Nasdaq Punches Out Another Record While Broad Market Stumbles

Breadth was poor even as tech names leapt, and there's a little nervousness about tomorrow's Fed bias decision.
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SAN FRANCISCO -- Meet the new market, same as the old market -- only more so.

The extreme elements in force on Wall Street were on display again today with noticeable vigor. As was the case

Friday, tech stocks failed to sustain their early impetus but maintained enough momentum to send the

Nasdaq Composite Index

to yet another record. Meanwhile, blue-chips and the bond market extended their recent struggles.

The price of the 30-year Treasury bond fell 23/32 to 95 28/32, its yield rising to 6.44% ahead of tomorrow's meeting of the

Federal Open Market Committee

. No rate change is forecast but many players expect the

Fed

to adopt a tightening bias tomorrow. Speculation of such a change restrained blue-chip stocks as well as the bonds.

Barry Berman, head of stock trading at

Robert W. Baird

in Milwaukee, called the Fed gathering "the only reason" for the blue-chips' decline. "I think there's a quarter-point increase already built into the market. So whether or not they get it tomorrow, there's just a general concern over what might be said,

such as if the stock market is targeted as a concern. So it's just the uncertainty" weighing on stocks.

However, barring something "more ominous than people expected," Berman expects the market to "move back up again" after the FOMC adjourns.

Today, however, the

Dow Jones Industrial Average

struggled after rising as high as 11,310.03 in the first hour of the session. Losses mounted as the day progressed and after trading as low as 11,110.93, the Dow closed off 113.16, or 1%, to 11,144.27. Following a similar pattern, the

S&P 500

shed 2.96, or 0.2%, to 1418.09 after trading as high as 1429.16 and as low as 1411.10.

The Nasdaq Comp failed to sustain its early high of 3801.93 but remained in positive territory throughout -- save for a brief moment in the final hour -- before closing up 30.81, or 0.8%, to 3783.87, its 26th record in the past 36 trading days.

Leading the Comp among big tech bellwethers were

Oracle

(ORCL) - Get Report

, up 6.2% after announcing a 2-for-1 stock split, and

Cisco

(CSCO) - Get Report

, up 3.6% after agreeing to buy the fiber-optics business of Italy's

Pirelli

.

Those gains helped offset setbacks by

Microsoft

(MSFT) - Get Report

and

Intel

(INTC) - Get Report

, which each surrendered some of last week's big advance.

Additionally, Internet stalwarts such as

Yahoo!

(YHOO)

and

CMGI

(CMGI)

rose sharply, helping the Comp as well as the

Nasdaq 100

, which rose 0.9%.

However,

TheStreet.com Internet Sector

index fell 14.34, or 1.3%, to 1098.75, owing to weakness in components such as

E*Trade Group

(EGRP)

and

MindSpring Enterprises

(MSPG)

.

Meanwhile,

TheStreet.com

Red Hots index rose 9.85, or 2.7%, to 370.16. The 20-stock index tracks action in particularly volatile stocks and is meant to measure so-called hot money. (You can check quotes on the Red Hots index and its component stocks at

http://www.thestreet.com/redhots.)

The Red Hots got a boost from

Red Hat

(RHAT)

, which rose 5.7%. Rather than lamenting the Linux distributor's wider-than-expected loss, investors focused on Red Hat's revenue increase and 2-for-1 stock split. (

TheStreet.com/NYTimes.com

joint newsroom covered the Red Hat news in a

story today.)

The Logic of It All

"Everything that's going on makes sense," said Alan Skrainka, chief market strategist at

Edward Jones

in St. Louis. "The stock market is reacting like it should to what's taking place in the bond market. The exception, of course, is technology. I don't think it's justified

but I understand why it's happening. Investors are looking for companies that can produce very strong earnings growth in the absence of price increases."

Evincing the stark difference between investors' attitudes toward tech stocks and just about everything else, even news of mergers or stock splits or blockbuster earnings failed to inspire the latter.

So while Cisco jumped on the news of its $2.15 billion acquisition,

Monsanto

(MTC) - Get Report

fell 12.3% and

Pharmacia & Upjohn

(PNU)

dumped 6.2% on news of their

get-together. The

American Stock Exchange Pharmaceutical Index

lost 1.3%.

Skrainka attributed the weakness among the drug makers to the absence of a big premium in the Monsanto-Pharmacia & Upjohn deal.

"People are saying 'I bid up some drug names in the hope I'll get bought out

at a premium' and it didn't happen" in this case, he said.

Additionally,

Honeywell

(HON) - Get Report

slid 11.2% on news it plans to buy

Pittway

(PRY)

for $2.2 billion. Pittway shares soared 54.7%.

