Publish date:

TheStreet.com's MIDDAY UPDATE

November 2, 1999


Market Data as of 11/2/99, 1:22 PM ET:

o Dow Jones Industrial Average: 10,742.40 up 93.89, 0.88%

o Nasdaq Composite Index: 3,010.17 up 42.52, 1.43%

o S&P 500: 1,366.74 up 12.62, 0.93%

o TSC Internet: 756.78 down 5.07, -0.67%

o Russell 2000: 434.97 up 3.15, 0.73%

o 30-Year Treasury: 99 25/32 up 18/32, yield 6.138%

In Today's Bulletin:

o Midday Musings: Nasdaq's Charge Above 3000 Pulling Bystanders Off Sidelines
o Herb on TheStreet: Would Steve Jobs Be Better off as a Money Manager?

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Midday Musings: Nasdaq's Charge Above 3000 Pulling Bystanders Off Sidelines


Thomas Lepri

Staff Reporter

11/2/99 1:04 PM ET

It's a lesson Manhattanites have learned well from their horrible little real estate market. When it looks like asset prices can't possibly rise any further, and then they do just that -- start the bidding. It may sound crazy to the buy-the-dip crowd, but it makes a whole lot of sense from where the market's standing today, at the point where long-term investing meets the short-term momentum play.

The major indices were on another magic carpet ride at midsession, led by the

Nasdaq Composite Index

, lately above the 3000 mark and still probing deeper into record territory. Powered by increasingly big-cap technology issues, the Comp was up 39, or 1.3%, to 3007.

Nasdaq Hits 3000: Join the discussion on


Message Boards.


Dow Jones Industrial Average

was up 87, or 0.8%, to 10,735, while the

S&P 500

was 12 higher to 1366. Strong breadth was helping the small-cap

Russell 2000

advance 3 to 435.

TheStreet.com Internet Sector

index was exceptional on the downside, off 6 to 756.

The conventional wisdom was that stocks would need to breathe a bit after rallying so strongly and so broadly toward the end of last week. But investors impressed by the market's comeback and unwilling to get left behind were making that thesis look, well, rather conventional.

"Some people are worried that we're in a lockout phase," said Richard Dickson, technical analyst at

Scott & Stringfellow

in Richmond, Va. "The market screams higher and people say, 'I've got to wait for a pullback.' But in a market like this, waiting means paying higher prices. So I think people said, 'Why wait? Here we are, and we're buying it.'"

It's not like people are buying out of blind panic. Though frighteningly fierce, the market's run-up last week was markedly healthier than the sort of strength the indices have shown for some time now. "What you saw last week was a very important bottom," said Barry Hyman, senior market strategist at

Ehrenkrantz King Nussbaum

. "A bottom accompanied by good breadth, strong volume, renewed leadership by the growth stocks, and a very accommodative bond market."

Neither the day's economic data nor a morning

speech by



Alan Greenspan

were having much effect on the bonds, which were shaving off a few more basis points in yield in an extension of last week's rally. The

Commerce Department

released figures showing personal income unchanged in September. As has been the case for some time, spending outstripped income, growing 0.4% in September on the heels of a revised 0.8% clip in August.

The benchmark 30-year Treasury was up 18/32 to 99 24/32, its yield easing to 6.14%. (For more on the fixed-income market, see today's early

Bond Focus.)

Meanwhile, the market continues to rotate. The possibility that those insatiable consumers aren't anywhere near ready to stop spending was helping send the

S&P Retail Index

was up 1.5%. The

Morgan Stanley Consumer Index

was up 0.5%.

Chip stocks were getting their wind back as the market seems to have decided that yesterday's 6.1 quake in Taiwan won't create any problems for the region's semiconductor industry. The

Philadelphia Stock Exchange Semiconductor Index

was up about 3.3%.

Financials were also looking strong, the Philadelphia Stock Exchange/KBW Bank Index up about 1.7%.

"This is not a one-sector market, as is witnessed by the breadth," Hyman said. "If it were the same old rally, with breadth 2-to-1 to the downside, I'd be suspicious. But that's not what's happening."

