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Nasdaq Stampedes to Another Record: That Makes it 22 for 30

Dow and DOT also surge higher in very heavy trading.

Like

Hannah Arendt's

controversial analysis of evil, tech stock investors are now dealing with the banality of higher prices. The

Nasdaq Composite Index's

latest record-setting rise -- the average's 22nd in the past 30 trading days -- elicited little celebration today, save for a burst of excitement in the afternoon.

In a modified repeat of

yesterday's riotous session, major proxies surrendered big early gains before recovering. The Comp spent much of the afternoon session lagging its blue-chip counterparts, which closed with solid gains, albeit off their intraday highs.

Today's midmorning swoon came after the

New York Stock Exchange

and

National Association of Securities Dealers

submitted a proposal to the

Securities & Exchange Commission

recommending a dramatic increase in margin requirements for day traders. But strength in financials plus continued pure, unadulterated demand for certain tech stocks left stock proxies upright at the close.

"There's definitely some interest in other stuff

but the Nasdaq continues its upward climb," said Doug Myers, vice president of equity trading at

IJL Wachovia

in Atlanta. "There's a lot of money flowing into tech, especially these wild Linux types and Internet infrastructure companies. It does not seem to be waning."

Save some "external event that pops the bubble," Myers foresees continued higher prices. "I think barring any type of bent tracks, we're going to keep chugging along."

Banking stock followed the bond market higher; the 30-year Treasury rose 22/32 to 99 13/32, its yield declining to 6.17% after the

Producer Price Index

provided further evidence inflation remains subdued. (For more, see today's

Bond Focus .)

Gains by financial components such as

American Express

(AXP) - Get Report

and

J.P. Morgan

(JPM) - Get Report

, as well as

General Electric

(GE) - Get Report

paced the

Dow Jones Industrial Average

, which closed up 89.91, or 0.8%, to 11,224.70 after trading some 50 points higher around 3:30 p.m. EST.

The

S&P 500

rose 8.93, or 0.6%, to 1417.04. The index was similarly boosted by its financial components, as well as strength in recently sluggish groups. The

Philadelphia Stock Exchange/KBW Bank Index

and

American Stock Exchange Broker/Dealer Index

each gained about 2%. Additionally, the

S&P Retail Index

rose 2.2% while the

American Stock Exchange Pharmaceutical Index

gained 0.7% and the

Morgan Stanley Cyclical Index

rose 0.9%.

Blue-chip averages were restrained by energy stocks such as

Exxon Mobil

(XOM) - Get Report

, down 3.9% as crude prices fell 3.3% to $25.50 a barrel. The

American Stock Exchange Oil & Gas Index

shed 2.1%.

The tech-fettered Comp rose as high as 3636.65 early on, then slid as low as 3560.91 when word of the margin requirement proposal emerged.

But gains from bellwethers such as

Sun Microsystems

(SUNW) - Get Report

,

MCI WorldCom

(WCOM)

,

Cisco

(CSCO) - Get Report

and

Yahoo!

(YHOO)

-- plus a slew of smaller tech names -- supported the index, which closed up 26.11, or 0.7%, to 3620.28.

TheStreet.com Internet Sector

index also set another record, up 22.88, or 2.1%, to 1129.50. However,

TheStreet.com

Red Hots index fell 3.25 to 366.08. The 20-stock index tracks action in particularly volatile stocks and is meant to measure so-called hot money.

Big movers again included smaller stocks connected to the Linux operating system.

Bitwise Designs

(BTWS)

up 37.8%. Conversely,

Perle Systems

(PERL)

slid 14.1% to 20 1/8 after trading as high as 31 5/8.

Among new issues,

FreeMarkets

(FMKT)

gained 482%.

But it wasn't a smooth ride for all of tech.

IBM

(IBM) - Get Report

was the Dow's biggest negative influence, falling 3.9% as investors reassessed their recent enthusiasm.

"We think the stock has gotten ahead of itself given negative earnings momentum in the next two quarters,"

Merrill Lynch

analyst Steve Milunovich wrote in a report today. "We are neutral on the shares intermediate term."

Semiconductor and equipment stocks such as

Intel

(INTC) - Get Report

,

Micron

(MU) - Get Report

,

National Semiconductor

(NSM)

and

Applied Materials

(AMAT) - Get Report

were also notable losers. The

Philadelphia Stock Exchange Semiconductor Index

fell 1.4%.

Adtitionally,

Dell

(DELL) - Get Report

slid 2.9% after

BancBoston Robertson Stephens

analyst Dan Niles reportedly reiterated some concerns. Meanwhile, recent high-flyers suffered some retrenchment, including

Corel

(CORL)

, down 22.5%.

The Russell 2000 rose 1.83, or 0.4%, to 466.73 as market breadth improved as the session progressed.

