More Records Broken as Small-Caps Finally Crack New Highs

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If the stock market is the

Icarus

of our age, the betting these days is that he's got flame-retardant wings and a turbocharged jet pack.

Stocks finished the session off their intraday highs but still up enough for new closing records on several indices. Perhaps most notable was the small-cap

Russell 2000

, bereft of new highs since Oct. 13's 465.21 before today's rise of 2.50 to 467.12. The less-popular

S&P SmallCap 600

, which broke its own new-high drought in late February, rose 1.27 to a record 195.53.

The SmallCap 600's big brother, the

S&P 500

, gained 4.22 to a record 1068.47 after setting an intraday high of 1069.18. The

Dow Jones Industrial Average

poked close to another century mark, topping out at 8695.19 around 3 p.m. EST, but it settled for a rise of 32.63 to a record 8675.75.

American Express

(AXP) - Get Report

,

IBM

(IBM) - Get Report

,

J.P. Morgan

(JPM) - Get Report

,

AT&T

(T) - Get Report

and

International Paper

(IP) - Get Report

were among the upside leaders, with

Disney

(DIS) - Get Report

and

Alcoa

(AA) - Get Report

the chief laggards.

Over in techland,

Cisco

(CSCO) - Get Report

,

Oracle

(ORCL) - Get Report

and

Intel

(INTC) - Get Report

powered the

Nasdaq Composite Index

up 8.34 to 1756.85 -- still well short of its Feb. 26 high of 1777.11. The large-cap

Nasdaq 100

added 5.26 to 1153.87.

Equity volume remained

Popeye

-strong and picked up even from

yesterday's massive levels.

New York Stock Exchange

advancers led decliners by 1,743 to 1,221 on 655.3 million shares, with 308 new highs ahead of 24 new lows. On the Nasdaq, 2,385 advancers bested 2,053 decliners on 844.8 million shares. New Nasdaq highs topped new lows by 244 to 50.

"Very simply, the market continues to flow along with the money that is coming at it," said Dick Stein, chief technical analyst at

Noble International Investments

in Boca Raton, Fla.

No kidding.

Mutual Fund Trim Tabs

reported today that a huge $4.4 billion flooded into U.S. equity funds on Monday alone, bringing the net inflow for the two days ended Monday to $2.8 billion. Forty-five managements received new cash Monday, with 18 flat and 27 reporting redemptions.

Stein said much of the valuation-stretching run in stocks stems from simple supply and demand, with mutual-fund buying and corporate repurchases sopping up more and more shares. "What is going to change that situation?" he asked. "I don't know, but there's nothing on the economic front that suggests it's going to change in the near future."

Like many strategists, Stein pointed to the market's willingness to rotate away from tech stocks and into consumer nondurables and other areas as a sign that the current trend can continue healthily. "Yes, you will get an

America Online

that sells in here at 600-some-odd times earnings, but that's the exception and not the rule," he said. AOL

(AOL)

, up 15/16 to 123 15/16, actually has a price-to-earnings ratio of a mere 538.9.

That kind of P/E looks like a signal of mania to some Wall Streeters, but Stein said his anecdotal sense is that today's retail investors have their heads in the game. "The majority of our accounts have no margin purchasing whatsoever," he said. "People are being much more reasonable and realizing that they have to take care of their future, that Uncle Sam is not going to do it."

Wednesday's Company Report

By

Heather Moore
Staff Reporter

(

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

.)

Bank of Japan

Governor Yasuo Matsushita will resign this month in response to the bribery scandal now gripping the institution, Japan's

Nihon Keizai Shimbun

is reporting. Tokyo prosecutors arrested a senior bank official and charged him with taking bribes of sumptuous dinners and "other entertainment" from

Industrial Bank of Japan

and

Sanwa Bank

in exchange for information on the Bank of Japan's market operations. The

Nihon Keizai Shimbun

, unlike U.S. news organizations, is well known as a direct conduit for government information, which suggests that Matsushita is indeed on his way out.

