TheStreet.com's MIDDAY UPDATE
December 30, 1999
Market Data as of 12/30/99, 1:04 PM ET:
o Dow Jones Industrial Average: 11,530.54 up 45.88, 0.40%
o Nasdaq Composite Index: 4,065.67 up 24.21, 0.60%
o S&P 500: 1,470.13 up 6.67, 0.46%
o TSC Internet: 1,166.12 up 3.90, 0.34%
o Russell 2000: 498.31 up 1.30, 0.26%
o 30-Year Treasury: 96 01/32 up 7/32, yield 6.423%
In Today's Bulletin:
o Midday Musings: Not Ready to Quit Yet, Wall Street Keeps Reveling in Buying Spree
o Wrong! Dispatches from the Front: It's Been a Long Time Since ...
Fox News Channel
"THESTREET.COM" MILLENNIUM EDITION:
Jan. 1 at 6 p.m. ET and Jan. 2 at 11 a.m. ET
A special edition of "TheStreet.com" looks at investing in the new millennium. Special guests include
, chief investment officer of the
Jacob Internet Fund
, author of
The 100 Best Stocks to Own in America
Condor Capital Management
. Plus, Cramer and guests reveal their favorite stocks for the new millennium.
Also on TheStreet.com:
Wrong! Rear Echelon Revelations: It's Never Too Late to Admit Your Mistakes
Cramer's been receiving email from value managers desperate to confess their sins.
Under the Hood: The Good, the Bad and the Ugly: A Year's Worth of Calls
A look at the stock and fund picks, right and wrong, from the past year's Under the Hood columns.
Technician's Take: Chart Parade: Those Rockin', Rollin' Retailers
What better time to visit your favorite stores?
Mutual Funds: Standing Room Only in the Century Club
Also, the battle for No. 1 and four new Internet funds from Kinetics.
Midday Musings: Not Ready to Quit Yet, Wall Street Keeps Reveling in Buying Spree
12/30/99 1:12 PM ET
With Y2K only one trading session away, it's the same old fascinating story. Stocks are, for the most part, gaining across the board. So with the shopping spree that kicked off October still in full swing, only one question remains. When will it end?
"We expect the same activity to continue through the next day and a half unless something disastrous happens with Y2K," said Randy Billhardt, co-head of block trading at
. "We're seeing some portfolio window-dressing at the year's end. People are continuing to buy the winners."
And in today's market, one word that rings synonymous with "winner" is technology. The tech darlings have been on fire since late October, with the tech-whipped
Nasdaq Composite Index
hitting a monumental new closing high of 4041.46 just
yesterday. And with the Comp up a record breaking 84% for the year, investors just can't get enough. So does all this buying warrant the old adage, "It's all fun and games until someone gets hurt"?
If you're a skeptic, the high valuations definitely lend cause for concern. "The last time this type of speculation showed up was in July 1997," said Brian Gilmartin, portfolio manager at
Trinity Asset Management
. "The Dow was up 10%, which was a lot at that time, and there were a lot of signs of excess. A typical sign of a frothy market is when poor companies are being bid up."
Even benign company announcements have sent stocks bouncing. "
, which is not a bad company, made an announcement that moved its stock 15 to 26," said Gilmartin. "The news, which was an "Internet opportunity" with
, did not warrant an almost doubling of the stock in the period that it occurred. With very little specifics, the stock went up."
Lately, the Nasdaq was steaming up 26, or 0.6%, to 4068. In Nasdaq trading, both
were both giving strong performances thanks to research kudos.
It was a mixed day for
TheStreet.com Internet Sector
index. Coming back from the loss column, the DOT was up 2 to 1164.
were exerting negative pressure.
Despite its downturn in midday trading,
has been tagged as Nasdaq's gem of the year. Yesterday, a PaineWebber initiation with a price target of 1,000 sent the stock soaring to another new record close, 659. (
covered the PaineWebber analyst's extraordinary move in
stories yesterday, and took a
look today at a company riding Qualcomm's coattails.)
According to Gilmartin, price targets may set the stage but don't always tell the story. "Brokerages put these targets on stocks to generate transactions," he said. "I ignore the price targets and concentrate on the fundamentals. Qualcomm's fundamentals have not changed enough to warrant that kind of move. However, it's still a great story."
Despite high interest rates, tech stocks are still flying high. So what will take the air out of tech's balloon? "The earnings growth is overriding the higher interest rates," Gilmartin said. "Even though you're seeing higher real interest rates, the depressing effect is that theses rates have been offset by very strong earnings growth and incredible fundamentals. I'd still be a buyer of the sector leaders, like
, but you need a long-term horizon. Tech earnings and guidance during January's conference calls had better be very good, or it's going to get ugly." Trinity is a big holder of Cisco.
Those high interest rates were easing some in today's trading, with the 30-year Treasury up 7/32 to 96 1/32. Its yield was down to 6.43%. (For more on the fixed-income market, see today's early
Dow Jones Industrial Average
, which has been cast in shadow of the hip, tech-laden Nasdaq, was jumping 51, or 0.4%, to 11,536. Ironically, tech heavyweights
were holding down the fort for the Dow, showing notable gains.
Unlike tech stocks, the financial sector has not been immune to higher interest rates. "There is no inflation and real interest rates are too high, which is what is keeping a lid on the financial services sector," said Gilmartin. Lately, the
American Stock Exchange Broker/Dealer Index
was unchanged at 444.
was gaining 7, or 0.5%, to 1470, while the small-cap
was tacking on 1 to 498. Both were on pace for record closes.
Breadth was mixed and volume was heavy.
