Nasdaq Storms to Yet Another Record as Market Caps Strong Week

Momentum is the story on Wall Street, but some are wondering how many more pages there are to turn.
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SAN FRANCISCO -- There's a joke making the rounds on trading desks these days: If not for the new "Dogs of the Dow" --

Microsoft

(MSFT) - Get Report

and

Intel

(INTC) - Get Report

-- the venerable index would already be at a new all-time high. Well, tech stocks -- including the aforementioned -- continued higher today while a decidedly old-school industrial,

Caterpillar

(CAT) - Get Report

, weighed on blue-chip averages.

Caterpillar declined 11.7% after

warning its fourth-quarter sales would be lower than expected, dragging the

Dow Jones Industrial Average

down with it. After trading as low as 10,976.06, the Dow closed off 31.81, or 0.3%, to 11,003.89. The

S&P 500

shed 2.94, or 0.2%, to 1422.00.

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Message Boards.

Meanwhile, the

Nasdaq Composite Index

overcame the modestly negative (and subdued) tone on Wall Street, rising 22.14, or 0.7%, to 3369.25, notching its (

yawn

) 13th record in the past 16 trading days. Among its biggest constituents, the Comp got boosts from Intel,

Sun Microsystems

(SUNW) - Get Report

, and

Oracle

(ORCL) - Get Report

; the

Nasdaq 100 rose 0.8% to a record 3028.84. Elsewhere, the

Morgan Stanley High-Tech 35

rose 0.6% to a record 1575.18 while the

Philadelphia Stock Exchange Semiconductor Index

gained 0.7%.

Similarly, strength in tech components, namely

IBM

(IBM) - Get Report

, prevented the Dow and S&P from falling further. IBM rose 6.1%. Additionally,

Compaq

(CPQ)

jumped 4.7% on rumors it could be a takeover target.

'Don't fight the tape and momentum or you'll get your head handed to you,' said GSG's Gary Kaltbaum. 'But this worries me long-term.'

The tech-acclaimed Comp also got assistance from recent highfliers such as

JDS Uniphase

(JDSU)

, up 5.3%, and

China.com

(CHINA)

, up a further 26.7% after setting a 2-for-1 stock split. The average also got a lift from secondary tech names such as

PMC Sierra

(PMCS)

, up 5%, and

PairGain Technologies

(PAIR)

, up 9.2%.

Market players continue to be impressed by the Nasdaq's seemingly endless string of records, but worry about its sustainability.

"We've had an unprecedented move in the Nasdaq. The only thing that's bad is it's about as extended as it can be," said Gary Kaltbaum, chief technical analyst at

GSG Securities

in Orlando, Fla. "We're going to have a correction and it's going to be nasty just because of how far

tech stocks have gone. I just don't know when

and I haven't seen the signs yet."

Like many peers, Kaltbaum fretted about increasing bullishness and the "ridiculous speculation" in some stocks, notably new issues. Today, IPOs continued to generate strong interest. Among the highlights,

CacheFlow

(CFLO:Nasdaq) leapt 427%,

SciQuest.com

(SQST:Nasdaq) rose 87.5% and

Exactis.com

(XACT:Nasdaq) rose 71%.

"Don't fight the tape and momentum or you'll get your head handed to you," he said. "But this worries me long-term."

TheStreet.com Internet Sector

index failed to match the Nasdaq's streak of new highs, dipping 7.00, or 0.7%, to 948.83 after trading as high as 970.31.

Additionally,

TheStreet.com

Red Hots index rose 6.48, or 2.08%, to 318.42. The 20-stock index tracks action in particularly volatile stocks and is meant to measure so-called hot money.

The

Russell 2000

took a respite from its recent surge, dipping 0.77, or 0.2%, to 461.27 as market internals soured.

In

New York Stock Exchange

trading, 877.3 million shares were exchanged while declining stocks led advancers 1,822 to 1,196. In

Nasdaq Stock Market

action 1.41 billion shares traded while losers led 2,059 to 1,976. New 52-week lows outpaced new highs 167 to 64 on the Big Board while new highs led 206 to 71 in over-the-counter trading.

