TheStreet.com's MIDDAY UPDATE
October 25, 1999
Market Data as of 10/25/99, 1:09 PM ET:
o Dow Jones Industrial Average: 10,332.52 down 137.73, -1.32%
o Nasdaq Composite Index: 2,796.55 down 19.97, -0.71%
o S&P 500: 1,288.54 down 13.11, -1.01%
o TSC Internet: 718.59 up 2.48, 0.35%
o Russell 2000: 415.59 down 3.10, -0.74%
o 30-Year Treasury: 96 13/32 down 19/32, yield 6.391%
In Today's Bulletin:
o Midday Musings: Debate on What's Next Rages as Blue-Chips Sell Off Hard
o Herb on TheStreet: The Capers Continue at Compaq
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Midday Musings: Debate on What's Next Rages as Blue-Chips Sell Off Hard
10/25/99 1:10 PM ET
There are two ways to characterize what's going on with the stock market today, and whichever one is right makes all the difference in the world.
One way is to say that today's pullback is nothing more than a momentary pullback in a market that's finally found it's feet. The
tacked on 4.3% last week in a rally that, for once, wasn't based on just a narrow group well-loved, big-cap stocks advancing. So what if the market takes a little pause? The trend is up.
The market: Join the discussion on
The other way of looking at what's going on is to say that last week was a fake-out, an oversold bounce higher in a downward-moving market. Until stocks see some textbook capitulative selling, this thing hasn't plumbed the bottom yet.
Among market watchers, who have already seen stocks rally and fail three times since hitting their highs in late July, the latter interpretation of the market seemed the more popular today.
"Basically, I'd say there's no change in my view that this is a bear market rally that we've been seeing," grumbled Tim Hayes, senior equity strategist at
Ned Davis Research
in Nokomis, Fla. "I think the market will come back to the realization that nothing has really changed for the better. The internals of the market have not improved in terms of breadth and volume."
Moreover, Hayes feels that when shares hit their latest lows a little more than a week ago, "we had not got the deeply oversold levels you need for a bottom that's going to last."
Hayes, who spends a lot of time tracking sentiment measures, does note that some of them are getting pretty low -- the ones put out by
are scraping along at levels not seen since the 1980s. But sentiment gauges that measure more of a long-term outlook than Market Vane's (which tracks sentiment through the stock futures market) are still pretty high. "The shorter-term you get, the more pessimism you see -- which sort of goes along with the idea of a bear-market rally," said Hayes.
Others may not be as down on the market as Hayes, who reckons the market won't come back until it cuts 23% to 25% off its highs, but there's still a sense that stocks will continue to struggle for a while.
"The rate increases that you've seen in the bond market are having a corrosive effect on the stock market," said Jim Benning, stock trader at
. "I don't think it's going to hurt the stock market too badly, but it doesn't help."
The bond market was hurting awfully badly, with the benchmark 30-year Treasury down 20/32 to 96 13/32. Its yield swelled to 6.40%, the highest since Oct. 22, 1997. (For more on the fixed-income market, see today's early
For Benning, the key will be Nov. 16
Federal Open Market Committee
meeting. He's hopeful that whichever way the Fed goes -- tighten or stand pat -- there will be clear sense that the Fed will be out of picture once it's done.
But for that to happen, points out Steve Goldman, market strategist at
in Greenwich, Conn., it will be important things start cooling down. "We need a vision or a clear-cut sign that the economy is slowing down," he said. "There's still no evidence of that. Subsequently, stocks are going to have a difficult time."
Dow Jones Industrial Average
was lately off 132, or 1.3%, to 10,338. The
was down 13, or 1%, to 1289.
Things were a little bit better in tech-land. The
was off 19, or 0.7%, to 2797. And
TheStreet.com Internet Sector
index was actually registering gains. The DOT was lately up 2 to 718.
was down 3 to 416.
Breadth was negative on moderate volume.
New York Stock Exchange:
1,002 advancers, 1,877 decliners, 440 million shares. 31 new 52-week highs, 186 new lows.
Nasdaq Stock Market:
1,554 advancers, 2,176 decliners, 514 million shares. 67 new highs, 105 new lows.
Monday's Midday Watchlist
Earnings estimates from First Call/Thomson Financial; earnings reported on a diluted basis unless otherwise specified.
Mergers, acquisitions and joint ventures
added 1/16 to 29 5/8 after saying it forged a $1.18 billion pact with
, axing its planned $1.17 billion merger with
lately up 1/2 to 58 9/16. The transaction also calls for Grupo Mexico to assume $1 billion of Asarco's debt. Asarco's decision to unite with Grupo Mexico followed Phelps refusal to up its cash and stock bid, which valued the company at $29.34 a share based on Friday's closing prices. Before inking the agreement, Asarco handed over a $30 million breakup fee to Phelps Dodge.
