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midday12-27-99's MIDDAY UPDATE

December 27, 1999

Market Data as of 12/27/99, 1:05 PM ET:

o Dow Jones Industrial Average: 11,431.45 up 25.69, 0.23%

o Nasdaq Composite Index: 3,903.25 down 66.19, -1.67%

o S&P 500: 1,452.46 down 5.88, -0.40%

o TSC Internet: 1,086.39 down 42.13, -3.73%

o Russell 2000: 479.38 down 3.05, -0.63%

o 30-Year Treasury: 95 20/32 up 12/32, yield 6.455%

In Today's Bulletin:

o Midday Musings: Nasdaq Retreats Further From 4000 as Profits Are Locked In
o Wrong! Dispatches from the Front: The Year Isn't Over Quite Yet Community

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"" on

Fox News Channel


Special Times!

Jan. 1 at 6 p.m. ET and Jan. 2 at 11 a.m. ET

A special edition of "" looks at investing in the new millennium. Special guests include

Ryan Jacob

, CIO of the

Jacob Internet Fund


Gene Walden

, author of

The 100 Best Stocks to Own in America

; and

Ken Schapiro


Condor Capital Management


Also on

Wrong! Tactics and Strategies: How the E-tailers Stole Christmas

Shopping online is a great idea -- until things go wrong.

Banking: Bank Earnings Warnings Suggest SEC Openness Push Has a Way to Go

Wall Street's habit of meeting with executives means some news still leaks out to big investors sooner.

IPOs: Year 2000 Promises an IPO Dog-and-Pony Show

Four sites that cater to pet owners prepare to go public -- and struggle to stand out in the crowd. More Palmistry at 3Com

Plus, another look at Commerce One and the Webvan-HomeGrocer race.

Midday Musings: Nasdaq Retreats Further From 4000 as Profits Are Locked In


Justin Lahart

Associate Editor

12/27/99 1:08 PM ET

After a run-up at the open, stocks finally ran into some of that selling pressure that people have been talking about.

"It looks like investors are finally taking the opportunity to realize some of these gains they have," said Bill Allyn, head of block trading at


. But far more surprising than the settling in of a little profit-taking is how long it took to come. The

Nasdaq Composite Index

is up more than 45% from its October lows, and many on Wall Street were, quite rationally, expecting tech stocks to pull back and tread water a month ago.

But stocks -- or at least tech stocks -- have not been adhering to what Wall Street thinks of as rational. There's evidence individual investors are playing a greater part in this market than ever before.

Volume, for instance, has been huge on the

Nasdaq Stock Market

relative to the

New York Stock Exchange

. And despite the high Nasdaq volume, there aren't many block trades going off in four-letter names.

Implied volatility, a pretty good read of professional investor sentiment, shows a decline in bullishness over the last month. Typically, as sentiment drops, so does the market (when it troughs, it's supposed to be time to buy). Yet despite the turn in sentiment among the professional crowd, the big indices keep going higher.

Eventually, the market should pull back, or at least tread water, but that moment hasn't come yet despite today's selling, said


strategist Steve Goldman.

"It's hard to get any sustainable declines this time of year," he said. "You have a lot of momentum and you have a lot of seasonal factors." Goldman reckons that in mid-January, as those year-end factors abate and investors start worrying about interest rates again, the market could get a little rockier.

In the middle of the lunch hour, the

Dow Jones Industrial Average

was a little deeper into record territory with a gain of 19 to 11,424, but none of the other major indices were flashing green.

The Nasdaq was down 65, or 1.6%, to 3905, beating a steady retreat after popping up to a new intraday high of 4001.90 on the open. The

S&P 500

was off 7, or 0.5%, to 1451, and the smallish-cap

Russell 2000

was down 3, or 0.6%, to 480. Internet Sector

index was down 40, or 3.6%, to 1088. E-tailers were getting hit on reports that they didn't handle Christmas traffic well.



, in particular, was taking lumps on a

Robertson Stephens

downgrade to long-term attractive from buy. It was lately off 13.9%.

Some secondary indices were faring better, with the

Dow Jones Transportation Average

up 2% and the

Dow Jones Utilities Average

up 1.1%.

In the near-silent bond market, the benchmark 30-year Treasury was up 12/32 to 95 20/32, its yield easing to 6.46%. (For more on the fixed-income market, see today's early

Bond Focus.)

Like utilities, financials were strong with the good fixed-income underpinning. The

Philadelphia Stock Exchange/KBW Bank Index

was up 0.7% and the

American Stock Exchange Broker/Dealer Index

was up 1.5%.

Market Internals

Breadth was poor on healthy volume.

