TheStreet.com's MIDDAY UPDATE
December 10, 1999
Market Data as of 12/10/99, 1:05 PM ET:
o Dow Jones Industrial Average: 11,191.98 up 57.19, 0.51%
o Nasdaq Composite Index: 3,606.40 up 12.23, 0.34%
o S&P 500: 1,416.46 up 8.35, 0.59%
o TSC Internet: 1,125.48 up 18.86, 1.70%
o Russell 2000: 463.90 down 1.00, -0.22%
o 30-Year Treasury: 99 13/32 up 21/32, yield 6.163%
In Today's Bulletin:
o Midday Musings: FreeMarkets Drama Earns Applause from Analyst, Buyers
o Herb on TheStreet: Introducing Greenberg's Garbage Index
Introducing Greenberg's Garbage Index -- an index of stocks that have risen from the dead. Consider them a lowbrow version of Cramer's Red Hots. Check out the index and then discuss it on our newest boards:
And longtime tech watcher Jim Seymour joins us on Dec. 15 for a Q&A about the future of Microsoft, B2B and other tech-related queries. Post your questions now.
Plus, Jim Cramer will be appearing on the following shows on the FoxNews Channel:
5 p.m. EST - "Your World with Neil Cavuto"
7 p.m. EST - "Fox Report with Shepard Smith"
"TheStreet.com" on Fox News Channel
This week's "Word on TheStreet" panel takes a look at valuing stocks now that the old rules no longer seem to apply. Fund writers Dagen McDowell and Joe Bousquin square off about the Jacob Internet fund, which is expected to begin trading Dec. 13. Gary and Adam are up to their usual "Chartman" antics, looking back at past predictions and forward to some new ones.
"TheStreet.com" on Fox News Channel airs Saturdays at 10 a.m. and 6 p.m. ET and Sundays at 10 a.m. ET. FNC is Fox's 24-hour cable news channel. To find Fox News Channel in your area, call your local cable operator or see our "TSC on Fox TV" page at http://www.thestreet.com/tv.
Also on TheStreet.com:
Smarter Money: Don't Listen to the Insiders
FREE: A whole cottage industry has formed around tracking insider buying and selling, but JJC thinks this approach is misguided.
SiliconStreet.com: Where the Individual Is Equal to the Institution
The Andover.Net 'Open IPO' left a lot of money on the table, as individual investors proved as adept as institutional ones at sandbagging investment banks.
Trade Winds: After Seattle, China Faces Tough Fight for WTO Entry
The nation's entry was never guaranteed, but the protests and the WTO's failure to reach agreement on trade talks have made it a lot tougher.
Fixed-Income Forum: How Are Bond Prices Affected by Coupon Payment Dates?
They aren't. So-called accrued interest is accounted for separately to avoid confusion.
Midday Musings: FreeMarkets Drama Earns Applause from Analyst, Buyers
12/10/99 1:12 PM ET
yesterday's drama in the stock market, one could expect today to be a little quieter.
For the most part, it is. But make no mistake, it isn't without some drama.
Join the discussion on
That drama would be newcomer
, which was up 445.8% to 262, in its trading debut. Also making FreeMarkets' debut even more interesting was an analyst's call on the stock.
Scott Ehrens, Internet/New Media analyst at
, began coverage of FreeMarkets -- even before the stock began trading -- with a buy rating and slapped a 300 12-month price target on the stock.
Bear Stearns came out with a press release on the analyst's action this morning, stating that Ehrens "who has been at the fore-front of the business-to-business Internet explosion, has found his latest star, FreeMarkets."
Meanwhile, as for yesterday's IPO whopper,
VA Linux Systems
, which makes computers and servers that run the Linux operating system, today it was giving back some of its hefty gains and was down 15 1/8 to 228.
Major market averages opened higher on tame wholesale inflation data, however, amid lunch hour on Wall Street, gauges were mixed.
Dow Jones Industrial Average
was up 39.15, or 0.35%, to 11,173.94.
were powering the Dow on the upside.
was up 4.71, or 0.33%, to 1412.82. The
Nasdaq Composite Index
was down 6.06, or 0.17%, to 3588.11. The small-cap
was down 1.39, or 0.3%, to 463.51.