Market Internals

Breadth was indeed strong.

New York Stock Exchange:

1,828 advancers, 1,079 decliners, 522 million shares. 58 new 52-week highs, 56 new lows.

Nasdaq Stock Market:

2,056 advancers, 1,568 decliners, 706 million shares. 170 new highs, 65 new lows.

Tuesday's Midday Watchlist

By Eileen Kinsella
Staff Reporter

Tech stocks were hopping as the Nasdaq broke through the key 3000 level. Among top movers helping fuel today's gains,



was flying 24 7/8, or 44.3%, to 81 1/8, while recently public

InterTrust Technologies


was hopping 14 1/2, or 25.5%, to 71 3/8.

Mergers, acquisitions and joint ventures

Barnes & Noble

(BKS) - Get Report

rose 5/8 to 22 1/4 after it said it purchased a 49% interest in



Alaska Gov. Tony Knowles urged the

Federal Trade Commission

yesterday to block

BP Amoco's


proposed $26.8 billion takeover of

Atlantic Richfield

(ARC) - Get Report

and said he suspended Alaska's talks over the deal with BP Amoco. Shares of BP Amoco fell 1 9/16 to 55 11/16, while Atlantic Richfield dropped 4 13/16, or 5.2%, to 87 3/8.


said it has obtained $100 million in fourth-round financing from


(AMZN) - Get Report


Martha Stewart Living Omnimedia


and others, which will contribute to the company's expansion into 20 new locations in 2000. Shares of Amazon slid 2 3/16 to 67, while Martha moved up 3/4 to 34 5/8. The online grocer said

Kleiner Perkins Caufield & Byers


Hummer Winblad Venture Partners

are among the other investors funding the project.

Sykes Enterprises

(SYKE) - Get Report

rose 11/16 to 31 13/16 and

Perot Systems

(PER) - Get Report

was up 1/8 to 19 3/16 after the companies said they have forged a tech agreement to offer consulting, tech support and other services.

Separately, Perot posted third-quarter earnings of 14 cents a share, in line with the five-analyst estimate and up from a year-ago 9 cents a share.

U S West


jumped 1 5/16 to 62 11/16 after shareholders gave their stamp of approval to the company's planned $36 billion merger with

Qwest Communications


, lately rising 1/16 to 35. U S West said 93.7% of the votes favored the deal, which will be voted on by Qwest shareholders today.

Earnings/revenue reports and previews


Earnings estimates from First Call/Thomson Financial; earnings reported on a diluted basis unless otherwise specified.


Cadmus Communications


lost 1, or 11.1%, to 8 1/8 after it posted first-quarter earnings of 17 cents a share before charges, missing the three-analyst estimate of 20 cents a share, and the year-ago 31 cents.

Fresh Del Monte

(FDP) - Get Report

gained 3/4 to 42 1/4 posted third-quarter earnings of 21 cents a share, missing the five-analyst estimate of 25 cents and down from the year-ago 44 cents.

Global TeleSystems

(GTS) - Get Report

gained 1 1/16 to 26 1/16 after it posted a third-quarter loss of 59 cents a share, narrower than the six-analyst estimate of a 68-cent loss but wider than the year-ago 42-cent loss.

Oxford Health


gained 1 15/16, or 15.6%, to 14 3/8 after it posted third-quarter earnings of 29 cents a share, beating the 16-analyst estimate of 15 cents and up from the year-ago 58-cent loss.

Ralston Purina


rose 1/2 to 31 7/8 after it reported fourth-quarter earnings of 36 cents a share, beating the 10-analyst estimate by a penny and up from the year-ago 31 cents.

Rite Aid

(RAD) - Get Report

lost 1/8 to 8 13/16 after it reported an unaudited net loss for the latest 13-week quarter of 6 cents a share. The seven-analyst estimate called for a loss of 26 cents a share. Since announcing preliminary second-quarter results in early October, Rite Aid has continued a review of its accounting, which was undertaken partly as a result of comments of the staff of the


. The company also continued to evaluate and make necessary adjustments for various matters identified as a result of that review.



rose 15/16, or 5.85%, to 17 3/16 after it reported third-quarter earnings of 13 cents a share, in line with the five-analyst estimate and up from the year-ago 5 cents a share.