In NYSE trading, 987 million shares were exchanged while advancers led declining stocks 1,550 to 1,492. In

Nasdaq Stock Market

action 1.55 billion shares traded -- the fourth-busiest session in history -- while gainers led 2,142 to 2,014. New 52-week lows outpaced new highs 316 to 83 on the Big Board while new highs led 228 to 138 in over-the-counter trading.

Out with the New

Although few say tech stock momentum is waning, some market players are turning their attention elsewhere.

Stocks without "four letters or 'Dot something' are absolutely ignored right now," said Sam Ginzburg, managing director of equity trading at

Gruntal

. "Because of all that volatility

in tech stocks it's taking away from meat and potatoes-type investing. We're tired of 'em. It's a huge pyramid scheme."

Ginzburg declined to name names but said "there are so many good, quality companies that are so cheap to buy right now, it's unbelievable.''

Because many investors have such outsized gains in tech stocks this year, however, the trader expects tax-loss selling in more traditional issues to continue through year-end.

But "talking to major portfolio managers they say it's a buyer's market," he said. "If we keep the long bond down and get another goon round of earnings, we're going to have a nice little January effect."

Among other indices,

Dow Jones Transportation Average

rose 50.16, or 1.8%, to 2874.94; the

Dow Jones Utility Average

slid 1.26, or 0.5%, to a 52-week low of 273.18; and the

American Stock Exchange Composite Index

fell 1.44, or 0.2%, to 827.86.

For the week, the Dow slid 0.5%, the S&P fell 1.1%, the Nasdaq rose 2.8%, the Russell added 0.5%, the DOT jumped 9.8%, the Dow transports shed up 1.8%, the Dow utilities lost 3.5% and the Amex Composite fell 0.9%.

Elsewhere in North American equities, the

Toronto Stock Exchange 300

gained 112.64, or 1,4%, to 7933.7 and the

Mexican Stock Exchange IPC Index

rose 61.69 to 6780.02.

Friday'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

BellSouth

(BLS)

was unchanged at 47 1/4 after saying it will join forces with Dutch

KPN Telecom

(KPN)

and buy a 100% stake in German mobile phone operator

E-Plus

. KPN jumped 8 3/4, or 12.7%, to 77 5/8. The deal struck between BellSouth and KPN frustrates a $9.3 billion bid by

France Telecom

for E-Plus. BellSouth, which already owns a 22.5% stake in E-Plus, said it is taking a $9.4 billion loan from KPN to buy shares in E-Plus owned by

Vodafone AirTouch

(VOD) - Get Report

and

VEBA

. Shares of Vodafone dropped 1 3/8 to 49 3/8.

Corning

(GLW) - Get Report

climbed 1 1/4 to 117 and

Oak Industries

(OAK) - Get Report

popped 3 1/4 to 95 3/4 after the companies said the

Federal Trade Commission

had granted early termination of the waiting period for their merger. The $1.8 billion deal, announced last month, still needs approval from the

Securities and Exchange Commission

.

Gannett

(GCI) - Get Report

, owner of

USA Today

, fell 1 3/16 to 78 after it approached British publisher

News Communications & Media

about making a cash offer for the group. Newscom is currently valued at about $284 million. Today, Newscom rejected Gannett's approach, saying it was too low.

Japan's

Fuji Heavy Industries

said

General Motors

(GM) - Get Report

is buying a 20% stake in Fuji for approximately $1.4 billion. Shares of GM fell 11/16 to 72. Fuji Heavy makes Subaru brand cars.

Hollywood Park

(HPK)

slipped 1/8 after saying it will sell two properties to

Penn National

(PENN) - Get Report

for $195 million in cash. Penn gained 9/16, or 7%, to 8 3/4.

Monsanto's

(MTC) - Get Report

gained 1 9/16 to 43 13/16 after

The Wall Street Journal

reported its board is expected to formally discuss today ways of splitting its

Searle

pharmaceutical business from its agricultural business, which is struggling.

National Westminster Bank

(NW)

added 1 to 128 after saying it cancelled a $1.62 billion tender offer that it planned in November to block

Bank of Scotland's

hostile offer. NatWest said that it axed the tender offer, which was set for Dec. 20 to Jan. 14, after

Royal Bank of Scotland

emerged as rival bidder for NatWest just two days after the offer was announced. NatWest said it would set new plans to "return capital to shareholders" in the future.

Nortel Networks

(NT)

popped 5 3/4, or 7%, to 88 1/4. said it has agreed to a three-year, $600 million wireless network supply deal with

AT&T

(T) - Get Report

AT&T slipped 13/16 to 57.

