There's something happening here. What it is ain't exactly clear. There's a man (from NATO) with a gun (and some B-52s) over there (in Kosovo), telling Milosevic he's got to beware. Better stop (too late!). What's that sound? Everybody look what's going down.

With paranoia striking deep, traders kept one eye on the Balkans and one ear out for corporate profit warnings today, leaving blue-chip stocks to sulk through a fairly directionless session. Conversely, tech measures gained momentum as the session waned.

Snapping back from

yesterday's nosedive, the

Nasdaq Composite Index

was the best performer of major proxies, overcoming profit warnings by






in the process.

The Nasdaq rose 42.44, or 1.8%, to 2365.28, led by familiar stalwarts


(DELL) - Get Report



(CSCO) - Get Report



(INTC) - Get Report



(MSFT) - Get Report

, and

MCI WorldCom




New York Stock Exchange



(IBM) - Get Report





Texas Instruments

(TXN) - Get Report


Micron Technology

(MU) - Get Report

all were solidly higher.


Nasdaq 100

rose 2.7%, the

Morgan Stanley High-Tech 35

gained 1.9% and the

Philadelphia Stock Exchange Semiconductor Index

was higher by 1.7%.

Still, Read-Rite lost 21.4% and Ericsson shed 6.9% after their respective profit warnings, while chip equipment makers


(KLAC) - Get Report


Applied Materials

(AMAT) - Get Report

were notably lower.

Internet plays recovered from early losses but Internet Sector

index still fell 2.70, or 0.5%, to 594.11 while E-Commerce Index

lost 0.60, or 0.6%, to 107.60.

Thanks largely to big-cap tech stocks and some airlines, the

S&P 500

rose 6.45, or 0.5%, to 1268.59 after trading as low as 1256.52. The

Russell 2000

gained 1.03, or 0.3%, to 384.40.


Dow Jones Industrial Average

was trading at its intraday low of 9625.21 around 2:15 p.m. EST after

President Clinton

announced the bombing of Serb strongholds. Less than an hour later, the Dow was trading at its apex of 9703.19. However, the index settled back in the final hour, finishing down 4.99, or 0.1%, to 9666.84.

'The S&P up 6 is not going to get me excited,' J.W. Genesis' Gary Kaltbaum said. 'Yes, the Nasdaq is up, but Microsoft, Intel, Cisco are higher and there's a bounce in Dell -- that's your whole Nasdaq. This is meaningless.'

IBM was the Dow's best performer, followed by


(T) - Get Report

. Dow decliners were led by

American Express

(AXP) - Get Report

, which fell 3.5%.

Financials stocks faltered in general, despite a favorable durable goods report and decent gains by the bond market. The price of the 30-year Treasury bond rose 9/32 to 95 27/32, its yield sliding to 5.54%.

The afternoon indecision reflected the conundrum facing traders, who found themselves doing geopolitical analysis.

"Right now people are saying Kosovo is a nonevent," said Sam Ginzburg, managing director of equity trading at


. "But there's an interesting buzz around the Street that Russia may want to get involved to help their economy. That's the wild card. The next couple of days are doing to be extremely interesting. It's best to stay nimble."

Indeed, Russian President

Boris Yeltsin

engaged in some saber-rattling in the wake of the NATO action, in stark contrast to his more recent bedpan-rattling and longstanding vodka-glass-rattling. The idea traders are even concerned about possible Russian intervention demonstrates their nervousness, Ginzburg conceded.

"Everybody is terrified which leads to volatility and that is going to get exacerbated with all the day traders involved," he said. "But it's a great stock picker's market. If you know the levels of stocks you're trading or investing in -- they're getting to levels that are terrific buys or shorts."

The trader declined to specify, saying only "people that are astute can make money" in large-cap stocks.

Evoking 1929 and Waiting for the Other Shoe

"As far as the market today, the S&P up 6 is not going to get me excited," said Gary Kaltbaum, chief technical analyst at

J.W. Genesis Securities

in Boca Raton, Fla. "Yes, the Nasdaq is up, but Microsoft, Intel, Cisco are higher and there's a bounce in Dell -- that's your whole Nasdaq. This is meaningless."

Kaltbaum believes yesterday's performance was a "shot across the bow," adding, "Whatever happens next to cause the market to drop could be the one that says 'you're done.'"

As a technician, Kaltbaum is neither bullish nor bearish by nature. But the divergence in the performance of the average stock vs. "big-cap, big-name stocks" has him convinced there's trouble ahead. Market internals improved from yesterday, but he again found them unconvincing.