And while Red Hat leapt in its split announcement,

Morgan Stanley Dean Witter

(MWD)

rose just 0.7% despite

reporting blowout fourth-quarter earnings and establishing a 2-for-1 stock split.

Honeywell, which recently completed its merger with

AlliedSignal

, was the biggest negative influence on the Dow. Others included Microsoft,

DuPont

(DD) - Get Report

, and

Johnson & Johnson

(JNJ) - Get Report

.

While both the majority of industry groups and individual stocks fell on the session, the

Russell 2000

rose 0.98, or 0.2%, to 467.19.

In

New York Stock Exchange

trading, 905.2 million shares were exchanged while declining stocks led advancers 1,816 to 1,292. In

Nasdaq Stock Market

action 1.309 billion shares traded while losers led 2,419 to 1,871. New 52-week lows swamped new highs 279 to 85 on the Big Board while new highs led 193 to 169 in over-the-counter trading.

Among other indices,

Dow Jones Transportation Average

slid 33.95, or 1.2%, to 2884.47; the

Dow Jones Utility Average

slid 0.44, or 0.2%, to 273.83; and the

American Stock Exchange Composite Index

added 1.35, or 0.2%, to 831.15.

Elsewhere in North American equities, the

Toronto Stock Exchange 300

gained 33.21 to 8131.40 and the

Mexican Stock Exchange IPC Index

fell 16.25 to 6943.10.

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

Pharmacia & Upjohn

(PNU)

and

Monsanto

(MTC) - Get Report

agreed to a merger of equals estimated at $29 billion -- or at least it

was

estimated at that, before the market took both stocks lower on the news. Pharmacia finished down 3 1/8, or 6.2%, to 47 1/8, while Monsanto slid 5 1/8, or 12.2%, to 36 5/8.

The merger creates the world's 11th-largest drug company, with a market capitalization of about $50 billion and total sales of $17 billion. The partners see cost savings of about $600 million a year.

Pfizer

(PFE) - Get Report

said it would keep its marketing pact with Monsanto, even if Monsanto merges with Pharmacia & Upjohn. Pfizer and Monsanto's G.D Searle co-market the widely successful arthritis formula

Celebrex

.

PaineWebber

slashed Monsanto to neutral from buy, citing disappointment that the deal included no premium for Monsanto's

Searle

drug unit.

For more on the

merger announcement, check out a story by

TheStreet.com/NYTimes.com

joint newsroom.

Allegheny Energy

(AYE)

fell 3/16 to 26 5/16 after it said it has entered a deal to purchase

Energy Corp. of America

unit

Mountaineer Gas

for $323 million.

Burlington Northern Santa Fe

(BNI)

and

Canadian National Railway

(CNI) - Get Report

agreed to link up in a $19 billion stock merger. The partners expect the combined company, to be called

North American Railways

, to realize $500 million to $600 million in improved income during its first three years. Shares of Burlington retreated 3 9/16, or 12.5%, to 24 13/16, while Canadian National slipped 11/16 to 29 1/16.For more on

the merger, check out a story by

TheStreet.com/NYTimes.com

joint newsroom..

Cisco popped 3 5/8 to 103 1/4 after it announced that it will buy the optical networking systems business of Italy's

Pirelli

for $2.15 billion.

For more on

Cisco's acquisition , check out a story by

TheStreet.com/NYTimes.com

joint news room.

Conexant

(CNXT) - Get Report

agreed to buy

Maker Communications

(MAKR)

in a $990 million stock deal. Maker holders will receive 0.66 of a Conexant share for each Maker share. Shares of Conexant skidded 3 5/16 to 66 5/16, while Maker Communications jumped 7 3/4, or 22.9%, to 41 3/4.

Interpublic Group

(IPG) - Get Report

said it has entered a $580 million stock deal to buy

NFO Worldwide

(NFO) - Get Report

. The terms call for Interpublic to pay $26 a share for each NFO share upon the deal's completion. The deal includes a collar that if exceeded would allow either Interpublic or NFO to renegotiate the transaction. Shares of Interpublic stumbled 2 5/16 to 55 3/4, while NFO mounted 8 1/4, or 58.9%, to 22 1/4.

MCI WorldCom

(WCOM)

advanced 9/16 to 80 9/16 after

Der Spiegel

reported that

France Telecom

(FTE)

and

Deutsche Telekom

(DT) - Get Report

both plan to bid for control of

Global One

, their joint venture with

Sprint

(FON)

. MCI WorldCom is in the process of acquiring Sprint. Shares of France Telecom climbed 1 9/16 to 114 1/16, while Deutsche mounted 2 3/8 to 60 3/4.