TheStreet.com Internet Sector
was up 10.84, or 0.96%, to 1117.46, led higher by
"It looks a little toppish," said Dave Eberhart, analyst at
Optima Investment Research
in Chicago, of the market. He said the Nasdaq's pretty overdone and that sooner or later it should get a decent retracement.
The March S&P 500 futures contract was lately up 3.80 to 1433. Eberhart pegged first support for the March S&P 500 futures contract at 1425, and then after that it goes to 1410.5, which would be about a one-and-a-half week low. He said if the contract fell through there it could "pretty easily" see 1406.
As for the Treasury market, the 30-year Treasury bond was up 21/32 to 99 12/32, yielding 6.161%, thanks to the good news in the
Producer Price Index
. (For more on the fixed-income market, see today's early
reported the overall November PPI rose 0.2%, in line with expectations, while the core PPI -- which excludes food and energy prices -- was unchanged, below estimates. Economists polled by
were expecting the overall PPI to come in at 0.2% while the core was expected to rise 0.1%. The news helped ease inflation fears.
Sector-wise, financials, e-commerce and airline stocks, were all strong, while computer makers and oil service stocks were among some of the sectors taking a hit.
Bank stocks were rallying in part thanks to the advance of the bond market. The
Philadelphia Stock Exchange/KBW Bank Index
was up 2.4%.
Elsewhere on the upside sector-wise, the
American Stock Exchange Airline Index
was up 1.2%.
On the downside, the
Philadelphia Stock Exchange Computer Box Maker Index
was down 2.4%, while the
Philadelphia Stock Exchange Oil Service Index
was down 2.9%.
Running on Empty?
Jay Suskind, head of institutional equity trading at
, said he thinks "the action's going to stay where it's been," in the market going forward, pointing to technology and Internet names. He added: "My bet is you see more profit-taking on that side, just because they've come so far so quickly."
For the rest of the year, he said he thinks a lot of people are going to be doing year-end positioning in their portfolios, with people running into tech and others cashing out their gains, which could make for a choppy trading environment.
Of the action in VA Linux yesterday and what it said about the market, Suskind said it highlights "the casino mentality," and shows the frothiness and speculation in the market. He said that won't end until one of them "blows up."
"The pyramid is getting tighter and tighter on the way up," he said.
Volume was robust on both the
New York Stock Exchange
Nasdaq Stock Market
, while breadth was negative. (see below).
Among other indices, the
Dow Jones Utility Average
was down 0.1%; the
Dow Jones Transportation Average
was down 0.2%; and the
American Stock Exchange Composite Index
was down 0.86%.
New York Stock Exchange:
1,378 advancers, 1,472 decliners, 546 million shares. 60 new 52-week highs, 209 new lows.
Nasdaq Stock Market:
1,782 advancers, 2,014 decliners, 873 million shares. 162 new highs, 101 new lows.
Friday's Midday Watchlist
Earnings estimates from First Call/Thomson Financial; earnings reported on a diluted basis unless otherwise specified.
Mergers, acquisitions and joint ventures
rose 3/16 to 47 7/16 after saying it will join forces with Dutch
and buy a 100% stake in German mobile phone operator
. KPN popped 9 3/16, or 13.3%, to 78 1/16. The deal struck between BellSouth and KPN frustrates a $9.3 billion bid by
for E-Plus. BellSouth, which already owns a 22.5% stake in E-Plus, said it is taking a $9.4 billion loan from KPN to buy shares in E-Plus owned by
. Vodafone slipped 3/4 to 50.
, owner of
, dropped 1 11/16 to 77 1/2 after it approached British publisher
News Communications & Media
about making a cash offer for the group. Newscom is currently valued at about $284 million. Today, Newscom rejected Gannett's approach, saying the offer was too low.