In NYSE trading, 765.9 million shares traded while advancers edged declining stocks 1,510 to 1,434. In

Nasdaq Stock Market

activity 860.2 million shares were exchanged while losers led 2,074 to 1,853. New 52-week lows swamped new highs 109 to 13 on the Big Board and by 123 to 23 in over-the-counter trading.

"The last time you had a new yearly low on the advance/decline and a new high in the Dow at the same time was 1929," Kaltbaum said. "That doesn't mean the end of the world, but if the broader market doesn't pick itself up, eventually it's going to give. This market is going to have a rough time going to 11,500," he added, making a veiled reference to the most famous technician of all --

Ralph Acampora.

"That doesn't mean we're dropping like a rock," Kaltbaum continued. "I see a lot of congestion from 9600 to 9100.

Also, you've got EMC, Microsoft, Cisco doing well and

Procter & Gamble

(PG) - Get Report

breaking to new highs. These are not unsubstantial companies."

Among other indices, the

Dow Jones Transportation Average

rose 11.54, or 0.4%, to 3206.65; the

Dow Jones Utility Average

gained 5.10 , or 1.7%, to 305.05; and the

American Stock Exchange Composite Index

lost 0.28, or 0.04%, to 703.60.

Elsewhere in North American equities, the

Toronto Stock Exchange 300

rose 45.08, or 0.7%, to 6527.31 and the

Mexican Stock Exchange IPC Index

leapt 187.42, or 4.1%, to 4819.49.

Wednesday'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.


Ericsson slid 1 9/16, or 6.9%, to 21 1/16 after saying earnings for the first half of 1999 will be under pressure, essentially repeating comments made Dec. 10.

Morgan Stanley Dean Witter

lowered its recommendation to underperform from an already tepid neutral.

Meanwhile, several tech bellwethers recovered quite well from yesterday's firestorm, some having already been flogged from earlier earnings worries. Dell rose 2 3/4, or 7.7%, to 38 1/2; Cisco rose 4 1/8 to 104 7/16; Texas Instruments rose 3 7/16 to 94 11/16; and Micron Technology rose 1 3/8 to 52.

Mergers, acquisitions and joint ventures

Chancellor Media


added 1 1/8 to 41 15/16 after setting the terms of its planned merger with

Capstar Broadcasting


. Chancellor agreed to exchange 0.5 of a share for each share of Capstar, which hopped up 1, or 5.3%, to 20 after

BT Alex. Brown

reinitiated coverage with a strong buy.

Corporate data storage equipment supplier EMC flew 5 to 118 7/8 after setting a $3 billion five-year strategic alliance with IBM. IBM tacked on 4 1/8 to 169 1/2.


(KNL) - Get Report

shot up 9, or 59%, to 24 1/4 on word its board received a proposal from

Warburg Pincus Ventures

and Knoll management, which together currently own 60% of Knoll's outstanding shares, to acquire the rest of the shares they don't own for $25 a share.

MTS Systems

(MTSC) - Get Report

shed 1/4 to 10 1/8 while

DSP Technology


soared 1 1/8, or 20%, to 6 15/16 after the firms agreed to merger in a stock swap. MTS Systems will exchange 2.08 million shares of stock for all the outstanding shares of DPS Technology and net share equivalents of DPS stock options.


(REV) - Get Report

climbed 5 3/16, or 30.4%, to 22 1/4 amid rumors the cosmetic giant is in merger talks, perhaps with


(UN) - Get Report

. Unilever added 3/16 to 69 3/16.



leapt 1 1/2, or 5%, to 31 11/16 after

Bell Canada

agreed to take a 21% stake in the international telecom service provide. The agreement is part of a larger deal in which


(AIT) - Get Report

agreed to buy a 20% stake in Bell Canada's parent,


(BCE) - Get Report

for about C$5.1 billion. AIT rose 1 3/8 to 62 7/16; BCE rose 3/8 to 45.

Earnings/revenue reports and previews



sloughed off 1 3/4 to 41 a day after its first-quarter profit warning.



skidded 1/8 to 16 1/8 after saying it will record a second-quarter charge of 60 cents a share related to the planned sale of low-margin businesses, including its mainframe residual leasing and medical refurbishing business.


(CTV) - Get Report

jumped 1 5/8, or 8.9%, to 19 7/8 after saying last night it sees first-quarter earnings of 19 cents to 22 cents a share -- above the six-analyst view of 16 cents. The company, which earned 13 cents in the year-ago period, cited a strong domestic coaxial cable market.

