Momentum Carries Nasdaq to Yet Another Record Despite Breadth

In a narrowly focused session that saw most stocks decline, the Nasdaq Comp and 100 nevertheless scored all-time highs.
Author:
Publish date:

SAN FRANCISCO -- Tech stocks have been paradise found for many investors and today (again) challenged the old adage about no sector being an island. With nearly every other major industry group struggling and blue-chip proxies faltering, the

Nasdaq Composite Index

waffled a bit from its early impetus but secured yet another record.

Coming off last week's big gains, traders weren't overly concerned about or surprised by today's somewhat lackluster action. And, absent any big economic news or other "macro" event, trading focused on so-called story stocks, with most of the tales poorly received.

After climbing as high as 3570.91 in the wake of

Friday's big advance, the Nasdaq Comp fought selling pressure for much of the afternoon before closing up 25.38, or 0.7%, to 3456.01.

Gains from

Sun Microsystems

(SUNW) - Get Report

and

Cisco

(CSCO) - Get Report

overcame weakness in fellow bellwethers such as

Intel

(INTC) - Get Report

and

MCI WorldCom

(WCOM)

to sustain the Comp. The

Nasdaq 100

rose 0.6% to 3191.09, another record but off its intraday apex of 3223.63.

Additionally,

Yahoo!

(YHOO)

gained 11% ahead of its addition to the

S&P 500

tomorrow. Yahoo! paced

TheStreet.com Internet Sector

index, which rose 16.10, or 1.6%, to an all-time best of 1044.64 after trading as high as 1058.20. Additionally,

TheStreet.com

Red Hots index rose 9.42, or 2.8%, to 347.43. The 20-stock index tracks action in particularly volatile stocks and is meant to measure so-called hot money.

One Red Hot on the move was

Red Hat

(RHAT)

, higher by 16.1% after

Dell

(DELL) - Get Report

extended an existing agreement between the firms to include service and support. Dell dipped 1.1%.

"Momentum rules. It's really that simple," said Barry Hyman, chief market strategist at

Ehrenkrantz King Nussbaum

, regarding tech stocks in general and the Comp in particular. "It's getting kind of scary, but there's reason to be enthusiastic. Tech is the only growth sector."

Given the strong seasonal factors and "extreme momentum," Hyman expects the "positive feelings" will remain intact through early January.

But the strategist would not add to tech holdings at this point, saying some moves -- such as Yahoo!'s rise from 212 3/4 on Nov. 30 to today's close of 280 13/16 -- are getting "out of hand."

In

New York Stock Exchange

trading, tech giants such as

Motorola

(MOT)

and

Nokia

(NOK) - Get Report

enjoyed stellar sessions as well, the latter following a slew of positive analyst comments. The

Morgan Stanley High-Tech 35

rose 2% to a record 1700.33.

Also,

IBM

(IBM) - Get Report

gained 3.6% and was the biggest positive influence on the

Dow Jones Industrial Average

.

Blue-Chip Blues

But the Dow struggled, closing off 61.17, or 0.5%, to 11,225.01 after trading as low as 11,193.51. The average was weighed down by

Hewlett-Packard

(HWP)

, which dipped 1.7% after announcing a 34% price cut in certain CD drives. Additionally,

Coca-Cola

(KO) - Get Report

declined 6.2% on

news Chairman Douglas Ivester will retire in April.

Morgan Stanley Dean Witter

cut its recommendation to neutral from outperform.

One of the big "stories" of the day was the failure of financial stocks to continue their recent momentum despite the bond market's modest improvement. The price of the 30-year Treasury bond rose 7/32 to 98 14/32, its yield dipping to 6.25%. However, the

Philadelphia Stock Exchange/KBW Bank Index

shed 2.6% while the

American Stock Exchange Broker/Dealer Index

fell 4.3%.

Trader said the group was infected by

U.S. Bancorp

(USB) - Get Report

, which declined 27.8% after issuing a

profit warning.

The U.S. Bancorp announcement was "pretty punishing," said Jay Meagrow, vice president of trading at

McDonald

in Cleveland. "If not for that, we'd probably be having a pretty good day."

Meagrow said the reaction to U.S. Bancorp's announcement was particularly harsh because of its timing. Many institutions dumped the stock because they now "can't carry USB through the end of the year," he said. "At the end of any other quarter, investors can digest" bad news, but not before year-end.

As a result, there was "big capital commitment trading" on the stock today, he noted. Indeed, at 21.1 million shares, U.S. Bancorp was the fourth most active in NYSE action. Additionally, the stock "never saw an uptick" during the company's midday conference call, he observed. "Either nobody was listening or they didn't seem to care" about the company's explanations.

