Nasdaq Rides Solo Into Recordland as Blue-Chips Bog Down

Tech stocks performed strongly as the long bond rallied, leaving its yield below 6%.
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SAN FRANCISCO -- The latest string of records for the

Dow Jones Industrial Average

and

S&P 500

ended today at one, which we know is the loneliest number (number!). Alone and loving it, the

Nasdaq Composite Index

jumped 28.82, or 1.1%, to 2771.86 behind broad strength in tech stocks, notching its fifth record in the past six sessions.

The Nasdaq Comp got a boost from Internet stocks, which rallied after last night's better-than-expected earnings report by

Yahoo!

(YHOO)

, which rose as high as 175 1/4 but closed off 1.6% at 164 7/16. Bellwether Net names mostly followed the spirit of Yahoo!'s earnings vs. the direction of its stock, sending

TheStreet.com Internet Sector

index higher by 11.11, or 1.7%, to 664.96. The DOT got a big lift from

MindSpring Enterprises

(MSPG)

, which leapt 17.7% amid rumors it is a takeover target, with

Dell

(DELL) - Get Report

among potential buyers. Dell gained 4.1% as computer makers found favor overall.

Elsewhere,

Apple Computer

(APPL)

leapt 9.2% after a

BancBoston Robertson Stephens

upgrade and

Hewlett-Packard

(HWP)

rose 6.5%. The

Morgan Stanley High Tech 35

added 1.4%

Meanwhile, chip and equipment makers were enlivened by expectations for strong second-quarter earnings and positive comments (notably from

Lehman Brothers

) ahead of a big industry get-together next week.

KLA-Tencor

(KLAC) - Get Report

jumped 7.3%,

Micron

(MU) - Get Report

soared 9.2% and

Intel

(INTC) - Get Report

rose 2.1%; the

Philadelphia Stock Exchange Semiconductor Index

gained 3.8%.

Finally,

MCI WorldCom

(WCOM)

gained 5.6% after being added to

Morgan Stanley Dean Witter

investment strategist Byron Wein's "fresh money buy list." (Apparently, investors cared little that WorldCom replaced yesterday's child (of the damned)

Waste Management

(WMI)

on Wein's list.) The

Nasdaq 100

rose 1.5%.

H-P was the Dow's best performer, by far, but the blue-chip index dipped 60.47, or 0.5%, to 11,126.89 after trading as high as 11,211.11. Weakness in financials such as

J.P. Morgan

(JPM) - Get Report

and tobacco giant

Philip Morris

(MO) - Get Report

-- after last night's antismoking jury decision -- weighed most heavily on the index.

The Dow was also hampered by

General Motors

(GM) - Get Report

, down 3.2%, while

General Electric

(GE) - Get Report

fell 0.8% a day after hitting a 52-week high. The firm posted second-quarter earnings of 85 cents a share, a penny ahead of expectations but apparently not enough to satiate increasingly demanding investors.

Strength in tech bellwethers limited the damage, but the S&P 500 dipped 1.44, or 0.1%, to 1394.42 after trading as high as 1403.25, owing largely to weakness in financials, tobacco companies, transports and drug makers.

Unless it was a delayed reaction to recent trading, financials did not slide in reaction to the bond market, which rallied despite concerns about rising oil prices. The price of the 30-year Treasury bond rose 22/32 to 89 23/32, its yield declining to a hair below 6%.

"It's nice to see bonds snap back; the albatross of corporate offerings has been lifted," said Bryan Piskorowski, market analyst at

Prudential Securities

, noting that

Fannie Mae

(FNM)

and

Ford

(F) - Get Report

both priced deals today. Beyond that, "there's nothing really to write home about. Once we got through midday it turned into a tired, profit-taking type market. Not a bad day but a lackluster-type day."

Piskorowski said the S&P reversed amid a "lack of follow-through on a retest" of the day's futures contract high of 1416. He sees the index as extended and notes it never threatened Tuesday's contract high of 1417.50.

In

New York Stock Exchange

trading, 824.1 million shares traded while declining stocks led advancers 1,657 to 1,299. In

Nasdaq Stock Market

activity, 1.05 billion shares were exchanged, while gainers led 2,016 to 1,929. Net 52-week highs led news lows by 108 to 45 in NYSE trading and by 158 to 35 in over-the-counter action.