Plasma-Therm

(PTIS)

ran up 2 7/16, or 26%, to 11 3/4 after said it would be acquired by

Oerlikon-Buhrle Holding

in a deal valued at $150 million.

SBC Communications

(SBC)

said it has agreed to buy an interest in Brazilian wireless provider

Algar

. SBC said Telefonos de Mexico also plans to invest in the company, while

Williams Communications

(WCG) - Get Report

will slice its interest in Algar to 50%. Shares of Williams skidded 1/2 to 26 7/16.

Time Warner's

(TWX)

CNN News Group has entered an agreement which could potentially lead to a $20 million interest in

Leisureplanet

, the flagship division of

Leisureplanet Holdings

(LPHL)

. The purchase would immediately give CNN a little less than a 10% interest in the company with the possibility of taking no more than a 20% stake over the life of the three-year contract, which would total $20 million. The transaction calls for Leisureplanet to be the exclusive travel services provider for most CNN Web sites and purchase $30 million worth of advertising on CNN's Web sites and television network starting in 2000. Shares of Time Warner declined 1/4 to 65 7/8, while Leisureplanet Holdings advanced 1/16 to 13 7/8.

In addition, Leisureplanet said that

Warburg Dillon Read

and

UBS Capital

would take a $20 million stake in its parent company Leisureplanet Holdings.

Vodafone AirTouch

(VOD) - Get Report

said it plans to post its offer document for

Mannesmann

(MNNSY)

on Thursday and will leave its hostile bid open until Feb. 7. Vodafone's bid for Mannemann, launched in November, currently values Mannesmann around $135 billion. Shares of Vodafone lost 1 3/8 to 47 7/8, while Mannesmann, which did not trade, was at 238 1/2.

World Access

(WAXS)

fell 1/16 to 20 1/2 after it agreed to acquire

Star Telecommuncations

(STRX)

in a $650 million stock swap. The deal values Star at $10.50 a share. Combined with World Access' acquisition of privately held

Long Distance International

, the Star buy gives World Access an annual revenue run rate of more than $2.3 billion. Shares of Star Telecommunications hopped 1 31/32, or 28.6%, to 8 7/8

Earnings/revenue reports and previews

CMS Energy

(CMS) - Get Report

slid 11/16 to 31 after it said unseasonably warm weather could shave 10 cents from its fourth-quarter EPS. The nine-analyst estimate sees the company posting fourth-quarter earnings of 73 cents a share.

Conoco

(COC.A)

slipped 1 3/16, or 5.1%, to 21 3/4 after it said it upped its capital spending budget for 2000 by $300 million, to $2.2 billion. Conoco said $1.6 billion of the budget would be spent on exploration and production. Chairman and CEO Archie Dunham said the spending plan would increase production by 5% to roughly 245 million barrels of oil equivalent next year.

Dana

(DCN)

was unchanged at 27 after it said it plans to downsize its structural products facility and reorganize its South America and European divisions, which would result in pretax restructuring charges between $150 million to $200 million.

Novellus Systems

(NVLS)

was soaring 28 1/4, or 33.1%, to 113 9/16 after saying late Friday it expects its fourth-quarter earnings to beat the 22-analyst forecast of 65 cents a share. The company also set a 2-for-1 stock split.

Warburg Dillon Read

today upgraded the stock to strong buy from buy and boosted its price target to 120 from 90.

A.G. Edwards

(AGE) - Get Report

tacked on 3/4 to 28 3/8 after it reported third-quarter earnings of $1.23 a share, crushing the two-analyst estimate of 81 cents and the year-ago 70 cents.

International Multifoods

(IMC)

climbed 3/8 to 12 3/4 after it reported third-quarter earnings of 43 cents a share, a penny better than the six-analyst outlook and up from the year-ago 14 cents (not including discontinued operations). The company said it's comfortable with estimates of $1.30 to $1.35 for fiscal 2000; the current First Call/Thomson Financial view calls for $1.31.

Ivax

(IVX)

added 1 1/4, or 6.1%, to 21 3/4 after it said it expects its fourth-quarter earnings to exceed the six-analyst estimate of 14 cents a share. The company earned 15 cents in the year-earlier period.

Juno Online Services

(JWEB)

announced its plans to increase services and cut its charges to compete with its rivals such as

America Online

(AOL)

. Shares of Juno leaped 12 5/8, or 77.1%, to 29.

Morgan Stanley Dean Witter

(MWD)

gained 1 3/8 to 129 7/16 after it reported fourth-quarter earnings of $2.84 a share, far ahead of the 14-analyst estimate of $1.96 and up from the year-ago $1.49.