Fuji Heavy Industries
is buying a 20% stake in Fuji for approximately $1.4 billion. Shares of GM dropped 1 7/8 to 70 13/16. Fuji Heavy makes Subaru brand cars.
fell 1/16 to 21 15/16 after it said it will sell two properties to
for $195 million in cash. Penn climbed 7/16, or 5.4%, to 8 3/4.
gained 1 13/16 to 44 1/16 after
The Wall Street Journal
reported its board is expected to formally discuss today ways of splitting its
pharmaceutical business from its agricultural business, which is struggling.
Earnings/revenue reports and previews
gained 3 15/16, or 5.5%, to 64 7/8 after it posted fourth-quarter earnings of 3 cents a share, a penny ahead of the 17-analyst estimate and up from the year-earlier loss of 5 cents a share, which excludes merger-related charges.
dropped 4 5/16, or 23.6%, to 13 15/16 after it warned its fourth-quarter results will not be as strong as expected. The company said it still sees record results for 1999, with earnings-per-share up 5% to 7%.
gained 1 3/16 to 19 1/2 after saying it expects to take a fourth-quarter charge of $21.7 million.
slipped 1/4 to 21 15/16 after saying it expects to meet fourth-quarter estimates. The current nine-analyst estimate is for 49 cents a share.
Separately, Sonoco said its fiscal 2000 spending budget is set for $444 million, topping the $423 million for 1999. The company said the budget contains $235 million for base infrastructure spending and $91 million for plant turnarounds. In addition, $118 would be allocated to growth programs.
Offerings and stock actions
was slipping 1/8 to 22 9/16 after it said it approved a 10 million-share increase for its buyback plan.
was climbing 6 7/8, or 11.6%, to 66 1/2 after it said its board approved a 2-for-1 stock split.
was popping 3/8 to 55 3/4 after it said it plans to offer of 3 million common shares in the first quarter.
said it set a $40 million share repurchasing plan. Shares of Wabash National were climbing 5/16 to 14 3/8.
Credit Suisse First Boston
to strong buy from buy. Shares of Apache was unchanged at 32 1/4.
First Boston late yesterday upgraded
to strong buy from buy. Shares of Baker Hughes was falling 3/16 to 19 1/16.
to intermediate-term accumulate from intermediate-term neutral. Shares of Caterpillar were edging up 3/4 to 46 9/16.
Credit Suisse First Boston started coverage of
with a hold rating. Shares of Centennial Healthcare were unchanged at 2 15/16.
Deutsche Banc Alex. Brown
to strong buy from buy. Shares of Harcourt General were bouncing 3 1/18, or 8.6%, to 39 3/8.
reiterated a near-term neutral, long-term buy rating on
. Shares of IBM retreated 2 15/16, to 110 7/16.
Warburg Dillon Read
raised its target on
to 68 from 58 , while
increased its price target to 70. Merrill reiterated a near- and long-term neutral rating, while
upped it to a buy.
reiterated a buy rating and upped its earnings estimates. National Semiconductor was sliding 1 5/8 to 49 3/8.
First Boston analyst James Parmelee raised his price target on
to 100 from 80. Shares of Nortel Networks hopped 3 1/2 to 86.
initiated coverage of
with an attractive rating and a price target between 95 to 100. Shares of Proxicom were hopping 2 3/8 to 89 1/2.
Donaldson Lufkin & Jenrette
upped its rating on
Ticketmaster Online-City Search
to buy from market performer. Shares of Ticketmaster Online-City Search were climbing 4 5/8, or 11.7%, to 44 3/16.
Banc of America
initiated coverage of
Triad Hospitals Holdings
with a buy rating and a price target of 17. The stock is a spin-off of
Shares of Triad Hospitals Holdings bounced 3/16 to 14..
resumed coverage of
as a buy. Warburg Dillon Read maintained a strong buy rating and a price target of 60. Shares of Tyco were gaining 1 to 29 1/4.
with a market performer rating. Shares of Unitrin were unchanged at 38.
Merrill increased its rating on shares of
to near-term buy from accumulate. Shares of Vitesse Semiconductor were mounting 2 3/16 to 48 5/8.
to outperform from neutral. Shares of WHX were bouncing 1/4 to 9.