Uno Restaurant


reported fourth-quarter earnings of 40 cents a share, beating the single-analyst estimate of 36 cents and the year-ago 20 cents a share. The company said the latest quarter had compared with 13 weeks for the year-ago period.

Offerings and stock actions

Citibank Worldwide Securities Services

, a unit of


(C) - Get Report

, launched an American depositary receipt program in connection with Italy's sale of shares in



, which is now one of the largest publicly traded electric utilities in Europe. The ADRs were priced at $45 each, and are equivalent to 10 ordinary shares. Lately the ADRs were at 45 3/16.

Kaufman & Broad

(KBH) - Get Report

gained 1 1/16, or 5%, to 22 1/4 after it said it added 4 million shares to its buyback plan.


(MAT) - Get Report

rose 9/16 to 14 1/8 after saying it plans to spin off

Learning Co.



. Mattel said

A&E Television


Hearst Interactive

and others will contribute $37.5 million in initial funds to the plan.

Nextel Communications


added 1/16 to 83 7/8 after it said its 30 million-share Class A offering was priced at Monday's closing of 83 13/16.

Morgan Stanley Dean Witter


Goldman Sachs


Credit Suisse First Boston


Deutsche Bank Securities


Merrill Lynch



served as underwriters for the deal.



popped up 13 15/16, or 34.9%, to 54 1/2 after it said Chairman and CEO Charles Johnson plans to acquire $1 million of the company's stock.

Goldman Sachs is expected to price a 25 million-share IPO for



at $11 to $13 a share tomorrow night.

Analyst actions

U.S. Bancorp Piper Jaffray

raised its price target in

Air Express


to 33 from 30. Shares of Air Express were bouncing 15/16 to 30 3/16.

Credit Suisse First Boston started coverage of

Expeditors International of Washington

(EXPD) - Get Report

as a strong buy, and

Circle Group International


as a hold. Expeditors International shares were slipping 1/16 to 38 1/8, while Circle Group was hopping 1 to 25 1/8.

Morgan Stanley Dean Witter started coverage of



with an outperform rating. Shares of Hertz were gaining 1/4 to 43 7/8.

Credit Suisse First Boston analyst Wendell Laidley started coverage of



with a buy rating and a price target of 105. Interwoven was jumping 3 1/8 to 84 7/8.

PaineWebber upped its earnings estimates for

Micron Technology's

(MU) - Get Report

first-quarter 2000 to 88 cents a share from 79 cents and for calendar year 2000 to $4.27 from $4.19. Micron Technology was popping 3 11/16 to 76 1/4.

Warburg Dillon Read

rolled out coverage of

Province Healthcare


with a buy rating and a price target of 21. Province Healthcare was adding 5/16 to 16 5/8.

Donaldson Lufkin & Jenrette

said it started coverage of

SCI Systems

(SCI) - Get Report

with a buy recommendation. SCI Systems shares were climbing 3 7/16, or 7%, to 52 1/2.

Goldman Sachs

upped its price target on


(STM) - Get Report

to 125 from 85 and reiterated its market outperformer rating. STMicro was soaring 9 11/16, or 10.7%, to 99 1/2.

Warburg Dillon Read raised its price target on

Teva Pharmaceuticals


to 70 from 69.

Merrill Lynch

raised its intermediate rating on the stock to accumulate from neutral. Shares of Teva were mounting 1/16 to 49 3/8.


Abbott Labs

(ABT) - Get Report

was sinking 2 1/4, or 5.5%, to 38 1/8 after it said it plans to pay the federal government $100 million to satisfy terms of a deal to cover its diagnostic manufacturing operations in Lake County, Ill.



was falling 9/16 to 75 5/8 on a

Wall Street Journal

report that it is expected to announce plans to discontinue its


brand, due to decreasing sales in recent years. According to the


, DaimlerChrysler could cut back on costs by axing Plymouth, without affecting its high-volume product lines.

