Nasdaq on Pace for Another Record in Mixed Session

Equity players are happy with the market's better-than-negative tone after such remarkable gains.
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Heavily larded with gains from what's become a month-long rally, the market's major benchmarks were tottering around break-even at midsession.

The

Dow Jones Industrial Average

was down 45 to 10,991, while the

S&P 500

was off 4 to 1421. The

Nasdaq Composite Index

, shaking off its morning torpor, had moved 13 higher to 3360, in record territory.

Small-caps and Net shares were mixed. The

Russell 2000

was down half a point to 462, and

TheStreet.com Internet Sector

index had risen half a point to 956.

Market observers were generally pleased.

"We have a very positive focus at this point," said Jeffrey Warantz, equity strategist at

Salomon Smith Barney

. "The recent rate hike from the

Fed

is basically the last one we're going to have for the foreseeable future. That having been done, combined with some of the earnings numbers coming in, we're looking at clear sailing going out into the end of the year."

That perspective reflects the tenor right now on Wall Street, where much of the caution that pervaded the market back just over a month ago has dissipated. The

Chicago Board Options Exchange Market Volatility Index

, which quantifies the level of fear in the options market, has been dropping steadily since Oct. 15, when it closed at 31.48. The VIX was lately up 0.16 to 20.26, its lowest level since the middle of July. That, not coincidentally, was just before the market's sharp summer selloff.

"It's complacent," said Peter Green, director of technical research at

Gruntal

. "The market was due for a little bit of a pause, based on the Nasdaq Composite's mammoth move and the fact that some stocks in the technology sector had put in their first sell signals."

Witness

Qualcomm

(QCOM) - Get Report

, 1999's Momentum King, which has been frightening traders with the dizzying intraday swings it's been making in both directions since the stock hit an intraday high of 406 1/8 back on Monday. Qualcomm was lately trading up 6 3/16 to 362, having bounced up from an early low of 349. (For a look at the excessive weighting of Qualcomm and others in the

Nasdaq 100

, check out

Justin Lahart's

feature from yesterday.)

To Green, that volatility "suggests that we're seeing some distribution before it can go higher again," said Green. "Money has been going into stocks like

Compaq

(CPQ)

and

IBM

(NYSE)

, which haven't performed well in the S&P 500. That means money is being rotated, which is helpful."

Today, Compaq was up 7.2%, while IBM had picked up 5%.

"The overall picture is bullish," said Greg Nie, chief technical analyst at

First Union Securities

in Chicago. "But two things stand out: first, there's the extended condition of the Nasdaq Composite, which has moved 27% above its 200-day moving average. That's only the fourth time in history that it's gotten to that level. Also, the five-day trend in the Arms index has gotten significantly overbought."

The Arms index, otherwise known as trin, measures the ratio the volume of declining stocks to the volume of advancing stocks.

In sector news, oil and oil service stocks were mixed despite another sharp upward pop in crude prices. The

Philadelphia Stock Exchange Oil Service Index

was up 0.5%, while the

American Stock Exchange Oil & Gas Index

was off about 1%. December crude futures were up 65 cents to $26.45.

Transports were feeling the pinch from the spurt in oil. The

Dow Jones Transportation Average

was shedding 1.5%, and the

Philadelphia Stock Exchange Airline Index

was down 1.3%.

With no major economic news to react to, the bond market was flat. The 30-year Treasury was unchanged at 99 14/32, leaving the yield at 6.17%. (For more on the fixed-income market, see today's early

Bond Focus.)

Market Internals

Breadth was negative, while volume was strong amid the double-expiration of stock and stock index options.

New York Stock Exchange:

1,052 advancers, 1,834 decliners, 532 million shares. 54 new 52-week highs, 115 new lows.

Nasdaq Stock Market:

1,801 advancers, 1,985 decliners, 866 million shares. 174 new highs, 50 new lows.

Friday's Midday Watchlist

By Eileen Kinsella
Staff Reporter

Vodafone AirTouch

(VOD) - Get Report

fell 1 1/4 to 44 13/16 after it said it will raise $37.2 billion in the syndicated loan market to fund its sweetened $128.5 billion offer for

Mannesmann

(MNNSY)

, making for the largest hostile takeover bid in history. According to bankers, the loan would set a record as the biggest ever, topping

AT&T's

(T) - Get Report

$30 billion loan in April.

Separately, according to

Reuters

, Vodafone CEO Chris Gent said during a news conference that the company has contacted the

European Commission

regarding its bid for Mannesmann and hopes to receive the EU's stamp of approval after the discussions.

Mergers, acquisitions and joint ventures

Calico

(CLIC)

fell 2 to 65 1/2 after it announced plans to buy

Connecting.com

(CNKT)

, in a deal valued at roughly $90 million. Connecting climbed 17/32 to 4 25/32.