Despite lackluster advance/decline action, broader market averages advanced. The

Russell 2000

rose 2.06, or 0.5%, to 454.75 and the

American Stock Exchange Composite Index

added 6.55, or 0.8%, to 808.69.

Marking Time

"The market was due for a little pullback. We're seeing some weakness in the Dow

but the Nasdaq continues to go higher," said Ronny Kraft, CEO of

Gotham Capital Management

. "I think the market is just marking time. The reality is the economy is continuing to heat up. Next week is going to be a revelatory week

with

CPI

and

PPI

."

Kraft, who's been a bit of an inflation hawk of late and thus often less than bullish, said Dell's "breakout" on significant volume was significant but chalked up the Nasdaq's gain to its being "still on a high from Yahoo beating the numbers."

The tech-aligned index could enjoy more room to the upside, perhaps to as high as 2800. But the hedge fund manager said the comp "hit major resistance areas two days ago" on an upward trendline.

"We covered some long positions two days ago, missed out on the long side

yesterday, and scurried to get in this morning," he admitted. "But the Nasdaq probably pulls back in the next day or two.

Interestingly, Kraft sees more upside for the Dow.

"We're in a vacuum of economic data and the focus has turned to earnings -- there's been no major disasters," he said, evidently deeming the action in Waste Management and

Consolidated Stores

(CNS) - Get Report

, off 29.4% on a profit warning, less than major. "The Dow can go higher. There's no clear cut-resistance on the Dow outside of the horizontal trend line. But the market is not trading in a horizontal frame of mind. It's about diagonal trend lines, thrust and momentum.

Greenspan

gave them the green light."

Still, Kraft, noting continued price gains in oil and other commodities, sees trouble by early October as inflation fears revive.

Among other U.S. indices, the

Dow Jones Transportation Average

fell another to 23.51, or 0.7%, to 3451.39 and the

Dow Jones Utility Average

dipped 0.45, or 0.1%, to 320.69.

Elsewhere in North American equities, the

Toronto Stock Exchange 300

slipped 33.27, or 0.5%, to 7138.83 and the

Mexican Stock Exchange IPC Index

sloughed off 40.76, or 0.7%, to 5890.48.

In South America, Argentina's

MerVal

sank 22.70, or 4.4%, to 496.93 and Brazil's

Bovespa

shed 236, or 2.0%, to 11,509. In Argentina, a trucking strike was choking food and fuel supplies in major cities. The stoppage was brought on by a 1% to 1.5% vehicle tax geared toward raising money to increase teachers' salaries.

Thursday's Company Report

By Heather Moore
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.

)

Stocks of retailers announcing June same-store sales were mixed in reaction to the reports.

  • Bradlees (BRAD) rose 2 7/8, or 19.3%, to an annual high of 17 13/16 after recording sales up 24.8%.
  • Consolidated Stores tanked 6 7/8, or 29.4%, to 16 1/2 after saying it expects to post a second-quarter loss of 2 cents to 4 cents a share, below the 13-analyst estimate of earnings of 6 cents. Its sales figures, up 3.5% over the year-earlier period, didn't seem to matter much. Merrill Lynch cut the stock to near-term neutral from buy and from long-term accumulate from buy.
  • Dayton Hudson (DH) rose 15/16 to 71 3/8 after saying its sales for Target hopped 7.5% and its sales for Mervyn's hopped 2.8%.
  • Dollar General (DG) - Get Report fell 1/2 to 30 1/4 even after posting sales up 7.5%.
  • Federated Department Stores (FD) fell 1 3/4 to 55 1/8 despite sales that rose 8.4%.
  • Gap (GPS) - Get Report rose 2 to 51 5/8 on a 13% sales gain.
  • J.C. Penney (JCP) - Get Report fell 1 1/2 to 47 1/4 on a 2.3% sales drop.
  • Kmart (KM) fell 1/8 to 16 1/4 despite sales up 9.2%.
  • Kohl's (KSS) - Get Report rose 1 9/16 to an all-time high of 81 1/4 on sales up 15%.
  • Limited (LTD) closed flat at 47 1/2 on sales perking 11%.
  • May Department Stores (MAY) rose 7/16 to 43 1/4 on sales up 8.4%.
  • Musicland (MLG) rose 3/8 to 9 1/4 on sales up 8.2%.
  • Saks (SKS) tumbled 3 5/16, or 11.3%, to 26 despite sales up 4%.
  • Sears (S) - Get Report fell 15/16 to 46 1/16 despite sales up 1.9%.
  • Spiegel (SPGLA) rose 1/4 to 8 13/16 after saying its Eddie Bauer sales jumped 12%.
  • Wal-Mart (WMT) - Get Report fell 1 to 47 despite sales up 6.5%.