Fireworks? What Fireworks?

Generally speaking, it was a quiet day in the financial markets, at least as far as the "big" issues of late are concerned. Oil prices added 3.1% to $26.60 a barrel, but energy stocks took a breather; the

American Stock Exchange Oil & Gas Index

slid 1.5%.

The price of the 30-year Treasury bond rose 1/32 to 99 14/32, its yield dipping to 6.17%.

As has been the case all week, equity players seem largely unconcerned about the potential negative implications of either oil's rise or the recent backup in bond yields.

"Any spike in oil could be short lived," said Bill Allyn, head of block trading at

Jefferies

. "The supply/demand dynamic has a way of taking care of itself. When

the price gets too high, the spigots get turned on. The entities that supply oil are very profit motivated."

As for the bonds, Allyn said "right now the

equity market is marching to its own beat. Eventually it will take its cues from the bond but right now stock investors are pretty single-minded."

Given that, the trader expects stocks to rally "into the end of the year" and foresees new highs for the Dow in conjunction with even more records for the Nasdaq.

Even today's expiration of index and stock options didn't generate much excitement.

"It's sort of a nonevent, a nonfactor. Other factors are playing a role" in the market's movement, said Steve Kim, equity derivatives analyst at

Merrill Lynch

. "People are already looking forward to December

expiration. There's generally a higher level of open interest at triple-witching. This is not as big an event."

Among other indices, the

Dow Jones Transportation Average

shed 41.66, or 1.4%, to 2976.50; the

Dow Jones Utility Average

slid 2.34, or 0.8%, to 291.71; and the

American Stock Exchange Composite Index

added 3.38, or 0.4%, to 826.12.

For the week, the Dow added 2.2%, the S&P rose 1.9%, the Nasdaq jumped 4.6%, the Russell rose 2.6%, the DOT soared 12.2%, the Dow transports fell 3.7%, the Dow utilities shed 2.9% and the Amex Composite climbed 0.4%.

Elsewhere in North American equities, the

Toronto Stock Exchange 300

gained 46.85, or 0.6%, to 7693.2 and the

Mexican Stock Exchange IPC Index

jumped 91.65, or 1.5%, to 6286.68, bringing the IPC to its fourth record in seven sessions. For the week, the IPC gained 4.2%, while the TSE rose 2.2%.

Friday's Company Report

By Tara Murphy and Eileen Kinsella
Staff Reporters

(

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

Calico

(CLIC)

rose 1/4 to 67 3/16 after it announced plans to buy

Connecting.com

(CNKT)

, in a deal valued at roughly $90 million. Connecting rose 7/16, or 10.3%, to 4 11/16.

Global Marine

(GLM)

slipped 3/16 to 16 7/8 after it said it would supply working capital for

Harland & Wolff Shipbuilding

and

Heavy Industries

, enabling the Ireland-based shipyard to finish two ultradeep water drillships being built for Global Marine. According to Global Marine, the funding, which calls for two letters of credit totaling $40 million and an advance of $93 million above its $315 million contract price, is not expected to dent its future earnings, noting that the agreement would add no more than 11% to the forecasted $660 million cost for the drillships.

General Motors

(GM) - Get Report

fell 1/16 to 69 3/4 after it said it has inked a deal to sell its financial share services division to

Arthur Andersen

. GM said the sale would involve 400 salaried employees at the company.

Egghead.com

(EGGS)

cracked 15/16, or 6.5%, to 13 1/2 after it said its shareholders favored its proposed $400 million merger with former competitor

Onsale

.

Pitney Bowes

(PBI) - Get Report

fell 3/16 to 48 11/16 and

ABN Amro

(ABN)

rose 1/16 after the companies said they forged an agreement for Pitney Bowes to sell its mortgage servicing division to ABN Amro. According to Pitney Bowes, terms of the deal will not be released until it is completed later this year or in early 2000. For more on the

acquisition , check out

TheStreet.com/NYTimes.com

joint newsroom for the latest news.