An investment group, including
, is buying
MidAmerican Energy Holdings
for $35.05 a share in cash, a hefty premium over MidAmerican's closing price of 27 1/4 Friday. Shares of MidAmerican jumped 6 3/16, or 22.7%, to 33 7/16.
Columbia Energy Group
rose 2 1/8 to 64 1/8 after it said no to
sweetened $6.1 billion takeover bid. Columbia said the NiSource offer was financially inadequate. Columbia said its board authorized management to look into strategic alternatives, including a merger. Shares of NiSource inched up 7/16 to 20 3/8.
said it would buy
Dutch auction business, which arranges competitive bids on securities. Deutsche said the transaction will be made through its
subsidiary and will expand its Dutch auction business by more than 150 clients. Shares of Chase fell 2 11/16 to 77 15/16.
added 1 1/8 to 40 1/8 after saying it's buying
for about $780 million in cash and stock.
slipped 13/16 to 25 15/16 after it said its manufactured housing unit signed two separate service agreements totaling $900 million, as well as a backup servicing agreement. GreenPoint Credit signed a deal with a unit of
Bank of America
, which fell 1 3/16 to 57 9/16, and made a servicing agreement with
, a unit of Deutsche Bank. The backup service deal is with
added 9/16 to 38 9/16 after it said it plans to buy
, which provides Web-based shipping services for about $300 million in stock. Stamps.com plans to issue 8 million shares of common stock for all shares, options and warrants of privately held iShip.
Earnings/revenue reports and previews
climbed 1, or 5.3%, to 19 3/4 after it reported third-quarter earnings of 38 cents a share, beating the six-analyst estimate of 36 cents and up from a year-ago 37 cents a share.
fell 2 to 92 despite posting third-quarter operating net of $1.55 a share, well above the 17-analyst estimate of $1.23 a share and the year-ago 22 cents a share.
, a Dow Jones Industrial Average component, rose 1 1/4 to 44 5/16 after it posted third-quarter operating earnings of 54 cents a share, a penny ahead of the 22-analyst estimate, but down from the year-ago 68 cents.
fell 2 to 91 3/4 after reporting third-quarter earnings of $1.07 a share, well above the 21-analyst estimate of $1.01 a share and up from a year-ago 59 cents a share.
climbed 5/16 to 18 9/16 after it reported third-quarter earnings of 60 cents a share, a penny shy of the eight-analyst estimate but up from a year-ago 53 cents a share.
edged up 1/16 to 21 13/16 after it reported third-quarter earnings from continuing operations of 27 cents a share, 2 cents ahead of the 21-analyst estimate and up from the year-ago 20 cents.
Danka Business Systems
inched up 15/16 , or 10.5%, to 9 7/8 after it said it sees second-quarter net income in a range of 13 cents to 15 cents, excluding items. The current four-analyst estimate calls for earnings of 15 cents.
climbed 1 7/8 to 40 1/4 after it reported third-quarter earnings of 35 cents a share, missing the four-analyst estimate of 38 cents but up from the year-ago 14 cents a share.
, a Dow component, fell 1 3/16 to 75 11/16 after reporting third-quarter earnings of 61 cents a share, ahead of the 21-analyst estimate of 59 cents and up from the year-ago 58 cents.
lost 1 1/8 to 46 13/16 after it posted first-quarter earnings of 52 cents a share, beating the two-analyst estimate of 46 cents and the year-ago 40 cents a share.
lost 7/16 to 23 3/16 after it posted third-quarter earnings of 52 cents a share, be3ating both the 12-analyst estimate of 50 cents and the year-ago 42 cents.
, a Dow component, rose 1/16 to 92 5/8 after posting third-quarter operating earnings of $1.14 a share, ahead of the nine-analyst estimate of $1.06 and up from the year-ago operating earnings of 97 cents.
, also a Dow component, slipped 3/8 to 59 1/2 after it posted third-quarter operating earnings of 36 cents a share, a penny shy of the 10-analyst estimate.
Zenith National Insurance
fell 1/8 to 22 1/2 after it cautioned investors that it expects a third-quarter loss in the 20-cents-a-share range, citing slowness in its workers compensation insurance and property reinsurance markets. The company's loss would be in line with the consensus estimate of a 20-cent loss.
Offerings and stock actions
was hopping 7/16 to 84 1/16 after it said that its board approved an additional $50 million to the company's buyback plan, bringing the program total to $59 million.
was climbing 1/4 to 25 5/8 after it said its board authorized the buyback of up to $50 million of its outstanding common shares.
Packaging Corp. of America
said it is postponing its IPO. The sixth-largest producer of containerboard in the U.S. was scheduled to begin trading tomorrow, with 42.8 million shares priced at $16 to $19 each through
was slipping 7/8 to 45 1/8 after it said it has set a 5 million-share Class A stock offering. According to its
Securities and Exchange Commission
filing, Radio One will offer 4 million shares, while stockholders offer the remaining 1 million.