General Electric

(GE) - Get Report

was jumping 3 to 132 5/16 after it said Chairman and CEO Jack Welch plans to retire in April 2001. A company spokesman said that it has not named a replacement for Welch.


(GILD) - Get Report

received a blow to its stock price after the

Food and Drug Administration

rejected its AIDS treatment


. Shares plummeted 17 7/16, or 27.6%, to 45 15/16 from yesterday's closing price of 63 3/16.


Bristol-Myers Squibb

(BMY) - Get Report

said it received FDA approval for its once-a-day form of AIDS treatment


. Prior to the approval, the drug needed to be taken twice a day. Bristol-Myers was sliding 15/16 to 76 5/16.

Herb on TheStreet: Would Steve Jobs Be Better off as a Money Manager?


Herb Greenberg

Senior Columnist

11/2/99 6:30 AM ET

Tuesday Tug of War

Welcome to my world:

Spent all day researching and writing an item. At the last (and I do mean


) minute, a piece of data rolled in that made me realize I'd be better off not running the item -- at least not now. Goes to explain the brevity of today's column.

Apple antics:

It's not news that


(AAPL) - Get Report

is an investor in

Akamai Technologies

(AKAM) - Get Report

, shares of which have zoomed since going public last week. But has anybody taken a look at what that investment means to Apple? At yesterday's close of 174 5/16, Akamai stock is worth about $765 million, or around $5 a share, to Apple. Sure, it's only a paper profit that can't be sold. But so was

ARM Holdings


, which Apple has been selling. Cracks one money manager: "I am quitting my job as a portfolio manager and turning it over to

Steve Jobs


Herb's Latest: Join the discussion on


Message Boards.

Ad nauseam:

Ancor Communications


issues a press release Monday saying that it was introducing a new switch "today" (as in Monday) at the

Fibre Channel Technologies Conference

-- only the conference that supposedly started Monday doesn't officially start until today (as in Tuesday)! ... Some clown writes that after reading an item

here about


(CL) - Get Report

he told his sister, who owns the stock, and she sold and the stock rose and now he can't wait until his


sub expires. (And good riddance.) ... And

Mark Martinez

, my assistant, finds a post on the



boards on



telling investors to ignore me because -- didn't they know?! -- I run a short-selling fund. Not only do I not run a fund, I can't invest one way or the other in


stocks other than


(TSCM:Nasdaq). ... No surprise that


(GPS) - Get Report

is changing the head of the Gap division; the affable Bob Fisher is being replaced by the intense Mickey Drexler. First my wife couldn't find any turtlenecks to replace last year's for the kids and me at any of the three nearby Gaps (just as winter is arriving). When she finally did find some, she brought them home and discovered that compared with last year's, the new ones were all a size bigger than their stated size. (And no wisecracks about shrinking; they're washed in cold water and hung.) Never mind merchandising problems -- quality control seems outta control!

Credibility questioned:

Anonymous emailer wonders why I continue to quote short-seller Marc Cohodes and why anybody should listen to him. "You have used him for years in your column, but not once have I seen what his returns have been. This is always your biggest flaw as a reporter.

Tell me and your readers why these people you continually quote are credible. Don't just quote them


To which I say: I really don't care about the performance of a source's fund; I only care about their track record as a source. And Cohodes' track record for flagging me on losers is exceptional. With the exception of

Microchip Technology

(MCHP) - Get Report

, which has zoomed despite his prophecy of doom, the rest (at one time or another during the past 10 years) turned into unadulterated disasters, as he predicted. They include

The Learning Company


Media Vision


Creative Technology



Avid Technology

(AVID) - Get Report


Stewart Enterprises



Engineering Animation



Pinnacle Systems



California Micro Devices


HMT Technology






Fresh Choice



Wall Technologies


C-Cube Microsystems

(CUBE) - Get Report


Tseng Labs

. And those are just the ones I can remember without doing an electronic database search!

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

herb@thestreet.com. Greenberg also writes a monthly column for Fortune.

Mark Martinez assisted with the reporting of this column.

Copyright 1999, TheStreet.com