New York Stock Exchange:
1,724 advancers, 1,244 decliners, 325 million shares. 91 new 52-week highs, 99 new lows.
Nasdaq Stock Market:
1,988 advancers, 2,017 decliners, 674 million shares. 191 new highs, 63 new lows.
Thursday's Midday Watchlist
In today's mostly quiet trading environment, the tech investors who haven't thrown in the year-end towel yet went looking for reasons to celebrate. They found some, however modest, in positive research actions.
jumped 11 3/16 to 414 13/16 after
upped its price target to 550 from 385.
also had reason to shout, adding on 9 7/16, or 12.9%, to 82 3/4 after
upped its rating to strong buy from buy and raised its price target to 125.
Mergers, acquisitions and joint ventures
popped 9 3/8, or 25%, after it said Microsoft had exercised warrants to purchase 707,694 CommTouch ordinary shares, representing about 4.7% of the shares outstanding. Shares of Microsoft added 1 to 118 15/16.
For more on this
story, check out additional coverage from
Earnings/revenue reports and previews
Earnings estimates from First Call/Thomson Financial; earnings reported on a diluted basis unless otherwise specified.
fell 1/2, or 6.5%, to 7 1/4 after it warned investors it expects to post fourth-quarter pro forma earnings of 25 cents to 26 cents a share, missing the two-analyst estimate of 30 cents. The company also said it sees fiscal 1999 pro forma earnings of between $1.06 a share and $1.07, which also would miss the two-analyst estimate of $1.10.
slipped 1/2, or 8.7%, to 5 1/4 following its announcement after yesterday's close that second-quarter net sales fell 21% to $1.38 billion from $1.75 billion, while same-store sales fell 1.8% from a year ago. The company said a less promotional approach to selling computers hurt sales for the quarter ended Dec. 25, though profit margins set a new high of 16% as the company broadened its product assortment beyond personal computers. CompUSA said it plans to announce second-quarter operating results Feb. 2.
PaineWebber initiated coverage of
with an attractive rating. Shares moved up 1 3/8 to 65 3/8.
upped its price target on
to 90 from 67. Shares added 3 5/16 to 75 3/8.
PaineWebber initiated coverage of
with a neutral rating and a price target of 87. Alltel climbed 2 3/4 to 82 9/16.
Morgan Stanley Dean Witter
raised its price target on
to 80 from 62. Shares rose 1 3/4 to 68.
said it initiated coverage of
with an outperform rating. Cordant inched up 5/8 to 32 15/16.
initiated coverage of
at accumulate and set a price target of 10. Delco Remy inched up 1/4 to 8 3/8.
PaineWebber started coverage on
with a neutral rating and a price target of 47. Heinz slipped 3/16 to 39 15/16.
slipped 7/8, or 12.5%, to 6 1/8 after it was cut to neutral from buy by
Salomon Smith Barney
PaineWebber started coverage of
with an attractive rating and a price target of 20. StorageTek added moved up 7/8, or 5.1%, to 17 15/16.
rolled out coverage of
with an outperformer rating and a 2001 price target of 51. Triton tacked on 3 7/16, or 8.3%, to 45 1/8.
slipped 3/16 to 108 1/8 after
The Wall Street Journal
reported it has brought a lawsuit against
insurance division, pushing the Ace unit to acknowledge certain pollution claims that were moved into a separate company. Ace lost 5/16 to 16 7/16.
climbed 7/16 to 41 7/16 after it said it set a record for commercial jet delivery in 1999, with 620 jetliners. The company said the previous record had been set in 1998 with delivery of 558 jetliners.
fell 5/8 to 41 13/16 after its
unit said it would hike its fuel surcharge on most domestic and international services by 3% as of Feb. 1.
A federal judge put a temporary restraining order on some
unit maintenance employees who took part in a "work slowdown" that stalled operations. The disagreement involved pay premiums to nonmanagement workers who need to be away from their "home base" during the New Year's weekend. Shares of AMR popped 2 5/16 to 67 13/16.
Fruit of the Loom
was off 7/16, or 40% to 13/16 following its announcement after yesterday's close that it filed for Chapter 11 bankruptcy protection. The company, which makes
, Fruit of the Loom and
products, has struggled with manufacturing and inventory problems. In the first half of the year, shipping difficulties hurt sales and profits.
was unchanged at 25 3/16 after it said the
Food and Drug Administration
has given its approval to a generic form of
, which stops rejection after kidney transplants. Glaxo gained 1 5/16 to 55 7/8.
subsidiary is facing a federal lawsuit claiming that it offered some mortgage lenders rewards in exchange for their business. Old Republic was unchanged at 13 7/16. The suit, which asks for class-action status, alleges that
gave pool insurance and other perks to mortgage lenders at below-market rates for their business.
Wrong! Dispatches from the Front: It's Been a Long Time Since ...
James J. Cramer
12/30/99 10:08 AM ET
"Sell 200 shares of
!" Yep, that's me, trading in lots of 200, something I haven't done since 1981 when I took down 200 shares of
. Holy cow, how the mighty have round-tripped!
Why the small increments? Cause it is so crazy, so nuts, that I can't stand being 30 or 40 points wrong within minutes of when I get a report. And because I am almost out of my delicious Qualcomm ammunition.
Join the discussion on
Oh, but what a high-quality problem. Can you imagine having to chose between
? Or between
? Could it get any crazier though?
Oh, as I prepare to send that, some guy is on TV saying that the
will lag next year. Oh, wow, get me that crystal ball! Mine only sees
crying -- because someone has broken her heart.
James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of the original publication, his fund was long Qualcomm. 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, TheStreet.com