SAN FRANCISCO -- In what's become an almost
-esque occurrence, the
Nasdaq Composite Index
scored yet another record today. Adding to the surreal nature of trading, the Comp fell from its session highs while
Dow Jones Industrial Average
closed well off potential record-setting levels following a pronounced slide in the final hour of trading.
Still, major averages mostly closed higher amid startlingly heavy trading volume; the Big Board experienced its highest volume ever plus a fourth-consecutive session of more than a billion shares traded for the first time.
Although many traders were swamped amid the avalanche of volume -- and thus unable to comment at length -- everybody's favorite
Allen Iverson (a.k.a. "The Answer") to the "why stocks faded" question was the expiration of index futures and options and stock options.
Many arbitragers "bought cash and sold combos" during the day, said Monte Hord, vice president of program trading at
, referring to synthetic futures in the
S&P 100 Index
. When the combos "rolled off" at the close, the arbs had to sell the cash to maintain they're hedged position, thus putting "downward pressure" on the market.
In addition, "a lot of the shorts were already rolled into next month" and thus weren't there to take the other side of the arbs' trades, Hord said.
According to two market makers in options, heavy buying into the futures market late on Friday forced investors to redeem some of their stock holdings and raise cash for their purchases. "That's what made the Dow jack around towards the end of the day," said one
American Stock Exchange
-based options trader.
Meanwhile, Bob Basel, director of listed trading at
Salomon Smith Barney
said the late-day slide "had more to do with the rebalancing" of the
after the close than with triple-witching.
For professionals, the action at the close overshadowed the final prices for major averages.
Still, the Nasdaq Comp rose 38.00, or 1%, to 3753.06 after trading as high as 3796.80, setting its 54th record of the year and 25th in the past 35 trading days (a 71.4% rate).
Gains by bellwethers such as
fueled the Comp; the Nasdaq 100 rose 0.8% to an all-time closing high of 3360.08 vs. its session best of 3434.22.
rose 5.8% after posting better-than-expected earnings
last night .
Also, chip and chip-equipment makers, such as
, continued to recover from their recent mini-slump. The
Philadelphia Stock Exchange Semiconductor Index
The Dow, meanwhile, closed up 12.54, or 0.1% to 11,257.43, leaving it well shy of its intraday high of 11,383.74 and its
Aug. 25 record close of 11,326.04.
was the Dow's biggest positive, rising 3% after
announcing a 3-for-1 stock split, a 17% increase to its quarterly dividend, and an increase to its existing stock buyback program.
The Dow was restrained by weakness in consumer-focused components such as
Procter & Gamble
Morgan Stanley Consumer Index
The S&P 500 rose 2.27, or 0.2%, to 1421.05 after trading as high as 1431.77 while the
gained 0.96, or 0.2%, to 466.22 vs. its session best of 469.21.
TheStreet.com Internet Sector
index fell 10.54, or 0.9%, to 1113.09 after trading as high as 1163.77. Additionally,
Red Hots index rose 5.97, or 1.7%, to 359.22. 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
Play the Game
The "dramatic" increase in volume and moves such as
26.5% rise thus far in December suggest many market players have the mindset that "we need to pad performance" and "everyone knows the market is going up at the end of the year," said Brian Belski, chief investment strategist at
George K. Baum
in Kansas City, Mo. "That's the game we're playing."
The strategist called the market "goofy" in a research report today but acknowledged in a phone interview that "the opportunity cost of missing these
tech stocks is high and remains high." Tech stocks are "going to continue to go" higher but "other groups and sectors" are beginning to generate interest, he said. "That's encouraging."
Indeed, the Dow also got a boost from cyclicals such as
as well as
, as most financials overcame early weakness.
down as low as 122 1/4 amid rumors of a profit shortfall, rebounded to close off fractionally at 128 1/8.
New York Stock Exchange
trading, 1.35 billion shares were exchanged -- the busiest NYSE session in history -- while advancers led declining stocks 1,674 to 1,409. In
Nasdaq Stock Market
action 1.573 billion shares traded while losers led 2,149 to 2,000. New 52-week lows swamped new highs 289 to 66 on the Big Board while new highs led 195 to 118 in over-the-counter trading.
The advance was not all-encompassing, however. Drugmakers continued to face selling despite reports of merger talks between
, which rose 3.4%, and
Pharmacia & Upjohn
, which lost 5.6%. The
American Stock Exchange Pharmaceutical Index
Also, electronics retailers suffered after
, down 19.7%,
reported disappointing same-store sales for the first half of December. In sympathy,
slid 6.8% while
Circuit City Stores
shed 2.2%. The
S&P Retail Index
"We're see an exaggeration of a pounding of the negative and an advancing of the positives," said Jack Ablin, managing director at
Colonial Asset Management
in Jacksonville, Fla. who attributed the trend largely to tax considerations. "If I'm a taxable investor, I'd rather sell my losers before year-end and hold my gains until after."