Meagrow noted names "suffering" in sympathy included such other regional banks as

PNC Bancorp

(PNC) - Get Report

, down 7.5%;

Comerica

(CMA) - Get Report

, down 6.7%; and

Fifth Third Bancorp

(FITB) - Get Report

, down 4.9%.

Hampered by weak financials as well as decline by big pharmaceutical companies, energy stocks, transports and retailers (among others), the S&P 500 closed down 9.96, or 0.7%, to 1423.34.

Kroger

(KR) - Get Report

was another big negative and at nearly 26 million shares, the most actively traded stock. The grocery chain fell 24.6% after issuing cautious comments about its fourth-quarter results. Also, two senior executives -- including Vice Chairman and COO Robert Miller -- left Kroger to head up

Rite Aid

(RAD) - Get Report

, which leapt 42.4%.

Overcoming decidedly negative breadth statistics, the

Russell 2000

rose 1.17, or 0.3%, to 465.75.

In NYSE trading, 917.0 million shares were exchanged while declining stocks led advancers 1,960 to 1,104. In

Nasdaq Stock Market

action 1.367 billion shares traded while losers led 2,237 to 1,877. New 52-week lows outpaced new highs 219 to 109 on the Big Board while new highs led 271 to 95 in OTC trading.

Among other indices, the

Dow Jones Transportation Average

shed 23.28, or 0.8%, to 2905.52; the

Dow Jones Utility Average

shed 1.86, or 0.7%, to 281.31; and the

American Stock Exchange Composite Index

dipped 5.68, or 0.7%, to 829.82.

Elsewhere in North American equities, the

Toronto Stock Exchange 300

gained 62.77 to 7857.50 and the

Mexican Stock Exchange IPC Index

dropped 44.21 to 6425.70.

Monday's Company Report

By Tara Murphy
Staff Reporter

(

Earnings estimates from First Call; new highs and lows on a closing basis unless otherwise specified. Earnings reported on a diluted basis unless otherwise specified.

)

Mergers, acquisitions and joint ventures

Autoliv

(ALV) - Get Report

slipped 3/16 to 29 13/16 after it said it bought Japanese steering-wheel maker

Izumi

and that the acquisition would have a small positive impact on earnings.

Bea Systems

(BEAS)

gained 4 1/2 to 119 13/16 after it formed a strategic alliance with

IXL

(IIXL)

where IXL will use Bea's suite of e-commerce transaction servers. IXL climbed 11/16 to 38 3/8.

Credit Suisse First Boston

upped its rating on Bea to strong buy from buy.

Cablevision Systems

(CVC)

climbed 1 5/16 to 75 5/8 after it said it entered an agreement to purchase a 10% interest in

Salon.com

(SALN)

in exchange for advertising and promotional time. Salon.com rose 5/16 to 7 1/4. According to the terms, Salon.com would issue 1.11 million shares to Rainbow Media Holdings, which has agreed to give Salon.com $11.8 million in advertising over its outlets for the next several years.

Concord EFS

(CEFT)

fell 1 to 28 1/16 after it agreed to acquire

Card Payment Systems

, a reseller of payment processing services, for 6.2 million common shares. At Friday's closing price of $29, the transaction is valued at about $179.8 million.

Dell

(DELL) - Get Report

fell 1/2 to 44 3/4 after saying it will install and support

Red Hat

(RHAT)

Linux operating systems on all of its PowerEdge server models. Shares of Red Hat popped 32 1/8, or 16.1%, to 232 1/8.The deal includes worldwide service and support to its Linux offerings, extending an agreement between the two companies.

Genome Therapeutics

(GENE) - Get Report

gained 1 13/32, or 27.1%, to 6 5/8 after it said it expanded its fungal drug pact with

Schering-Plough

(SGP)

, which lost 1 11/16 to 47 7/8.

InfoSpace.com

(INSP) - Get Report

said it plans to acquire wireless Internet services provider

Saraide

and e-commerce company

Prio

in separate stock deals valued at a total of about $740 million. InfoSpace CEO Naveen Jain said he expects wireless devices, such as cell phones, to generate about 40% of revenue next year. Shares of InfoSpace soared 18 7/16, or 14%, to 149.

The

Federal Reserve

authorized the $9.85 billion merger of

Republic New York

(RNB)

and

HSBC Holdings

. Shares of Republic rose 13/16 to 71 3/16. The transaction was tied up for months after a New Jersey money manager, who was charged with scamming investors, sparked a probe into his dealings with Republic. Republic's founder Edmond Safra, who died in a suspicious fire in his apartment last week, saved the deal after he accepted a $450 million reduction of his interest.