Vodafone AirTouch

(VOD) - Get Report

lost 5/16 to 45 3/4 after it said it will raise $37.2 billion in the syndicated loan market to fund its sweetened $128.5 billion offer for

Mannesmann

(MNNSY)

, making for the largest hostile takeover bid in history. According to bankers, the loan would set a record as the biggest ever, topping

AT&T's

(T) - Get Report

$30 billion loan in April. For more on

Vodafone's takeover bid, check out

TheStreet.com/NYTimes.com

joint newsroom's latest story.

Separately, according to

Reuters

, Vodafone CEO Chris Gent said during a news conference that the company has contacted the

European Commission

regarding its bid for Mannesmann and hopes to receive the EU's stamp of approval after the discussions.

Ziff-Davis

(ZD)

gained 1 1/16, or 6.3%, to 17 13/16 after saying it is selling its 64% interest in

ZDTV

to Paul Allen's

Vulcan Ventures

for $204.8 million. Allen is a cofounder of

Microsoft

(MSFT) - Get Report

.

For a further look at Ziff-Davis' decision, take a look at the

story written this morning by

TheStreet.com/NYTimes.com

joint newsroom.

Earnings

Caterpillar shed 6 3/4, or 12.1%, to 49 3/16 after it issued a downward revision for sales and revenue for the fourth quarter. Caterpillar expects sales, revenue and profit to be slightly above those in the third quarter, when the company earned 61 cents a share. For more on

Caterpillar's financial outlook , check out

TheStreet.com/NYTimes.com

joint newsroom's latest story.

In the fourth quarter of 1998, Caterpillar earned 83 cents a share. Analysts are calling for Caterpillar to earn 97 cents in the fourth-quarter. Merrill Lynch cut Caterpillar's intermediate rating to neutral from accumulate and sliced its fourth-quarter estimate to 65 cents a share from 93 cents and its fiscal 2000 estimates to $3.25 a share from a range of $3.75 to $4.00 range.

Newbridge Networks

(NN)

lost 2 1/2, or 10.4%, to 21 1/2 after executives, in a presentation before the company's earnings release yesterday, informed employees that the company is open to takeover offers, according to a source close to the firm. The company reviewed its plans for a 10% workforce reduction, which includes slicing 720 jobs and said it has not dismissed the option of a possible sale, although it has no current suitors. Regarding the company's earnings, Newbridge posted earnings of 8 cents a share, missing the 10-analyst estimate by a penny and down from the year-ago 18-cent profit.

TheStreet.com/NYTimes joint newsroom covered the

story yesterday.

Pepsi Bottling Group

(PBG)

added 3/16 to 16 1/2 after saying its fourth-quarter earnings were better than expected and it is on track to meet its 2000 targets. The 14-analyst estimate forecasts Pepsi Bottling to post a fourth-quarter loss of 23 cents a share, while the 15-analyst estimate sees it reporting fiscal 2000 earnings of 88 cents a share.

Valspar

(VAL) - Get Report

climbed 1/4 to 39 after it posted fourth-quarter earnings of 55 cents a share, beating the six-analyst estimate by a penny and up from the year-ago 48 cents.

Offerings and stock actions

China.com jumped 24 13/16, or 26.7%, to 117 11/16 after it set a 2-for-1 stock split.

Digene

(DIGE)

fell 1, or 5.4%, to 17 11/16 after it said it has set a private placement of 1.5 million common shares with some shareholders. The offering calls for 900,000 shares to be sold by the company, while stockholders would put up 600,000. The share price is set for $13.

Emulex

(EMLX)

gained 4 9/16 to 164 13/16 after it set a 2-for-1 stock split.

First Merchants

(FRME) - Get Report

fell 1 to 27 5/16 after it started a self-tender offer to buy back up to 1.2 million shares of its common stock at $28 a share.