The price of the 30-year Treasury bond rose 4/32 to 96 19/32, its yield dipping to 6.38%.
Among other indices,
Dow Jones Transportation Average
slid 3.09 to 2918.42; the
Dow Jones Utility Average
added 3.75, or 1.4%, to 274.27; and the
American Stock Exchange Composite Index
lost 4.06, or 0.5%, to 829.80.
For the week, the Dow rose 0.3%, the S&P gained 0.3%, the Nasdaq rose 3.7%, the Russell dipped 0.1%, the DOT gained 1.5%, the Red Hots soared 12.1%, the Dow transports rose 1.5%, the Dow utilities added 0.4% and the Amex Composite rose 0.2%.
Elsewhere in North American equities, the
Toronto Stock Exchange 300
gained 51.03, or 0.6%, to a record 8098.20 and the
Mexican Stock Exchange IPC Index
gained 100.32, or 1.5%, to 6959.35. For the week, the TSE was up 1.8%, while the IPC gained 2.6%.
Friday's Company Report
Earnings estimates from First Call/Thomson Financial; earnings reported on a diluted basis unless otherwise specified. New highs and lows on a closing basis unless otherwise specified.
was having a party after
Deutsche Banc Alex. Brown
upped its rating to strong buy from buy. The stock popped 18 5/8, or 7.9%, to 156 1/8.
Mergers, acquisitions and joint ventures
lost 2 3/16, or 5.5%, to 37 5/16 and
fell 1 1/16 to 32 7/16 after the companies said they called off their $7.3 billion merger because they were unable to resolve
Federal Trade Commission
concerns. Alza said it will take a fourth-quarter cancellation charge between $10 million and $15 million and now expects to report earnings in the range of 26 cents to 29 cents a share, well below the current seven-analyst estimate of 45 cents.
upped its rating on Alza to a long-term outperform from a market perform.
joint newsroom covered the pre-wedding divorce in a
gained 3 3/8, or 12.4%, to 30 9/16 after saying it agreed to buy
in a stock deal valued at $64.8 million.
rose 1 3/4 to 49 3/4, while
slipped 3/4 to 47 1/8 after the companies said they formed a gas-gathering, marketing venture. Duke said the new company would offer about 20% of its stock in an IPO in the first half of 2000.
climbed 3/4, or 5.7%, to 14 1/4 after saying it entered a distribution pact with
Shares of NBCI rose 1/2 to 70 7/8..
fell 1 1/2 to 126 1/2 after it voiced concerns over the Royal Bank of Scotland's takeover bid, saying it contains "seeds of substantial value destruction."
fell 3 3/8 to 111 1/2 after it agreed to buy
. SNB was unchanged at 5 7/16. Park National said it would issue 835,000 shares for the purchase.
Pharmacia & Upjohn dropped 3, or 5.6%, to 50 1/4 after
The Wall Street Journal
reported it is in merger talks with
. Pharmacia and Monsanto, which rose 1 3/8 to 41 3/4, are having serious talks about a merger of equals, the newspaper reported, citing people familiar with the matter. For more on the always-compelling drug wars, take a gander at the
story written by
lost 1/2 to 52 3/4 after it and
said their proposed merger would dilute earnings in the first two years. Charles Burdick, who would serve as the finance director for the merged group, said during a conference call that EBITDA would be diluted by roughly 12% in the first year before it becomes accretive in the third.
Earnings/revenue reports and previews
Adobe added 3 11/16, or 5.8%, to 67 1/2 after it posted fourth-quarter earnings of 76 cents a share, crushing the 12-analyst estimate by 34 cents. Banc of America Securities upped Adobe's price target to 90. For more on Adobe's earnings,
joint newsroom has the complete
lost 15/16 to 41 5/8 after it posted third-quarter earnings of 26 cents a share, in line with the 17-analyst estimate and up from the year-ago 8 cents. Circuit City also said it tapped its president and COO, W. Alan McCollough, as its CEO.
popped 6 3/4, or 14.8%, to 52 7/16 after it posted second-quarter earnings of 38 cents a share, beating the 17-analyst estimate of 34 cents and the year-ago 28 cents, which excludes a restructuring charge. Nike said earnings rose more than 50% and that it achieved quarterly revenue growth for the first time in two years. The company said it saw revenue grow in every region, but that its sales increase was largely fueled by growth outside the U.S.
raised its medium-term rating on Nike to buy from accumulate,
rated the stock buy and set a 12-month price target of 66, and
upped the stock to a buy from long-term buy and set a price target of 60. For more on the sneaker behemoth's earnings, check out
additional coverage from
was unchanged at 42 1/2 despite warning it expects fourth-quarter earnings will fall "significantly below" the consensus estimate. The three-analyst estimate calls for the diversified forest-products company to earn 48 cents a share in the fourth quarter and $1.77 in fiscal 1999.
Sinclair Broadcast Group
lost 1 11/16, or 14%, to 10 3/8 after it revised its outlook for the fourth quarter based on reports of its advertising sales for the quarter to date. The company said it expects fourth-quarter cash flow of 91 million, or 38 cents a share.
