearance here every now and then calls this ay-em saying that the last time oil was over $32 a barrel, which it is now, was the first step toward a recession. So much for higher interest rates anytime too soon. Man the battle stations! Auntie Em! Auntie Em! (And hold the hostile-o-grams claiming that I am now predicting a recession. I'm not, just telling you what Raymond says. Right or wrong, this is one walk-the-tightrope time if there has ever been one for the rulers of the rates.) ...
Moving on: Looks like the $100 mil raised by
was a last-ditch effort to raise cash. "If everything works out, the company will have sold $100 million of stock at a discount to the market price," says resident skeptic Eric Von der Porten of
. "Sort of a secondary offering when you can't do a secondary offering. If it doesn't work out, the company's stock price will get driven lower and lower because the market will fear the dilution, which will drive the stock lower, which will increase the dilution, which will drive the stock lower ... Yes, it's the old death spiral, it seems to me." Death spirals ... If you're a company you don't want to go there. Wall Street's equivalent of a loan shark! ...
Oh, and don't let me forget to tell you: Yesterday's
Hotline mentioned a private e-tailer called
. Said it had annual revs of $1 mil; make that annual profits of $1 mil. It had revs of $14 mil.
mistake ... A question for
Yesterday afternoon you said you would buy
when it falls to cash;
today you say you wished you had shorted it knowing everything you know. So, would you still buy it at cash? ...
Finally: So, do you want your company to invest in the stock market? That was the question I asked after
yesterday's column on
, whose money goes into a tech index fund. According to our nonscientific poll, however, roughly 62% of the Hotline's readers, as well as an almost equal amount of readers of my regular Herb on TheStreet column, who took an identical poll, say an emphatic "No!"
But there are some caveats. Michael Zigmont, for example, says he doesn't mind the investing, "but I don't want the gains/interest/dividends to be grouped in with earnings." And Asher Troppe, of
(Troppe spelled backwards?!), says: "If after analysis, that is where they can get the best return on excess cash, then perhaps it is an acceptable idea ... I would add that it'd be very interesting for a tech company ... to put some into bear funds. This way, when the market takes a hit, perhaps the stock will take a smaller hit." (Good idea, Ash, but don't count on it until
is investing in bear funds ... I'm sure most of these johnny-come-lately corporate investors will do it at
the wrong time!) Then came reader
, who asks, "Don't you buy an individual stock because you think it is going to do better than the market as a whole." (Yes, Matt.) "So wouldn't it follow that a company that buys a broad-based market index is saying it is going to underperform? After all, if you are going to outperform why bring your return down to meet the market?" (Smart man, that Matt.) Leave it to an
engineer, however, to put it all in perspective: "Intel invests in companies," he says. "However, they do it with a pointed purpose: to expand the computing business market so that they can sell more microprocessors and other infrastructure silicon. They do not take the $10B and throw it into the
fund. The fact that they make money on the deals, although important, is not primary." Hear, hear! And I hope you'll be here for the next edition of ... The Hotline.
Please join me and Paul McEntire, president of the Bearguard Fund, as we show you why the shorts can help you save your shirt at the first RealMoney.com Investor's Conference. McEntire, a veteran shortseller, started Bearguard last year. It's the first short-only stock mutual fund. We'll both share our tips on how to spot trouble, followed by my questions to Paul and your questions to both of us.
Surviving and profiting in treacherous markets
June 28th, 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