National Westminster Bank

(NW)

fell 2 to 136 after it said it has met during the last 10 days with

Royal Bank of Scotland

and

Bank of Scotland

, which both have launched rival takeover bids for NatWest, and said that it still feels their offers are inadequate.

Research Frontiers

(REFR) - Get Report

, an R&D company that has developed a light-control technology -- called suspended particle device (SPD) -- which can be used in automatically dimming rear-view mirrors and "smart" window, announced that it has granted a license to Global Mirror, allowing this company to use SPD technology in its rear-view mirrors. Research Frontiers stock was up 1 1/4, or 12.6%, to 11 1/2.

TCSI

(TCSI)

rose 27/32, or 50%, to 2 19/32 after it announced the completion of a deal that supplied

NEC Do Brasil

with TCSI's SolutionCore telecom application.

TeleWest Communications

(TWSTY)

climbed 2 3/4, or 5.1%, to 56 1/2 after saying it was in an early stage of merger talks with

Flextech

, a British pay-television company.

Tyson

(TSN) - Get Report

slipped 1/8 to 17 3/16 after it said it was unable to reach a definitive pact to sell its pork group to

Smithfield Foods

(SFD)

. Smithfield gained 1/4 to 25 5/16. Tyson said it doesn't expect the development to hurt its fiscal 2000 results and will continue to explore options related to its pork operations.

United Parcel Service

(UPS) - Get Report

said it is accelerating the purchase of new Airbus Industry A300-600 freighter aircraft due to growth in air express shipping. The company said it upped its order to seven A300s from its initial order of four. UPS said its next-day air service volume rose 14.6% from the year-ago report. Shares of UPS slid 3/16 to 66 1/4.

Ziff-Davis

(ZD)

lost 1 3/16, or 6.5%, to 17 1/16 after it said it would sell Ziff-Davis Publishing to

Willis Stein

for $780 million. For additional coverage of the

Ziff-Davis sale, check out a separate story from the

TheStreet.com/NYTimes.com

joint newsroom.

Earnings/revenue reports and previews

Cheap Tickets

(CTIX)

shed 5 13/16, or 31.9%, to 12 1/2 after it said a prolonged fare war in the airline industry will hurt its fourth quarter. The company said it sees fourth-quarter earnings at about 2 cents a share, compared with the year-ago loss of 3 cents a share. The current four-analyst estimate calls for earnings of 4 cents a share.

Chirex

(CHRX)

was chopped 21 1/16, or 62.9%, to 12 1/2 after it said it expects a decline in 2000 earnings and revenue because of a change in demand for two pharmaceutical ingredients under a 1997 supply agreement with

Glaxo Wellcome

(GLX)

.Glaxo lost 1 7/16 to 58 1/2. Chirex said revenue would decrease by $28 million for the year.

Circuit City

(CC) - Get Report

dropped 3 1/4, or 6.9%, to 44 after saying it sees its main unit posting a 42% increase in third-quarter earnings despite softer-than-expected November sales. The company expects to post third-quarter earnings of 26 cents a share, after a 1-cent reduction. The 16-analyst estimate forecasts Circuit City to posted third-quarter earnings of 25 cents.

Eastman Chemical

(EMN) - Get Report

said it completed labor cuts and sees $100 million in annual savings. The company said it sees costs for labor cuts between $100 million and $150 million, which will be taken as a fourth-quarter charge. Shares of Eastman Chemical were unchanged at 42 1/8.

Entergy

(ETR) - Get Report

slipped 1/2 to 26 9/16 after it said it will spend $9.8 billion on its power development and expansion of nuclear operations over the next five years as its markets become open to competition. Entergy said it will combine its Entergy Power Marketing and Entergy Power Group into a single entity in 2000. The company also confirmed it sees 2000 earning estimates within a range of $2.35 to $2.45 per share, roughly in line with the 15-analyst estimate of $2.38 a share.

Kroger

(KR) - Get Report

dropped 5 3/16, or 25.2%, to 15 3/8 after it reported third-quarter earnings of 24 cents a share, in line with the 15-analyst estimate and up from the year-ago 18 cents a share, excluding charges. Kroger said it sees fourth-quarter earnings between 37 cents and 40 cents a share, possibly trailing the 13-analyst estimate of 40 cents a share.