The vice chairman of
said the shipping giant's shares could begin trading Nov. 10.
Morgan Stanley Dean Witter
is offering 109.4 million shares in a range of $36 to $42 each.
was advancing 3/16 to 28 13/16 after it said that its board approved the repurchase of up to 20 million common shares.
raised its 1999 earnings estimates for
to $2.55 from $2.45. Shares of Amerada Hess were falling 1 7/16 to 57 5/16.
PaineWebber raised its rating on
to buy from neutral and lifted its price target to 45 from 32. Shares of Aon were gaining 1 3/8 to 33 1/8.
Salomon Smith Barney
cut its rating on shares of
to neutral from outperform. American General shares were losing 3 1/4 to 71 1/2.
A number of research firms made positive moves on
Donaldson Lufkin & Jenrette
raised its rating to buy from market perform, while
raised its rating to outperform from neutral.
Deutsche Banc Alex. Brown
Credit Suisse First Boston
raised their price targets on the stock. Shares of Ericsson were declining 13/16 to 38 3/16.
Deutsche Banc Alex. Brown and
initiated coverage of
with buy ratings. Foundry shares were soaring 5 1/8 to 167 1/4.
to its European focus list. Glaxo Wellcome shares were stumbling 1/8 to 59 7/16.
Merrill Lynch started coverage of
with an intermediate-term accumulate rating and a long-term buy rating. Merrill set a 12-month price target of 33. Interactive Intelligence shares were skidding 1 7/8, or 6.7%, to 25 3/4.
cut its rating on
to near-term accumulate from buy. Shares of Lehman Brothers were declining 2 3/8 to 65 9/16.
Merrill also lowered its rating on
Morgan Stanley Dean Witter
to near-term neutral from near-term accumulate. Shares of Morgan Stanley were tumbling 2 13/16 to 100 1/16.
raised its rating on
Protein Design Labs
to strong buy from buy. Protein Design Labs was bouncing 3 1/4, or 8.3%, to 42 1/4.
division unveiled a huge revamp, converting itself into an Internet portal site to better compete with portal leader
. CMGI was advancing 3 15/16 to 107.
According to two market research firms,
hopped to No. 1 among PC sellers in the third quarter, rising above
. Dell shares were sliding 5/16 to 39 1/2.
was climbing 1 1/4, or 6.1%, to 21 1/2 after it said it is launching a $126 million brand marketing campaign.
Herb on TheStreet: The Capers Continue at Compaq
10/25/99 6:30 AM ET
Quite the prediction
: In his latest report to clients on
Ashok Kumar noted that year to date Compaq's stock is down 56% vs. a 6% advance for the
. Then he wrote: "The stock's attempted bottoming process has failed. Having had a near-death experience, we are doubtful if Compaq will ever return to its glory days. Ironically in spite of all the acquisitions, there is a real threat of Compaq falling back to being a commodity player again."
Compaq officials were not available last night.
No fun and games:
says it did an audit of
The Learning Company
and found no irregularities. Can't help but wonder how it could do a thorough audit in just two weeks. The company, however, says that's just what it did with the help of a special team from the law firm of
Wachtell, Rosen, Lipton & Katz
and a special unit of
. Yet the company never said just why The Learning Company -- which Mattel bought last year -- missed its numbers. Any bets that this fairy tale doesn't have a happy ending?
Join the discussion on
Diamond in the rough:
Charles & Colvard
-- formerly known as
and the maker of a fake diamond called moissanite -- reported a third-quarter loss of 21 cents a share the other day. But the most interesting figure was in the balance sheet.
Before I give you that number, however, remember my interview with C&C CEO Jeff Hunter a couple of weeks or so ago? In that interview,
I asked about the deal C&C has with
, which makes the silicon carbide crystals. The deal calls for C&C to buy all of the crystals Cree makes through June 2000. Considering that C&C's shipments are below expectations, I had asked, Does that mean C&C's inventory would be up? He said yes, but added, "This isn't like lettuce, something you have to use. We're thinking for the long term."
long term, apparently. As of the third quarter, C&C's inventory was valued at $10.3 million, or around 1,000 days -- nearly three years.
: Can't wait to see what news
has today. The company's stock was halted shortly before the market closed on Friday. No further information was available.
TSC's new design
: Bravo to the design team. As someone who frequently works from home, I can now honestly say that there's no reason
can't be my primary source for biz news and analytical tools. If you haven't done it already, check out the button on the upper right hand side of the front page for ready access to news and press releases on
was the only mainstream site I could find that carried the
news of CHS' halt.) And I can't say enough about
real-time quotes. Very easy to sign up for and use. Not clunky. As with the whole new design: great execution.
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
email@example.com. Greenberg also writes a monthly column for Fortune.
Mark Martinez assisted with the reporting of this column.
Copyright 1999, TheStreet.com