The Heard on the Street column in the
takes a look at
Pixar Animation Studios'
and its stock price's inability to cash in on the success of
Toy Story 2
. Shares have fallen more than 25% since the film's release before Thanksgiving, while marketing and distribution partner
share price seems to be enjoying a boost. Shares of Pixar were advancing 13/16 to 39 1/4. Disney was up 1/2 to 28 1/8.
In the Inside Wall Street column in
this week, penned as usual by Gene Marcial,
is mentioned as a takeover target. James Boyle of
First Union Securities
said, with its undervalued assets and great management, the company is attractive, the column reported. Shares of Adelphia were climbing 1/2 to 61 1/2.
Elsewhere, the column offers a bullish piece on
, a developer of Internet traffic management systems, and also a positive item on
. Gentner Communications were rising 1 3/4, or 13.4%, to 15, while Radware was popping 1 to 51 7/16.
Herb on TheStreet: Introducing Greenberg's Garbage Index
12/10/99 6:30 AM ET
not the only one who can have an index. So can I. But unlike his, which revolves around today's hottest trends, mine focuses on stocks from yesteryear that had no biz rising then and certainly, unless proven otherwise, have no biz rising now.
I'm gonna call it Greenberg's
Garbage Index. This is one step removed from Cramer's
Red Hots or
B2B because unlike his, which include many stocks that didn't exist two years ago -- a few of which really might have some kind of a future -- mine is filled with stocks that have, how shall we say, "histories." They have histories of hype, histories of hope and histories of horrible disappointment. These are companies that have little in the way of institutional following or investors, and have made little or no money.
And here they are rising
, as if they've been discovered for the first time.
Join the discussion on
Herb's Latest or tell us what you think on
Greenberg's Garbage Index
If I were an adviser, hedge fund manager or trader, I'd be saying that just as Cramer's B2B is an index that could be bought
an index, rather than as individual stocks, the Greenberg Garbage Index is an index that could be shorted. Because as sure as I can tell you that I won't be living on the East Coast for the rest of my life -- stuffed like a tomato for another day on
New Jersey Transit
-- most of these stocks are likely to disappear from radar. Until the
round of hype hits.
We're talking about stocks like one of the great promotes of all time,
, whose digital copier machines were going to (or so said its promoters) take over the world. Its stock got as high as 100 before falling to as low as 5. Look what has risen from the dead!
? For years it supposedly was going to come up with a hot new battery technology. I pounded on Valence day after day, back when it was based in the Bay Area and I was with the
San Francisco Chronicle
. (I hit it so much, I guess, that the company moved to that hot technology haven of Henderson, Nev.) This time, I am told, some very smart people believe the company really does have something that will be a big-time success. I say treat it like you'd treat a supposedly hot drug in Phase 3 clinical trials. Too many of those turn out to be disasters.
, known best for its WordPerfect software; now, presto, it's a Linux company.
is a biotech company where hope seems to be constantly springing eternal.
, a digital scanner company. See Presstek.
, which beat the bears not long ago when it got FDA approval for its synthetic skin, used as a burn treatment. However, it's still losing gobs of money, and demand hasn't been anywhere near expectation.
, which has developed Chinese language character input for cell phones.
just did a deal with one of its competitors. Used to be known as Multi-Corp. "Used to be known" is the part of
company story that should worry potential investors.
is a developer of information-security products, technologies and services. Its so-called digital certificates have revived the former Instant Publisher.
, a provider of video-on-demand. Same story, third time around.
, which bills itself as a development-stage enterprise whose principal activity is developing, producing and marketing a telephone-based product utilizing its own patented E-Paper technology copy. It's also one of the longest-running jokes among short-sellers. It
yet risen in the latest cycle, but I included it because if it does, you know some kind of top is near. I leave it to
Gary B. Smith
to explain which one.
And before you spam me for including one of your favorites on Greenberg's Garbage Index -- or because I missed some -- remember, that's why it's an index. Who knows? One day one of these companies really may make big money and get some legitimate respect. Betting on just one, however, could be the quickest way to lose a life's savings.
Meanwhile, if you care to carry on a dialogue about the index -- especially you Corellians, as
calls them -- each stock in the Garbage Index, including Corel, has its own message board. (Ripping off Cramer and proud of it.)
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 1999, TheStreet.com