Tandy shed 13, or 19.7%, to 53 after it said it is comfortable with earnings estimates for the fourth quarter following an earlier announcement that same-store sales are currently 8% to 10% below its goal this month. The company did say that it sees double-digit sales gains for the fourth quarter and the year. The current 17-analyst estimate calls for earnings of 62 cents a share. Brown Brothers Harriman cut its fourth-quarter estimate on Tandy to 60 cents from 63 cents a share, while Merrill Lynch downgraded shares of Tandy to an intermediate-term accumulate from a buy rating.
Offerings and stock actions
slipped 15/16 to 39 15/16 after it set a 2-for-1 stock split and said it tapped Richard Laporte as its next CEO.
dropped 9 11/16 to 211 13/16 after it said its CEO is considering the possibility of an IPO for its Atventures, venture arm.
climbed 3 9/16, or 12.8%, to 31 7/16 after it set a spinoff of its Internet divisions. The company is seeking the
Internal Revenue Service's
approval to distribute the unit's shares as a dividend.
General Electric jumped 4 3/8 to 152 after it set a 3-for-1 stock split, and increased its share buyback program by $5 billion to $22 billion.
Modis Professional Services
slipped 1/8 to 12 15/16 after it said it will split into two publicly traded companies reflecting its two business sectors, information technology and professional business services. The company also said its board authorized it to explore a possible IPO for its e-business unit, which is included in the IT division.
popped 8 9/16, or 18.9%, to 53 7/8 after it set a 2-for-1 stock split. The company posted fourth-quarter earnings of 60 cents a share, beating the three-analyst estimate of 55 cents and the year-ago 43 cents.
rose 11/16 to 18 11/16 after it said it set a share buyback of up to $25 million.
J.P. Morgan started coverage of
as a buy and set a price target of 60. Agilent lost 1 5/16 to 45 15/16.
Salomon Smith Barney raised its rating on
to buy from outperform. Broadcom's target was upped to 300 from 150, while PMC-Sierra's was upped to 200 from 110. Broadcom bounced up 4 1/16 to 225 5/16 and PMC-Sierra gained 4 1/2 to 121 5/16.
said it started coverage of
with an outperform rating and a price target of 44. Shares rose 1 5/8 to 38 3/8.
said it upped its price target on
to 100 and maintained its buy rating. Emmis jumped 6 3/16, or 6.9%, to 96 3/8.
Credit Suisse First Boston
analyst David Nelson upgraded
to buy from hold. Shares of General Mills edged up 15/16 to 33 11/16.
First Boston upped its fiscal 2000 estimates on
to $1.60 a share from $1.55 a share. Shares of Jabil slipped 2 5/16 to 69 3/16.
After making cautious statements regarding
fourth-quarter earnings outlook, Merrill Lynch banking analyst Judah Kraushaar changed his tune after speaking with the company and raised his fourth-quarter earnings estimate to $1.86 a share from $1.69 and his fiscal 1999 number to $9.60 a share from $9.45.
also raised its fourth-quarter estimate on the stock to $1.90 a share from $1.75. JPM slipped 3/4 to 128 1/8.
cut its rating on
to add from buy and cut its 12-month price target to 37 from 40. Shares of Marriott slid 1 5/8, or 5.1%, to 30.
Banc of America Securities
said it sliced its rating on
to a market performer from buy. Shares fell 1 5/16, or 5.1%, to 24 9/16.
said membership of its AOL service has surpassed 20 million. Shares of AOL dwindled 1 1/8 to 85.
plan to offer long-distance service in New York state could be awarded
Federal Communications Commission
approval as soon as next week, making it the first Baby Bell to enter the long-distance market, the
reported. Shares of Bell Atlantic gained 5/8 to 64 15/16.
Food and Drug Administration
has ended its restrictions on its European-made
product line. The company said that shipments would begin again in the first quarter of 2000. Gilatech popped 3 13/16, or 24.9%. to 19 3/16.
Modis Professional Services
said its board gave the company the go-ahead to create two publicly traded companies: information technology and professional services. The board also authorized management to continue to look at strategic alternatives, including an IPO, for the company's e-business unit, which is included in the information technology division. Shares of Modis Professional Services retreated 1/8 to 12 15/16.
fell 1/4 to 24 11/16 after it said it was awarded a $1.3 billion United Kingdom defense contract for a radar system.
This week's "Inside Wall Street" column in
, penned as usual by Gene Marcial, offers up a positive piece on
. The column cites money manager Geoffrey Nixon of
, which holds a 6% stake in Silverleaf. Nixon says the stock is worth 27 based on 15 times estimated earnings per share of $1.80 a share in 2000. Shares of Silverleaf Resorts bounced 1/16 to 6 9/16.
The column also offers up positive pieces on
. Shares of EarthWeb mounted 4 1/8, or 11.3%, to 41.
Erin Arvedlund contributed to this story.