TST Recommends

Reliant Energy

(REI) - Get Report

rose 7/16 to 23 7/16 after it said it retained an unnamed investment bank to help it sell, or otherwise explore, alternatives for its Latin American investments as part of a change in strategy. The company has decided to focus on a strategy toward developing asset-backed trading and marketing in Europe.

Earnings/revenue reports and previews

Alexander & Baldwin

(ALEX) - Get Report

inched up 5/16 to 22 1/8 after it said it would write down about $12 million of its investment in

Kauai Coffee

in the fourth quarter. The company also said it increased its stock repurchase plan by 1 million shares.

Best Buy

(BBY) - Get Report

jumped 4 3/16 after it said that its new warranty accounting will slice third-quarter earnings by a penny.

Ciena

(CIEN) - Get Report

flew 10 3/16, or 16.6%, to 71 7/8 after it posted fourth-quarter earnings of 3 cents a share, a penny ahead of the 17-analyst estimate and up from the year-earlier loss of 5 cents a share, which excluded merger-related charges.

Hussman

(HSM)

lost 3 1/2, or 19.2%, to 14 3/4 after it warned its fourth-quarter results will not be as strong as expected. The company said it still sees record results for 1999, with earnings-per-share up 5% to 7%.

Panamerican Beverages

(PB) - Get Report

rose 1 1/2, or 8.2%, to 19 13/16 after it said it expects to take a fourth-quarter charge of $21.7 million.

Ryder Systems

(R) - Get Report

gained 1 5/16, or 5.9%, to 23 5/8 after it said it would assume a fourth-quarter charge between 42 to 47 cents a share, as a result of a restructuring announcement in November.

Sonoco

(SON) - Get Report

slipped 9/16 to 21 5/8 despite saying it expects to meet fourth-quarter estimates. The current nine-analyst estimate is for 49 cents a share.

Sunoco

(SUN) - Get Report

fell 13/16 to 23 9/16 after it said its fiscal 2000 spending budget is set for $444 million, topping the $423 million for 1999. The company said the budget contains $235 million for base infrastructure spending and $91 million for plant turnarounds. In addition, $118 million would be allocated to growth programs.

Analyst actions

Credit Suisse First Boston

upgraded

Apache

(APA) - Get Report

to strong buy from buy. Apache fell 1/4 to 32.

Salomon Smith Barney

sliced its rating on

AXA Financial

(AXF)

to outperform from buy. AXA fell 1 1/8 to 35.

First Boston late yesterday upgraded

Baker Hughes

(BHI)

to strong buy from buy. Shares fell 5/16 to 18 15/16.

SG Cowen

initiated coverage of

Adaptive Broadband

(ADAP) - Get Report

with a strong buy rating and a price target of 80. Shares popped 12 1/8, or 22.8%, to 65 1/4.

Merrill Lynch

upgraded

Caterpillar

(CAT) - Get Report

to intermediate-term accumulate from intermediate-term neutral. Caterpillar gained 7/8 to 46 11/16.

First Boston started coverage of

Centennial Healthcare

(CTEN)

with a hold rating. Shares of Centennial were unchanged at 2 15/16.

PaineWebber

said the banking industry looks oversold, adding that only selected names are rated a buy. The brokerage firm advised investors to add to positions of selected bank stocks when valuations reflect excessive fear, as they currently do. Names to focus on include

Bank of New York

(BK) - Get Report

;

Chase Manhattan

(CMB)

;

First Tennessee National

(FTN)

and

Wells Fargo

(WFC) - Get Report

. Shares of Bank of New York added 3 15/16, or 10.4%, to 41 1/2, while Chase Manhattan popped 11/16 to 78 9/16. First Tennessee climbed 5/16 to 29 1/8 and Wells Fargo gained 1/8 to 44 7/8.

Deutsche Banc Alex. Brown

upgraded

Harcourt General

(H) - Get Report

to strong buy from buy. Harcourt General edged up 3 3/4, or 10.3%, to 40.

Merrill Lynch reiterated a near-term neutral, long-term buy rating on

IBM

(IBM) - Get Report

. Shares of IBM slid 4 7/16 to 109.

Warburg Dillon Read

raised its target on

National Semiconductor

(NSM)

to 68 from 58 , while PaineWebber increased its price target to 70. Merrill reiterated a near- and long-term neutral rating, while SG Cowen upped it to a buy. Robertson Stephens reiterated a buy rating and upped its earnings estimates. Shares of National Semiconductor retreated 3, or 5.8%, to 48.

First Boston analyst James Parmelee raised his price target on

Nortel Networks

(NT)

to 100 from 80. Shares of Nortel climbed 5 3/4, or 6.9%, to 88 1/4.

ING Barings

initiated coverage of

OneMain.com

(ONEM) - Get Report

with a strong buy rating and a price target of 25. Shares of OneMain.com advanced 7/8, or 5.1%, to 17 11/16.