Salomon Smith Barney

announced its "Ten+ Exceptional Names" list -- 15 stocks the firm considers to be attractive investment opportunities for the coming year. They are:

  • Albertson's (ABS) , which moved up 2.2% to 52 3/8.
  • Allstate (ALL) - Get Report, up 1.4% to 36 13/16.
  • Amgen (AMGN) - Get Report, up 4.5% to 65 5/8.
  • Bank of New York (BK) - Get Report, flat at 39 1/8.
  • Dayton Hudson (DH) , up 1.3% to 71 3/8.
  • EDS (EDS) , up 4.7% to 59 11/16.
  • Fort James (FJ) , which moved down 2.8% to 38 1/2.
  • Honeywell (HON) - Get Report, up 1.6% to 119 15/16.
  • Lucent Technologies (LU) , down 0.4% to 71 9/16.
  • Marsh & McLennan (MMC) - Get Report, down 1.6% to 78 9/16.
  • MCI WorldCom, up 5.6% to 90.
  • Mobil (MOB) , down 0.5% to 103 1/8.
  • Pitney Bowes (PBI) - Get Report, up 2.5% to 70.
  • Raytheon (RTN.B) , down 0.6% to 74 1/2.
  • Tyco (TYC) , down 0.1% to 99 229/256.

Mergers, acquisitions and joint ventures

Metricom

(MCOM)

rallied 7 5/16, or 17.1%, to an all-time high of 50 5/16 after announcing an alliance with

Sanmina

(SANM) - Get Report

to build network equipment to support the company's planned wireless data service. Sanmina added 1 to 82.

MindSpring flew 8, or 17.7%, to 53 5/16 on market chatter the company will be taken out.

Pimco Advisors Holdings

(PA)

sliced off 1 to 32 7/8 after confirming it has been approached by

Allianz

, a German insurer, for a possible takeover.

The Wall Street Journal Europe

reported yesterday that Pimco is looking into a possible sale of part or all of the company to Allianz in a deal that could be valued at as much as $5 billion.

Earnings/revenue reports and previews

General Electric lowered 15/16 to 117 after posting record second-quarter earnings of 85 cents a share, beating the 13-analyst estimate by a penny and moving up from the year-ago 74 cents.

Airborne Freight

(ABF)

slipped 1 5/16 to 25 7/8 after last night saying it sees second-quarter earnings of 45 cents to 55 cents a share, lower than both the 12-analyst prediction of 62 cents and the year-ago 66 cents. The company cited a lack of growth in domestic shipments. Today, Morgan Stanley Dean Witter downgraded it to neutral from outperform and

PaineWebber

lowered it to attractive from buy.

Bergen Brunswig

(BBC) - Get Report

declined 5/8 to 15 9/16 after last night saying it expects to report third-quarter earnings of 25 cents to 27 cents a share, below the 14-analyst forecast of 31 cents. The company, which made 27 cents in the year-ago period, attributed the expected shortfall to negative industry trends hurting its PharMerica long-term care unit. Today,

Merrill Lynch

cut the stock to long-term accumulate from buy.

Biogen

(BGEN)

tacked on 1 11/16 to 66 11/16 before announcing what analysts think will be a stronger-than-expected quarter after today's closing bell. In a note this morning, Salomon Smith Barney analyst Meirav Chovav said she expected the company's multiple sclerosis drug,

Avonex

, to show $150 million in sales in the quarter, above her previous estimate of $143.6 million. She also thinks the biotech concern could earn 34 cents a share, above her 32-cent estimate.

Cintas

(CTAS) - Get Report

closed flat at 66 7/8 after reporting fourth-quarter earnings of 39 cents a share, 1 cent above the 11-analyst forecast and 9 cents higher than the year-ago figure.