In a $6 billion deal,

CBS Sports

, a unit of

CBS

(CBS) - Get Report

, extended its pact for broadcast rights to the

National Collegiate Athletic Association's

Division I men's college basketball tournament and other selected championship events. The extended deal will begin in 2003 after the conclusion of its existing eight-year pact with the NCAA and run until 2014. CBS Sports has been the exclusive broadcaster of the men's basketball championship since 1982. The deal between CBS and the NCAA, which CBS called "the most comprehensive sports agreement in history," provides CBS with the television rights, including over-the-air broadcasting, cable television, satellite, digital and home video. CBS also obtains the rights for all content relating to these events on the Internet. CBS was shedding 3/4 to 54 1/4, but

SportsLine USA

(SPLN)

, publisher of the

CBS SportsLine

Web site, was up 5 3/16, or 14.7%, to 45 3/8.

General Motors

(GM) - Get Report

slipped 1/8 to 69 11/16 after it said it has inked a deal to sell its financial share services division to

Arthur Andersen

. GM said the sale would involve 400 salaried employees at the company.

Global Marine

(GLM)

slipped 1/16 to 17 after saying it would supply working capital for

Harland & Wolff Shipbuilding

and

Heavy Industries

, enabling the Ireland-based shipyard to finish two ultra-deepwater drillships being built for Global Marine. According to Global Marine, the funding, which calls for two credit letters for a total of $40 million and an advanced $93 million above its $315 million contract price, is not expected to dent its future earnings, noting that the agreement would tack on no more than 11% to the forecast $660 million cost for the drillships.

Pitney Bowes

(PBI) - Get Report

inched up 3/16 to 49 1/16 and

ABN Amro

(ABN)

added 1/16 to 25 3/4 after the companies said they forged an agreement for Pitney Bowes to sell its mortgage servicing division to ABN Amro. According to Pitney Bowes, terms of the deal will not be released until it is completed later this year or in early 2000.

TheStreet.com/NYTimes.com

joint newsroom covered the news in a separate

story.

Ziff-Davis

(ZD)

rose 7/16 to17 3/16 after saying it is selling its 64% interest in

ZDTV

to Paul Allen's

Vulcan Ventures

for $204.8 million. Allen is a co-founder of

Microsoft

(MSFT) - Get Report

. For more on Vulcan's latest move, check out the

latest from

TheStreet.com/NYTimes.com

joint newsroom.

Earnings/revenue reports and previews

(

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

)

Valspar

(VAL) - Get Report

climbed 1/4 to 39 after posting fourth-quarter earnings of 55 cents a share, beating the six-analyst estimate by a penny and up from the year-ago 48 cents.

Caterpillar

(CAT) - Get Report

shed 5 7/16, or 9.7%, to 50 1/2 after it issued a downward revision for sales and revenue for the fourth quarter. Caterpillar expects sales, revenue and profit to be slightly above the third quarter. The company earned 61 cents a share in the third quarter. In the fourth quarter of 1998, it earned 83 cents a share. Analysts are calling for Caterpillar to earn 97 cents in the fourth quarter.

Newbridge Networks

(NN)

, fell 2 13/16, or 11.7%, to 21 3/15. In a presentation before its earnings release yesterday, Newbridge executives informed employees that the company is open to takeover offers, according to a source close to the firm. The company reviewed its plans for a 10% workforce reduction, which includes slicing 720 jobs and said it has not dismissed the option of a possible sale, although it has no current suitors. Regarding the company's earnings, Newbridge posted earnings of 8 cents a share, missing the 10-analyst estimate by a penny and down from the year-ago 18-cent profit.

TheStreet.com/NYTimes.com

joint newsroom covered the Newbridge news in a

story last night.

Pepsi Bottling Group

(PBG)

climbed 1/2 to 16 13/16 after saying its fourth-quarter earnings were better than expected and it is on track to meet its 2000 targets. The 14-analyst estimate forecasts Pepsi Bottling to post a fourth-quarter loss of 23 cents a share, while a 15-analyst estimate sees it reporting fiscal 2000 earnings of 88 cents a share.

Offerings and stock actions

China.com

(CHINA)

was soaring 23 1/8, or 24.8%, to 116 1/2 after it set a 2-for-1 stock split.

Emulex

(EMLX)

jumped 5 3/8 to 165 3/8 after it it set a 2-for-1 stock split.

First Merchants

(FRME) - Get Report

fell 1 1/16 to 27 5/16 after it said it started a self-tender offer to buy back up to 1.2 million shares of its common stock at $28 a share.

First Midwest Bancorp

(FMBI) - Get Report

added 1/8 to 43 15/16 after it set a 3-for-2 stock split.

Morgan Stanley Dean Witter

priced

ImClone Systems'

(IMCL)

2.75 million-share secondary offering at $32 a share. ImClone closed yesterday at 34 1/2.

Kinnard

(KINN)

slipped 1/16 to 5 3/4 after it said it would buy back up 1 million of it shares.

Whitman

(WH) - Get Report

, the country's second-largest

Pepsi

bottler, said it set a 15 million-share repurchasing program. Shares climbed 1/16 to 14

Analyst actions

Warburg Dillon Read

initiated coverage of

BMC Software

(BMCS)

with a buy rating and a price target of 88. BMC gained 4 1/2, or 6.5%, to 74 5/16.