Donna Karan

(DK) - Get Report

excelled 1/4 to 7 1/4 after posting a fourth-quarter loss of 15 cents a share, well ahead of the 29-cent shortfall expected in the four-analyst consensus. A year-ago, the retailer lost $3.17 a share.



stumbled 1 7/16, or 19.7%, to 5 7/8 after posting a second-quarter loss of 33 cents a share, 18 cents wider than the five-analyst view and deeper than the year-ago loss of 20 cents.

H.B. Fuller


surged 7 3/8, or 15.6%, to 55 7/8 after it announced first-quarter earnings of 67 cents a share, 14 cents higher than the six-analyst view and above the year-ago 43 cents.



vaulted 1 5/8, or 13.8%, to 13 3/8 after recording fourth-quarter earnings of 40 cents a share, topping the three-analyst estimate by 7 cents and moving ahead of the year-ago 32 cents.

International Flavors & Fragrances

(IFF) - Get Report

picked up 1 5/8 to 37 1/2 even after saying it sees first-quarter earnings of 46 cents a share compared to the year-ago 58 cents. The four-analyst forecast called for 55 cents. The company blamed economic troubles in Brazil for the expected shortfall.

National Data


expanded 3 5/8, or 9.8%, to 40 1/2 after last night matching third-quarter expectations for earnings of 52 cents a share.

National Service Industries


advanced 2 1/16, or 6.6%, to 33 1/8 after posting second-quarter earnings of 60 cents a share, a nickel ahead of the three-analyst view and above the year-ago 54 cents.

Read-Rite tanked 1 21/32, or 21.4%, to 6 1/8 after saying

last night it expects to post a second-quarter loss due to lower sales. The six-analyst estimate called for a profit of 7 cents a share compared with the year-ago loss of $1.29. Rival



dropped 13/32, or 7.3%, to 5 1/8 in sympathy.



collapsed 4 1/4, or 42%, to 5 15/16 after warning it expects a fiscal third-quarter loss of between 75 and 95 cents a share. The three-analyst estimate is currently for a profit of 10 cents a share vs. 24 cents a year prior.

Offerings and stock actions

DSP Group

(DSPG) - Get Report

revved up 3/4, or 5.2%, to 15 1/4 after announcing plans to repurchase up to 1 million shares.


, which provides Internet news and information, rocketed 22 1/8, or 88.5%, to 47 1/2 in its IPO. Last night,

Bear Stearns

priced the 3 million-share offering top-range at $25 a share.

Analyst actions

America Online


declined 3 7/8 to 117 1/8 after being downgraded to neutral from buy at

Brown Brothers Harriman

. Meanwhile, AOL said it will cut 700 to 1,000 jobs and that


President and CEO James Barksdale will give up day-to-day operation of the browser concern, which AOL recently acquired. Barksdale will join AOL's board.

reported last week that the postmerger AOL would lay off workers.



flourished 2 1/8, or 9%, to 25 7/8 after

SoundView Technology

lifted it to strong buy from buy and increased its price target for the stock to 40 from 34 a share.



lowered 1 3/16 to 40 5/8 after the company announced a second round of production cuts. Morgan Stanley Dean Witter lowered its first-quarter earnings estimate to 13 cents a share from 29 cents. The firm also cut its full-year view, to 53 cents from $1.20.

Burlington Industries


popped up 7/8, or 14.3%, to 7 after Morgan Stanley Dean Witter upped its recommendation to outperform from neutral.

Burlington Resources

(BR) - Get Report

tacked on 1 1/16 to 39 9/16 after being named

Merrill Lynch's

Focus One stock of the week.



slid 3/8, or 5.1%, to an annual low of 7 1/32 after BT Alex. Brown dropped it to a market perform from buy.

Quaker Oats


jumped 5 1/16, or 9.3%, to 59 5/16 after

Brown Brothers Harriman

upgraded the stock to buy from neutral.


(SUN) - Get Report

expanded 2 3/8, or 7.3%, to 35 1/16 after

Prudential Securities

upped it to strong buy from accumulate.

US Airways

(U) - Get Report

lifted 1 1/16 to 47 1/2 even after

Warburg Dillon Read

dropped the stock to hold from buy and lowered its target price to 54 from 60 a share, saying the company faces increasingly intense levels of competition.




sliced off 3/16 to 79 3/8 after naming William B. Harrison Jr. president and chief executive, replacing Walter V. Shipley, who will remain chairman.



rallied 25/32, or 10.4%, to 8 3/8 after Chairman, President and Chief Executive Richard Jaffe said he will assume the additional position of COO. Terrance J. Bieker resigned as chief operating officer and executive vice president.