First Midwest Bancorp

(FMBI) - Get Report

lost 3/8 to 43 5/16 after it set a 3-for-2 stock split.

Kinnard

(KINN)

lost 1/4 to 5 5/8 after it said it would buy back up 1 million of its shares.

Mid-America Apartment Communities

(MAA) - Get Report

moved up 9/16 to 22 15/16 after it increased its stock repurchase authorization to 4 million shares from 1 million.

SGA Communications

(SGA) - Get Report

gained 1/16 to 27 3/16 after it said it has set a 5-for-4 stock split, citing the stock's recent performance. The split will be payable on Dec.15 to investors of record Nov. 30.

Whitman

(WH) - Get Report

, the country's second largest

Pepsi

bottler, rose 1/2 to 14 7/16 after it set a 15 million-share repurchasing program. Separately, Whitman said that its chairman and CEO Bruce Chelberg would retire at the end of 2000.

Analysts actions

Warburg Dillon Read

initiated coverage of

BMC Software

(BMCS)

with a buy rating and a price target of 88. Shares of BMC Software jumped 7 5/16, or 10.4%, to 77 1/8.

Deutsche Banc Alex. Brown

initiated coverage of

Braun Consulting

(BRNC)

with a strong buy rating. Shares of Braun Consulting leaped 4 15/16, or 15.9%, to 35 7/8

Wachovia Securities

rolled out coverage of

Ciber

(CBR)

with a neutral rating. Shares of Ciber skidded 1/8 to 23 13/16.

Warburg initiated coverage of

Computer Associates

(CA) - Get Report

and

Legato

(LGTO)

with buy ratings. Computer Associates bounced 4 7/8, or 7.8%, to 66 3/4.

Warburg initiated coverage of

C-Cor.net

(CCBL)

and

Westell

(WSTL) - Get Report

with buy ratings. C-Cor.net climbed 1/8 to 51 3/4.

SoundView Technology

sliced its rating on

EMC

(EMC)

to buy from strong buy and raised its price target to 115 from 88. Shares of EMC slid 1/4 to 89 1/16.

Prudential Securities

raise its price objective on

General Electric

(GE) - Get Report

to 185 from 150. Shares of General Electric fell 1 5/8 to 137 3/4.

Goldman Sachs sliced its rating on

Keravision

(KERA)

to market performer from market outperform. Keravision sank 1 5/8, or 14.6%, to 9 7/16.

U.S. Bancorp Piper Jaffray

upped its price target on the

Learning Tree

(LTRE)

to 26 from 22 and raised its first-quarter 2000 earnings estimates to 25 cents a share from 13 cents. Learning Tree shares hopped 3 1/16, or 16.3%, to 21 7/8.

Goldman Sachs raised its rating on

Medquist

(MEDQ)

from market outperformer to its recommended list. Shares of Medquist mounted 2 5/16, or 9.3%, to 27 3/16.

Deutsche Banc Alex. Brown downgraded shares of

Papa John's

(PZZA) - Get Report

to buy from strong buy. Papa John's shares gained 2 5/8, or 7.7%, to 36 7/16.

Morgan Stanley Dean Witter

initiated coverage of

Patterson Dental

(PDCO) - Get Report

with a strong but rating and a price target of 60. Shares of Patterson Dental added 1 7/16 to 44.

SoundView Technology

rolled out coverage of

Photronics

(PLAB) - Get Report

with a strong buy rating and a price target of 40. Photronics popped 2 3/8, or 9.6%, to 27 3/16.

CSFB analyst Wendell Laidley upgraded shares of

Portal Software

(PRSF)

to strong buy from buy.

Merrill Lynch

also raised its intermediate-term rating on the stock to buy from accumulate. Portal Software shares edged up 4 1/16 to 96 15/16.

Banc of America

upped its price target for

SCI Systems

(SCI) - Get Report

to 105 from 75. SCI Systems advanced 4 1/8, or 5.8%, to 74 5/16.