Merrill Lynch

upped its intermediate-term rating on

Piedmont General

(PNY)

to accumulate from neutral. Shares of Piedmont General fell 9/16 to 29 7/8.

Robertson Stephens analyst Sue Billat said she raised her 2000 earnings estimates on

Photronics

(PLAB) - Get Report

to $1.02 from $1.00 a share. Photronics dwindled 13/16 to 24.

PaineWebber initiated coverage of

Proxicom

(PXCM)

with an attractive rating and a price target between 95 to 100. Shares of Proxicom climbed 3 to 89 5/8.

Donaldson Lufkin & Jenrette

upped its rating on

Ticketmaster Online-City Search

(TMCS)

to buy from market performer. Shares of Ticketmaster Online-City Search mounted 4 1/16, or 10.2%, to 43 5/8.

Banc of America

initiated coverage of

Triad Hospitals Holdings

(TRIH)

with a buy rating and a price target of 17. The stock is a spin-off of

Columbia/HCA Healthcare

(COL)

Shares of Triad Hospital Holdings bounced 3/16 to 14..

Lehman Brothers

resumed coverage of

Tyco

(TYC)

as a buy. Warburg Dillon Read maintained a strong buy rating and a price target of 60. Shares of Tyco added 2 1/8, or 7.5%, to 30 3/8.

Goldman Sachs

started coverage

Unitrin

(UNIT) - Get Report

with a market performer rating. Shares of Unitrin were unchanged at 38 3/16.

Lehman upped its rating on

USX Steel

(X) - Get Report

,

and

National Steel

(NS) - Get Report

to buy from outperform. Shares of USX Steel hopped 1 1/4 to 29 1/2, while National Steel gained 11/16, or 11.1%, to 6 7/8.

Merrill increased its rating on shares of

Vitesse Semiconductor

(VTSS)

to near-term buy from accumulate. Vitesse Semiconductor advanced 2 1/2, or 5.3%, to 49 1/16.

Lehman increased

WHX

(WHX)

to outperform from neutral. WHX shares climbed 5/16 to 9 1/16.

SG Cowen said it initiated coverage of

Xircom

(XIRC)

with a buy rating. Xircom shares climbed 5 1/2, or 10.3%, to 58 1/2.

Offering and stock actions

Allegheny Technologies

(ATI) - Get Report

rose 1/16 to 22 3/4 after it said it approved a 10 million-share increase for its buyback plan.

Aztar

(AZR)

stumbled 1/16 to 10 1/2 after it said it added 4.5 million shares, or about 10% of its common stock, to its current 3.5 million-share repurchasing program.

Goldman Sachs

and

Morgan Stanley Dean Witter

priced a 3.6 million-share IPO for

FreeMarkets

(FMKT)

, a business-to-business online auctioneer, at an above-range price of $48 per share. The anticipated range for the offering had been $40-$42. Initially, this IPO was slated to come in the $14-$16 range.

Bear Stearns

whipped out coverage of FreeMarkets with a buy rating and set a 12-month price target of 300. Shares of FreeMarkets soared 231 1/4, or 481.7%, to 280.

Columnist

Ben Holmes

weighed in on

the offering earlier this week. (See table below for latest stock price results)

Globix

(GBIX)

climbed 7 13/16, or 13.2%, to 67 1/8 after it said its board approved a 2-for-1 stock split.

Leap Wireless

(LWIN)

plans an offering of 3 million common shares in the first quarter. Shares of Leap Wireless edged up 7/8 to 56.

Wabash National

(WNC) - Get Report

said it set a $40 million share repurchasing plan. Shares of Wabash lifted 3/16 to 14 1/4.

Miscellany

The "Heard on the Street" column in the

Journal

took a look at

Pixar Animation Studios'

(PIXR)

and its stock price's inability to cash in on the success of

Toy Story 2

. Shares have fallen more than 25% since the film's release before Thanksgiving, while marketing and distribution partner

Disney's

(DIS) - Get Report

share price seems to be enjoying a boost. Shares of Pixar climbed 5/16 to 38 7/8, while shares of Disney popped 3/8 to 28.

In the Inside Wall Street column in

Business Week

this week, penned by Gene Marcial,

Adelphia Communications

(ADLAC)

is mentioned as a takeover target. James Boyle of

First Union Securities

said, with its undervalued assets and great management, the company is attractive, the column reported. Shares of Adelphia added 5/8 to 61 11/16.

Elsewhere, the column offers a bullish look at

Radware

(RDWR) - Get Report

, a developer of Internet traffic management systems, and

Gentner Communications

(GTNR)

. Shares of Radware tacked on 3/8 to 50 3/4, while Gentner Communications hopped 2 5/16, or 17.7%, to 15 1/2.

As originally published this story contained an error. Please see

Corrections and Clarifications.