Kroger also said its Vice Chairman and COO Robert Miller has resigned to take over as chairman and CEO of troubled drug store chain

Rite Aid

(RAD) - Get Report

. Kroger said it was comfortable with achieving previously projected annual EPS growth of 16% to 18% beginning in fiscal 2000. The company also said it will begin repurchasing its common stock in order to reduce dilution from its employee stock option plan.

United Natural Foods

(UNFI) - Get Report

rose 11/16, or 9.8%, to 7 3/4 despite posting a first-quarter loss of 6 cents a share, missing the five-analyst estimate of a 5-cent profit and the year-ago 26-cent profit. The company also said it tapped Michael Funk to replace Norman Cloutier as CEO.

U.S. Bancorp

(USB) - Get Report

shed 9 3/4, or 27.8%, to 25 3/8 after it said it sees fourth-quarter earnings between 52 cents and 54 cents per share, below the 21-analyst estimate of 59 cents a share. The company also warned it expects 2000 earnings of $2.30 to $2.35 a share, missing the 22-analyst estimate of $2.45 a share.

Offerings and stock actions

AT&T

(T) - Get Report

made it official, announcing plans to create a new wireless company,

AT&T Wireless Group

, and a new class of AT&T stock that will track the performance of the business. AT&T plans to conduct an IPO of the wireless tracking shares in the spring.

AT&T also announced the appointment of Daniel E. Somers as president and CEO of AT&T Broadband and Internet Services. Also, Rick Roscitt, president and CEO of AT&T Solutions, will become president of AT&T Business Services and will lead all AT&T units focused on the business market, including AT&T Solutions. In a story

this morning,

TheStreet.com

took a look at tracking stocks.

AT&T also "outlined its commitment" to give customers a choice of Internet service providers over the company's broadband cable and fixed wireless systems. The company said it outlined details of the "commitment" in a letter sent today to

Federal Communications Commission

Chairman William Kennard, which was co-signed by AT&T's general counsel and

MindSpring Enterprises

(MSPG)

Vice President David Baker. Shares of AT&T slipped 3/16 to 56 13/16.

Meanwhile,

The Wall Street Journal

said

Salomon Smith Barney

analyst Jack Grubman's upgrade of AT&T to buy from neutral last week may help the brokerage firm's chances of underwriting the wireless tracking stock offering. Sanford Weill, co-chairman of

Citigroup

(C) - Get Report

, the parent of Salomon, and a board member of AT&T, nudged Grubman, who has been less than bullish on AT&T's stock for some time, to take another look at AT&T, the

Journal

, in the Heard on the Street column, reported. Grubman is quoted in the

Journal

as saying: "No one tells me what to do."

Jack in the Box

(JBX)

said it had set a $10 million stock buyback plan. Shares of Jack in the Box added 1 1/8, or 5.65%, to 21 3/16.

--

Brian Louis

Analyst actions

SG Cowen

started coverage of

Braun Consulting

(BRNC)

with a strong buy rating and set a price target of 50. Shares of Braun Consulting gained 2 7/8, or 7.9%, to 39 1/2.

Goldman Sachs

started coverage of

Charter Communications

(CHTR) - Get Report

by adding the company to its U.S recommended list

. Morgan Stanley Dean Witter

also initiated coverage with an outperform rating and a price target of 29, while

Merrill Lynch

started the stock as near- to long-term accumulate.

Donaldson Lufkin & Jenrette

started coverage with a buy recommendation. Shares of Charter Communications skidded 1 1/4 to 25 1/16.

SoundView Technology

said it set a price target of 120 for

Cisco Systems

(CSCO) - Get Report

and upped its second-quarter earnings estimates to 23 cents a share from 22 cents. Soundview upped 2000 estimates to $1.03 from $1.01, and 2001 estimates to $1.30 from $1.27. Shares of Cisco Systems tacked on 2 11/16 to 98 1/4.

DLJ raised its rating on

Clorox

(CLX) - Get Report

to buy from market performer. Clorox shares mounted 1 3/8 to 48 3/16.

DLJ started coverage of

Data Critical

(DCCA)

with a buy recommendation while

U.S. Bancorp

initiated coverage with a strong buy rating and a price target of 23. Data Critical hopped 5/8 to 14 3/8.

Robertson Stephens

said it upped its fourth-quarter estimates on

Dollar Thrifty

(DTG)

to 20 cents a share from 15 cents and its 2000 estimates to $2.50 from $2.45 a share. Shares of Dollar Thrifty Automotive Group moved up 15/16 to 21 7/16.

J.P. Morgan

started coverage of

EBookers.Com

(EBKR)

with a buy rating. Shares of Ebookers.Com lost 1 1/4, or 5.2%, to 22 15/16.