For more on

Morgan Stanley's earnings, check out a story by

TheStreet.com/NYTimes.com

joint news room

Red Hat

(RHAT)

soared 14 5/16, or 5.6%, to 267 15/16 after it reported a third-quarter loss of 5 cents a share, a penny wider than the three-analyst expectation and down from the year-ago break-even result. The Linux distributor also set a 2-for-1 stock split and said it may pursue a secondary share offering.

For more on

Red Hat's red-hot earnings, check out a story by

TheStreet.com/NYTimes.com

joint news room.

Steris

(STE) - Get Report

lost 2 1/2, or 20%, to 10 after it said it is forecasting third-quarter earnings to be 4 cents to 6 cents a share below its second-quarter report of 21 cents a share. The 10-analyst estimate sees the company posting third-quarter earnings at 28 cents a share. Steris blamed the disappointing results on higher expenses from revamping.

Analyst actions

Merrill Lynch cut its rating on

Aetna

(AET)

to intermediate-term neutral from accumulate. Shares of Aetna skidded 1 3/4 to 49 3/4.

SG Cowen

upped its price target on

Braun Consulting

(BRNC)

to 100 from 50. Shares of Braun popped 7 1/2, or 12.7%, to 66 1/2.

Credit Suisse First Boston

analyst Lise Buyer initiated coverage of

Digital Impact

(DIGI)

with a buy rating. First Boston was the lead underwriter on the firm when it went public last month. Shares of Digital Impact hopped 6 9/16, or 14.6%, to 51 3/4.

Bear Stearns

initiated coverage of

GetThere.com

(GTHR)

with a buy rating and a price target of 63. Shares of GetThere.com slid 4 3/8, or 12.4%, to 31 1/4.

Salomon Smith Barney

started coverage of

E-tek Dynamics

(ETEK)

with a buy rating and a price target of 115. E-tek Dynamics edged up 6 3/4, or 7.4%, to 97.

First Boston analyst Stephen DeNelsky initiated coverage of

InfoCure

(INCX)

with a strong buy rating and a price target of 35. Shares of InfoCure added 3 3/16, or 13.4%, to 27

Morgan Stanley Dean Witter

made positive comments on

Kulicke & Soffa Industries

(KLIC) - Get Report

, saying bookings are ahead of schedule. Shares of Kulicke & Soffa gained 3 13/16, or 10.7%, to 39 1/2.

Merrill Lynch

sliced its rating on

Lason

(LSON)

to intermediate-term neutral, long-term accumulate rating from intermediate, long-term buy rating. Shares of Lason plummeted 12 5/8, or 52.3%, to 11 7/16.

PaineWebber

upgraded

May Department Stores

(MAY)

to buy from neutral and upped

Saks

(SKS)

to attractive from neutral. Shares of May Department stores stumbled 1/2 to 30 1/4, while Saks gained 1/4 to 15 13/16.

PaineWebber

sliced its fiscal 2000 estimate on

Progressive

(PGR) - Get Report

to $3.30 from $4.10 a share. Shares of Progressive retreated 5 15/16, or 7.7%, 71 1/16.

Salomon Smith Barney rolled out coverage of

SDL

(SDLI)

with a buy rating and a price target of 230. SDL were 9 7/8, or 5.9%, to 174 3/4.

Morgan Stanley Dean Witter upped its fiscal 1999 estimate on

Sotheby's Holdings

(BID) - Get Report

to 54 cents a share from 42 cents. Sotheby's Holdings bounced 3 7/8, or 14.5%, to 30 7/16.

Merrill Lynch said it upped its rating on

Vimpel-Communications

(VIP)

to a near-term buy from accumulate. Vimpel-Communications added 3 3/4, or 16.4%, to 26 1/2.

Morgan Stanley Dean Witter initiated coverage of

Viatel

(VYTL)

with a strong buy rating and a price target of 80. Shares of Viatel 1 15/16 to 50 13/16.

Offering and stock actions

Check Point Software

(CHKP) - Get Report

set a 2-for-1 stock split for shareholders of record "at or around" Jan. 23 of next year. Check Point Software Technologies fell 5 to 192 13/16.

Oracle

(ORCL) - Get Report

set a 2-for-1 stock split for shareholders of record Dec. 30. The company split its stock 3-for-2 this February. Shares of Oracle popped 5 5/8, or 6.2%, to 96 5/16.

The

New York Stock Exchange

said

PE Corp. Celera Genomics Group

(CRA)

would not comment on its stock's recent price surge. The shares soared 14, or 15.9%, to 102.

Qualcomm

(QCOM) - Get Report

jumped 11 13/16 to 466 13/16 after it said its shareholders have given their stamp of approval to a 4-for-1 stock split.

Ralston Purina

(RAL)

tacked on 3/16 to 26 3/8 after it said it set a share buyback of up to 8 million shares.