* * * * *

Investors used left-hand fingers to scratch their heads, as they wondered whether

Computer Sciences

(CSC)

is about to receive yet another takeover bid, and right-hand fingers to dial their brokers and whisper that three-little-lettered word. CSC enjoyed a jump of 4 11/16 to 101 5/8 from the speculation -- and stayed quiet.

Mergers, acquisitions and joint ventures

T*HQ

(THQI)

dived 7 7/8, or 24.3%, to 24 1/2 after the software maker said it and

WCW

won't renew their WCW World Championship Wrestling license agreement when it expires Dec. 29.

Waste Management

(WMX)

skyrocketed 4 1/16, or 16.1%, to 29 1/4 after agreeing to acquire

USA Waste Services

(UW)

, up 3 7/8, or 9.9%, to 43, in a stock swap valued at $13.5 billion. The combined company would be the nation's largest solid waste management group, with approximately 20% of the market.

Grist Mill

(GRST)

flew 2, or 16.3%, to 14 9/32 after

International Home Foods

(IHF) - Get Report

, which gave up 3/8 to 31 1/8, agreed to buy it for $105 million, or $14.50 per share. Grist Mill was the Oct. 10 selection of

TheStreet.com's

$10 Store.

Q-Med

(QEKG)

soared 3/4, or 13%, to 6 7/8 after the company agreed late

yesterday to end its strategic alliance with

SmithKline Beecham

(SBH) - Get Report

climbed 2, or 8.3%, to 26 1/8 after announcing an agreement with

Microsoft

(MSFT) - Get Report

, which skidded 13/16 to 80 11/16, to combine their Java language technologies for use on Apple's Macintosh computers. Also,

CompUSA

(CPU)

acquired 3/4 to 27 11/16 on news that it will launch Apple "store within a store" environments at its superstores this weekend.

United Dental

(UDCI)

sailed 1 1/16, or 6.3%, to 17 15/16 after it agreed to be acquired by

Protective Life

(PL)

, which shed 1 13/16 to 69 3/16, in a $175 million stock and cash deal.

Xerox

(XRX) - Get Report

closed at an all-time high of 94 3/4, up 1 1/16, after announcing it had agreed to sell its

Crum & Forster

insurance business to Toronto-based

Fairfax Financial

for $680 million.

Earnings reports and previews

Andrew

(ANDW)

lowered 5 15/16, or 21.2%, to 22 1/4 after late

yesterday's warning that its second-quarter earnings could be 10% to 15% short of the eight-analyst consensus estimate of 33 cents per share.

Swisher International Group

(SWR)

plummeted 1 5/8, or 11%, to 13 1/8 after the cigar company said it would post lower-than-expected first-quarter earnings because of high wholesale inventories and slow retail sales.

Morgan Stanley Dean Witter

cut it to neutral from strong buy. Making a similar warning during yesterday's session was

Consolidated Cigar

(CIG) - Get Report

, which tumbled 2, or 9.5%, to 19 after warning that its first-quarter earnings will show "little or no" growth from a year ago. Other stogie makers inhaling some second-hand smoke from the announcements:

General Cigar Holdings

(MPP)

lost 2 1/6, or 11.9%, to 15 1/4, and

Holt's Cigar Holdings

(HOLT)

plunged 3/8 to 8.

Nashua

(NSH)

vaulted 1 1/4, or 9.6%, to 14 1/4 after yesterday's post-close

announcement that the company will sell the British and Canadian units of its photofinishing group to an unnamed privately held company for $52.5 million. Nashua made the gain even after the company reported a fourth-quarter loss of 19 cents per share.

Michaels Stores

(MIKE)

was up 2 7/8, or 7.9%, to an all-time high of 39 1/2 after

yesterday's post-close announcement that its fourth-quarter earnings were 79 cents -- up from both analysts' 73-cent estimate and the year-ago 35 cents.

Talbot's

(TLB)

rocketed 1 3/8, or 7.6%, to 19 1/2 even after announcing it will open 33 fewer stores in fiscal 1998 than it did last year as sales begin to flatten out. The company also reported a fourth-quarter loss of 32 cents.