Morgan Stanley Dean Witter

started coverage of

Expedia

(EXPE) - Get Report

as an outperform. Expedia shares plummeted 5 1/2, or 10.1%, to 48 3/4.

First Boston started coverage of

Houghton Mifflin

(HTN)

as a strong buy and set a price target of 54. Shares of Houghton Mifflin edged up 5/8 to 39 1/2.

J.P. Morgan

said it upped its rating on

PSW Technologies

(PSWT)

to buy from long-term buy. Shares of PSW Technologies climbed 8 7/16, or 60.2%, to 22 1/2.

U.S Bancorp Piper Jaffray

started coverage of

iBasis

(IBAS)

with a strong buy rating and a price target of 58. Shares of iBasis slid 2 13/16, or 7.1%, to 36 15/16.

Merrill Lynch

raised its price target on

Infinity Broadcasting

(INF) - Get Report

by 25% to 47. Shares of Infinity Broadcasting hopped 1 15/16, or 5.1%, to 39 9/16.

SoundView Technology upped its rating on

Manugistics Group

(MANU) - Get Report

to buy from hold and set a price target of 28. Manugistics Group climbed 2 7/16, or 13.1%, to 21 1/8.

First Boston and Merrill Lynch both started coverage of

Next Level

(NXTV)

with buy ratings and price targets of 85.Shares of Next Level popped 3 1/4 to 69 15/16.

Merrill Lynch rolled out coverage of

PSS World Medical

(PSSI)

with a near and long-term accumulate ratings. Shares of PSS World Medical retreated 1/2 to 9 5/8.

Credit Suisse First Boston reinitiated coverage of

Seacor Smith

(CKH) - Get Report

with a buy rating and a price target of 70. Shares of Seacor declined 1/4 to 51 3/4.

BancBoston Robertson Stephens

upped its fourth-quarter EPS estimates for

Silicon Image

(SIMG)

to a 2 cent-loss from a 4 cent loss. Shares of Silicon Image jumped 8 15/16, or 21.5%, to 46 15/16.

Miscellany

American Business Products

(ABP)

added 1 1/8, or 10.7%, to 11 5/8 after it named Harold Smethills as CEO, president and a board member, succeeding acting CEO Daniel McGlaughlin. Smethills was recently chairman of Hill Equities, a private investing and consulting firm he founded in 1995.

Digene

(DIGE)

gained 5/16 to 18 after it said received marketing clearance from the

Food and Drug Administration

for its Hyprid Capturer II Gonorrhea Test.

Louis Dreyfus Natural Gas

(LD) - Get Report

lost 5/16 to 18 after it said it plans to more than double its 2000 exploration and development budget over this year's $210 million.

Global Crossing

(GBLX)

climbed 2 3/8, or 5.2%, to 47 3/8 after it named AT&T's former cable chief, Leo Hindery, as chairman and chief executive of GlobalCenter, its Internet services unit. The company also said it was considering a tracking stock or an IPO for the GlobalCenter unit.

Fortune Brands

(FO)

fell 5/8 to 32 3/4 after it said it has finished relocating its headquarters to suburban Chicago, ending its operations in Greenwich, Conn. The relocation, which cut its headquarters workforce by 40%, would save the company more than $30 million starting in 2000.

Hewlett-Packard

(HWP)

stumbled 1 3/4 to 103 1/4 after it said it reduced prices by 34% on its CD-Write Plus internal and external drives. The company said the price of a CD-Writer Plus 9200i/9199i fell to $299 from $399 and its 9210e/9110e models price has dropped to $399 from $499.

IBM

(IBM) - Get Report

leaped 4 to 115 7/8 after it unveiled a $100 million plan to construct the world's fastest supercomputer to be used to model the folding of human proteins. Learning how proteins fold is anticipated to help researchers better understand both diseases and potential cures, IBM said.

Multex.com

(MLTX)

tacked on 2 1/2, or 9.6%, to 28 9/16 after it named John McGovern CFO.

Rite Aid chose a new top management team, naming Robert Miller as chairman and CEO. Miller was formerly COO at Kroger and a former CEO at

Fred Meyer

. Mary Sammons was named president and COO, while John Standley was named CFO and executive vice president. Rite Aid also said

Deloitte & Touche

is its new auditing firm. Shares of Rite Aid mounted 3 7/16, or 41.6%, to 11 11/16.

New York City

Comptroller

Alan Hevesi

said he expects Wall Street bonuses to total roughly $13 billion for 1999, topping bonuses of about $11 billion in the last two years. Wall Street only accounts for 5% of the city's jobs, but generates 17% of its revenue.