New York Stock Exchange:

1,294 advancers, 1,685 decliners, 394 million shares. 72 new 52-week highs, 227 new lows.

Nasdaq Stock Market:

1,527 advancers, 2,480 decliners, 659 million shares. 170 new highs, 105 new lows.

Monday's Midday Watchlist

By Tara Murphy
Staff Reporter


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


Mergers, acquisitions and joint ventures



was falling 15/16 to 38 5/16 after said its board had turned down

International Specialty Products'


$45-a-share offer made on Dec.14. Dexter said that the bid was too low and not in shareholders' best interest. Shares of International Specialty Products were edging up 5/16 to 7 3/4.

Interneuron Pharmaceuticals


was bouncing 2 3/4, or 61.3%, to 7 1/4 after it said it has licensed rights to its experimental panic disorder drug





. The deal calls for Warner-Lambert to pay Interneuron $73.75 million up front and manage all further testing, production and marketing for the drug. Shares of Warner Lambert were climbing 1 to 86 1/8.



was gaining 3 1/16, or 10.7%, to 31 7/16 after it said it has entered a $217.5 million deal to acquire all of the assets of

Uniroyal Technology



High Performance Plastics

. Shares of Uniroyal were tacking on 3 1/16, or 15.5%, to 22 13/16.

Earnings/revenue reports and previews

Lyondell Chemical


was adding 1/8 to 11 11/16 after it said income from

Equistar Chemicals

, in which it has a 41% interest, will be sliced by $39 million in the fourth quarter as a result of a $95 million pretax charge taken by Equistar.

Millennium Chemicals



Occidental Petroleum


each have a 29.5% interest in Equistar. Shares of Millennium Chemicals were tacking on 5/16 to 18 7/8 and Occidental Petroleum was advancing 1/16 to 21 11/16.

Analyst actions

Robertson Stephens started coverage of



with a buy rating. Shares of Digimarc were unchanged at 51.

Robertson Stephens lowered its rating on eToys to long-term attractive from buy. Shares of eToys were down 4 1/4, or 13.9%, to 26 3/4.

Credit Suisse First Boston

initiated coverage of



with a strong buy rating. Shares of Retek were bouncing 18, or 32.8%, to 72 7/16.

Morgan Stanley Dean Witter

upped its rating on



to outperform from neutral and set a price target of 57. Shares of Seagate were rising 1 11/16 to 48 3/8.

Goldman Sachs

sliced its fiscal 2000 earnings estimate for

Zions Bancorp


to $3.28 a share from $3.43. Shares of Zions were sliding 6 1/2, or 9.7%, to 60 1/4.




Thursday began a legal challenge to the

Federal Communications Commission's

decision allowing

Bell Atlantic


to offer long-distance phone service in New York. Shares of AT&T were losing 1 1/16 to 51 9/16, while Bell Atlantic was skidding 2 3/4 to 61 3/16.

Berkshire Hathaway


was off 400 to 53600 after it said

Warren Buffett

donated 2,500 Class A shares to charity.


is preparing to launch a Web site called

Perfect YardSale

, which will match up buyers and sellers of goods,

The Wall Street Journal

reported. Shares of were lifting 3/8 to 55 1/2.

Prison Realty Trust's


board said an investor group will purchase $315 million in securities and commit to purchase an additional $35 million in securities in a newly formed company that would be created via the merger of Prison Realty and the companies operating under the name

Corrections Corp. of America

Shares of Prison Realty were stumbling 9/16, or 9.7%, to 5 3/16.

joint newsroom covered the Prison Realty news in a

story today.

Wrong! Dispatches from the Front: The Year Isn't Over Quite Yet


James J. Cramer

12/27/99 10:43 AM ET

Making us work, huh? Just when we had decided that the year was over? No matter that it is thin, it still "feels" terrible and we are using wide scales to rebuild some positions that had become minuscule in the run-up.

We have tried to come up with some themes to the selling: Old net vs. new net. Net e-commerce turned out to be a joke. Revenge of bricks-and-mortar over sloppily executed net plays.


takes a holiday.

Join the discussion on


Message Boards.


But it is way too random for that.

JDS Uniphase


rallies because it splits.



rallies because it might split.

Commerce One


comes down because it already split? Seems kind of mindless and stupid.

The only thing substantive is that this



looks like it blew it. But why that should make me sell my



beats the heck out of me. So we aren't. We are buying.

James J. Cramer is manager of a hedge fund and co-founder of At time of the original publication, his fund was long Yahoo! and JDS Uniphase. His fund often buys and sells securities that are the subject of his columns, both before and after the columns are published, and the positions that his fund takes may change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Cramer's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to comment on his column at

Copyright 1999,