General Mills

(GIS) - Get Report

picked up 1 1/2 to 73 9/16 after announcing third-quarter earnings of 83 cents per share, in line with the 15-analyst consensus estimate and up from the year-ago 78 cents.

Toys R Us

(TOY)

rose 3/8 to 28 3/8 after announcing fourth-quarter earnings of $1.32 -- up a penny from the 20-analyst outlook and down from the year-ago $1.37. The giraffe-loving toy company said it will focus on improving results by reducing holiday selling costs. The company also said it will open 15 stores in the U.S. and 35 internationally.

TCBY

(TBY)

stacked on 3/8 to 9 after reporting first-quarter earnings of 3 cents per share, a penny ahead of the two-analyst expectation and up from the year-ago 1 cent.

Input/Output

(IO) - Get Report

shot up 11/16 to 22 15/16 after reporting third-quarter earnings of 34 cents per share, 2 cents better than the 11-analyst view and up from the year-ago 14 cents.

Analyst actions

Micromuse

(MUSE)

jumped 3 3/8, or 14.7%, to an all-time high of 26 5/8 after

Salomon Smith Barney

began coverage with a buy.

Rock-Tenn

(RKT)

caved 2 3/4, or 14%, to 16 15/16 after J.P. Morgan lowered it to market perform from buy. Late

yesterday, Rock-Tenn warned that it expected weakening demand and inefficiencies at a new plant to reduce earnings by 7 cents to 13 cents per share each quarter for the rest of the fiscal year.

Telegroup

(TGRP)

surrendered 2 3/16, or 12.7%, to 15 after

BT Alex. Brown

lowered it to market perform from buy. The telecommunications company reported after the bell

yesterday a fourth-quarter loss of 35 cents per share before charges, compared with a year-ago loss of 8 cents.

Ciena

(CIEN) - Get Report

was up 2 5/16, or 5.7%, to 43 1/4 after

J.P. Morgan

started coverage with a buy.

MGIC Investment

(MTG) - Get Report

declined 3 9/16, or 5%, to 67 5/8 after

Morgan Stanley Dean Witter

cut it to neutral from outperform.

Olympic Steel

(ZEUS) - Get Report

fell 3/8 to 14 1/16 after Salomon Smith Barney downgraded it to outperform from buy. The firm also reduced Olympic's first-quarter earnings estimate to 19 cents per share from 21 cents and 1998 estimate to $1.05 from $1.15.

Syntel

(SYNT) - Get Report

gave up 2 1/8, or 5.5%, to 36 3/8 after

Prudential Securities

cut it to hold from buy.

Samsonite

(SAMC)

slipped 1 15/16, or 5.2%, to 35 1/4 after Salomon Smith Barney downgraded it to outperform from buy.

Offerings and stock actions

Planet Hollywood

(PHL)

jumpstarted 1/4 to 10 3/4 after it and the private

Hard Rock Hotel

announced plans to sell $250 million of junk bonds each. Proceeds from the deal will be used to repay bank debt and finance new projects -- including joint ventures to build theater complexes, a sports-themed hotel in New York and a music-themed hotel/casino in Las Vegas.

Miscellany

Computer Learning Centers

(CLCX)

sank 8, or 28.9%, to 19 47/64 on news that the Illinois attorney general filed a consumer fraud suit against the company. The lawsuit involves the way the company recruited potential students to enroll in courses at one of its campuses.

Citrix Systems

(CTXS) - Get Report

leapt 4 3/16, or 10.3%, to 44 3/4 after announcing that it signed licensing agreements with six leading hardware and software manufacturers.

Vanguard Cellular

(VCEL) - Get Report

ascended 1 1/6, or 6.6%, to an all-time high of 17 1/8 after the company added CEO to co-founder and president Stephen Leeolou's string of titles.

Seagate

(SEG)

sprung 1 1/4, or 5.6%, to 23 3/4 after three of its data storage management products received Editor's Choice Awards from

PC Magazine

.

Staff reporter John J. Edwards III contributed to Wednesday's Company Report

.