Deutsche Banc Alex. Brown

initiated coverage of

Braun Consulting

(BRNC)

with a strong buy rating. Braun rose 4 7/16, or 14.3%, to 35 3/8.

Wachovia Securities

rolled out coverage of

Ciber

(CBR)

with a neutral rating. Ciber lost 9/16 to 23 3/8.

Warburg initiated coverage of

Computer Associates

(CA) - Get Report

and

Legato

(LGTO)

with buy ratings.Computer Associates climbed 3 1/16 to 64 15/16, while Legato lost 1 3/16 to 74 3/4.

Warburg initiated coverage of

C-Cor.net

(CCBL)

and

Westell

(WSTL) - Get Report

with buy ratings. C-Cor rose 1/16 to 51 1/8 while Westell gained 2 11/16, or 32.1%, to 11 1/8.

Prudential Securities

raise its price objective on

General Electric

(GE) - Get Report

to 185 from 150. General Electric shares were losing 1 3/8 to 138.

Goldman Sachs sliced its rating on

Keravision

(KERA)

to market performer from market outperform. Keravision shares were sliding 11/16, or 6.1%, to 10 1/2.

Goldman Sachs raised its rating on

Medquist

(MEDQ)

to its recommend list from market outperformer. Shares of Medquist were hopping 2 5/16, or 9.3%, to 27 1/4.

Deutsche Banc Alex. Brown downgraded shares of

Papa John's

(PZZA) - Get Report

to buy from strong buy. Shares of Papa John's were adding 1 9/16 to 35 1/4.

Morgan Stanley Dean Witter

initiated coverage of

Patterson Dental

(PDCO) - Get Report

with a strong but rating and a price target of 60. Shares of Patterson Dental popped 2 1/2, or 5.8%, to 45 3/16.

First Boston analyst Wendell Laidley upgraded shares of

Portal Software

(PRSF)

to strong buy from buy.

Merrill Lynch

raised its intermediate-term rating on the stock to buy from accumulate. Portal Software shares were jumping 4 1/8 to 97.

SCI Systems

(SCI) - Get Report

was flying 4 5/16, or 6.1%, to 74 1/2 on news that

Banc of America Securities

upped its price target to 105 from 75, saying the company should reveal an acquisition next week.

Morgan Stanley upped its rating on

Triad Hospitals

(TRIH)

to outperform from strong buy. Triad Hospitals shares were edging up 3/4, or 6 .3%, to 12 5/8.

Goldman Sachs initiated coverage of

United Parcel Service

(UPS) - Get Report

as a market performer. UPS was sliding 1 9/16 to 64 5/8.

Donaldson Lufkin & Jenrette

upped its 18-month price target on

Veritas

(VRTS) - Get Report

to 200 from 100. Veritas shares were leaping 7 7/16, or 5.3%, to 145 1/2.

Warburg rolled out coverage of

Watchguard

(WGRD)

with a buy rating and set a price target of 35 on the stock. Watchguard was climbing 7/8 to 25 3/4.

Miscellany

Rite Aid

(RAD) - Get Report

was advancing 7/16, or 6.3%, to 7 1/4 after it announced after yesterday's close that the

Securities and Exchange Commission

is launching a formal probe into the financially stressed drugstore chain, while revealing that its former auditors,

KPMG

, resigned saying they could no longer depend on Rite Aid management's representations.

Rite Aid said it has filed a report of unscheduled material events with the SEC called a Form 8-K, which explains the reasons behind KPMG's resignation. On Monday, Rite Aid said that KPMG was expected to examine its previous statements relating to its restated earnings, however KPMG backed out, saying it was unavailable. Earlier this month, Rite Aid cautioned investors to discount previously stated profit and cash flow reports and it has revised its earlier results.

For more on

Rite Aid's stock troubles, check out

TheStreet.com/NYTimes.com

joint newsroom's coverage.

Boeing

(BA) - Get Report

climbed 9/16 to 32 9/16 after saying it agreed to end a pay disparity affecting women and minorities and would pay a minimum of $4.5 million in back pay and salary adjustments. The company said the decision would resolve claims of pay disparities at various facilities.

Microsoft

(MSFT) - Get Report

and government lawyers convened briefly with Judge Thomas Penfield Jackson, the first such meeting since he declared that the company operated as a monopoly,

The Wall Street Journal

reported. Shares of Microsoft were adding 3/8 to 85 5/16.

Investors are scurrying for the few wireless companies they think are takeover candidates for the big telecommunications companies, the Heard on the Street column in the

Journal

reports. Listed as among the most likely acquisition cell-phone targets in the column:

VoiceStream Communications

(VSTR)

,

Powertel

(PTEL)

,

Nextel Communications

(NXTL)

and smaller companies such as

Rural Cellular

(RCCC)

. Shares of VoiceStream were gaining 1 13/16 to 93 13/16, while shares of Powertel were climbing 1/16 to 86 13/16.Nextel was losing 3/16 to 96 3/16, while Rural Cellular was plummeting 4 5/16, or 5.2%, to 78 3/4.