Computer Horizons

(CHRZ)

stumbled 1 1/4, or 9.6%, to 11 7/8 after last night saying it expects to report second-quarter earnings of 23 cents to 25 cents a share, which would be below both the six-analyst forecast of 31 cents and the year-ago 34 cents. The company blamed a greater-than-expected market slowdown.

Epicor Software

(EPIC)

shaved off 1 5/8, or 23.2%, to 5 3/8, matching an annual low, after last night saying it expects to post break-even results or a slight loss in the second quarter, citing continuing merger-related sales performance issues and a general slowdown in demand for resource planning software. The two-analyst view called for earnings of 12 cents a share vs. the year-ago 19 cents.

Gymboree

(GYMB)

collapsed 3 1/32, or 32.3%, to 6 3/8 after last night saying it expects to post a second-quarter loss of 20 cents to 25 cents a share and that quarterly revenue will be flat to 2% below year-ago figures. The 13-analyst prediction called for a loss of 2 cents vs. the year-ago loss of 3 cents. The company, which said its June same-store sales fell 33%, also said it will take a $13.5 million charge in the second quarter after revamping its brand and updating its stores.

Minntech

(MNTX) - Get Report

dwindled 2 1/8, or 15.3%, to 11 3/4 after last night saying it expects to post first-quarter earnings of 16 cents to 18 cents a share due to flat revenue. The three-analyst view called for 24 cents vs. the year-ago 21 cents. Today, PaineWebber dropped the stock to attractive from buy.

Safeway

(SWY)

skidded 7/8 to 52 1/8 after posting second-quarter earnings of 46 cents a share, topping the 17-analyst estimate by 2 cents and beating the year-ago 38 cents.

Wolverine

(WWW) - Get Report

gave up 11/16 to 13 3/16 after reporting second-quarter earnings of 16 cents a share, a penny above the seven-analyst prediction but behind the year-ago 21 cents.

Yahoo! shed 2 11/16 to 164 7/16 after last night reporting second-quarter earnings of 11 cents a share, topping the 21-analyst estimate by 3 cents and moving ahead of the year-ago 1 cent. Today,

Credit Suisse First Boston

raised its 1999 earnings view to 41 cents a share from 38 cents and its 2000 view to 67 cents from 58 cents.

Offerings and stock actions

Interliant

(INIT)

soared 6 13/16, or 68.1%, to 16 13/16 after Merrill Lynch yesterday priced its 7 million-share IPO midrange at $10. The company is a Web site management company.

Analyst actions

Maker Communications

(MAKR)

sank 8 5/8, or 16.8%, to 43 1/2 after suffering downgrades from Lehman Brothers, Salomon Smith Barney and

Needham

.

Uno Restaurant

(UNO)

vaulted 15/16, or 9.9%, to an annual high of 10 7/16 after BancBoston Robertson Stephens initiated coverage with a buy.

Veeco Instruments

(VECO) - Get Report

lost 3 7/16 to 30 1/4 after Merrill Lynch slashed it to accumulate from buy, citing problems in the disk drive business. The firm also decreased its earnings forecast for full-year 1999 to $1.40 a share from $1.55.

Miscellany

Tobacco names got smoked following yesterday's Florida court ruling. The

American Stock Exchange Tobacco Index

fell 2.6%. In the first class-action lawsuit brought by smokers ever to go to trial, a jury found that cigarette makers are liable for making a product that causes emphysema, lung cancer and other illnesses.

eBay

(EBAY) - Get Report

declined 4 3/16 to 134 3/16 after

The Wall Street Journal's

Heard on the Street column reported that some large hedge funds are making big bets against the online auctioneer, saying the company's coming quarter will be a letdown and that the second half of the year could bring even more disappointments.

Elan

(ELN)

excelled 7/8 to 29 3/8 after confirming it's conducting pre-clinical trials on an experimental therapy that could lead to a vaccine for Alzheimer's disease.

Human Genome Sciences

(HGSI)

surged 15 11/16, or 38.7%, to an all-time high of 55 1/2 after saying it identified an immune stimulant -- B Lymphocyte Stimulator, or BLyS -- that could help treat infectious diseases.

Mylan Laboratories

(MYL) - Get Report

skidded 1 5/8, or 5.4%, to 28 5/8 after a federal judge last night denied its motion to dismiss charges, saying Mylan violated antitrust laws by raising prices up to 3,200%. But the judge did dismiss some state charges.