Morgan Stanley upped its rating on

Triad Hospitals

(TRIH)

to outperform from strong buy. Triad Hospitals added 7/8, or 7.4%, to 12 3/4.

Goldman Sachs initiated coverage of

United Parcel Service

(UPS) - Get Report

as a market performer. Shares of UPS slipped 1 5/16 to 65.

Donaldson Lufkin & Jenrette

upped its 18-month price target on

Veritas

(VRTS) - Get Report

to 200 from 100. Veritas soared 7 7/16, or 5.3%, to 145 1/2.

Warburg rolled out coverage of

Watchguard

(WGRD)

with a buy rating and set a price target of 35 on the stock. Watchguard climbed 2 3/8, or 9.6%, to 27 1/2.

Miscellany

Boeing

(BA) - Get Report

added 11/16 to 43 11/16 after it said it agreed to end a pay disparity affecting women and minorities and would pay a minimum of $4.5 million in back pay and salary adjustments. The company said the decision would resolve claims of pay disparities at various facilities.

Blue Wave Systems

(BWSI)

jumped 5/8 to 8 1/16 after it said it named interim CEO and president Rob Shaddock as the company's permanent CEO and president.

In a $6 billion deal,

CBS Sports

, a unit of

CBS

(CBS) - Get Report

, extended its pact for broadcast rights to the

National Collegiate Athletic Association's

Division I men's college basketball tournament and other selected championship events. The extended deal will begin in 2003 after the conclusion of its existing eight-year pact with the NCAA and run until 2014. CBS Sports has been the exclusive broadcaster of the men's basketball championship since 1982. The deal between CBS and the NCAA, which CBS called "the most comprehensive sports agreement in history," provides CBS with the television rights, including over-the-air broadcasting, cable television, satellite, digital and home video. CBS also obtains the rights for all content relating to these events on the Internet. Shares of CBS lost 1 3/16 to 53 13/16.

Guess

(GES) - Get Report

skidded 5/16 to 17 3/8 after it said its president Paul Marciano will immediately take over as the company's co-chairman and co-CEO.

Microsoft

(MSFT) - Get Report

and government lawyers convened briefly with Judge Thomas Penfield Jackson, the first meeting since he declared that the company operated as a monopoly,

The Wall Street Journal

reported. Shares of Microsoft gained 1 1/16 to 86.

Rite Aid

(RAD) - Get Report

announced after yesterday's close that the

Securities and Exchange Commission

is launching a formal probe into the financially stressed drugstore chain, while revealing that its former auditors,

KPMG

, resigned saying they could no longer depend on Rite Aid management's representations.

Rite Aid said it has filed a report of unscheduled material events with the SEC called a Form 8-K, which explains the reasons behind KPMG's resignation. On Monday, Rite Aid said that KPMG was expected to examine its previous statements relating to its restated earnings, however KPMG backed out, saying it was unavailable. Earlier this month, Rite Aid cautioned investors to discount previously stated profit and cash flow reports and it has revised its earlier results. Shares of Rite Aid climbed 3/8, or 5.4%, to 7 1/4.

For more on

Rite Aid's stock troubles, check out

TheStreet.com/NYTimes.com

joint newsroom's coverage for the latest news.

Trico Bancshares

(TCBK) - Get Report

was unchanged at 19 3/4 after it said it has tapped Richard Smith to become its president and CEO.

Investors are scurrying for the few wireless companies they think are takeover candidates for the big telecommunications companies, the Heard on the Street column in the

Journal

reports. Listed as among the most likely acquisition cell-phone targets in the column:

VoiceStream Communications

(VSTR)

,

Powertel

(PTEL)

,

Nextel Communications

(NXTL)

and smaller companies such as

Rural Cellular

(RCCC)

. Shares of VoiceStream bounced 4 1/16 to 96 1/16, while Powertel lost 1 5/8 to 85 1/2. Nextel Communications added 1 15/16 to 98 5/16 and Rural Cellular skidded 2 9/16 to 80 1/2.