Finding itself in the unfamiliar position of having to play catch-up to blue-chip proxies, the
Nasdaq Composite Index
was on the fast track this morning. Meanwhile, the
Dow Jones Industrial Average
are dilly-dallying just below all-time best levels.
was leading tech bellwethers higher, lately up 3.3%. The chip giant reached a settlement with the
Federal Trade Commission
one day before its antitrust trial was set to begin. Given the deal comes just a few days after Intel acquired
Level One Communications
for $2.2 billion, one must applaud Intel's deft handling of the government. Or question the FTC's stomach to proceed without the otherwise-disposed
Other tech bellwethers were rising in concert with Intel, basking in the glow of last week's economic data, which showed strength but not inflation. The Nasdaq Comp lately was up 28 to 2366, having traded as high as 2375.41. The
was higher by 1.6%.
Philadelphia Stock Exchange Semiconductor Index
was higher by 1.5% as the
Morgan Stanley Dean Witter
chip conference gets underway. However, the group remains volatile;
, once as high as 62 13/16, lately was off 2.1% at 58 11/16.
Internet names also moved solidly higher.
TheStreet.com Internet Sector
index was up 15 to 549 while
TheStreet.com E-Commerce Index
was higher by 2 to 98.
The Dow, meanwhile, was meandering slightly below break-even as it digested
Friday's record-setting advance. The blue-chip proxy lately was down 51 to 9685.
"I would say this is just a breather after Friday," said Paul Rich, a trader at
in New York. "Overall, things look strong -- a combination of lower interest rates and good earnings is fueling the market. Today is just a breather."
Rich noted international markets were "mixed" this morning, helping deter some of Wall Street's enthusiasm. But that was to be expected, he said: "How are you going to keep up such momentum?"
The S&P 500 was doing slightly better, but without much oomph. After trading as high as 1279.89 (which would be a new high on a closing basis), the index lately was off 4 to 1272. Weakness in broker/dealers and consumer-focused entities such as retailers were weighing on the S&P 500 after both had big upward moves last week. The
American Stock Exchange Broker/Dealer Index
was down 2.5% while the
Morgan Stanley Consumer Index
was off 0.9%.
Energy names, however, continue to storm higher, led by the oil service stocks; the
Philadelphia Stock Exchange Oil Service Index
was lately up 4.7%.
was up 1 to 399.
In the bond market, the benchmark 30-year Treasury was up 4/32 to 94 31/32, its yield at 5.60%. (For more on the fixed-income market, see today's early
Notwithstanding this morning's action, last week's record performance by the Dow and all the talk of 10,000, some prominent (and not-so-prominent) market forecasters continue to view the recent rally with derision.
This morning, Don Hays, director of investment strategy at
Wheat First Union
in Richmond, Va., announced his asset allocation model has reduced its equity exposure to 35%, with the remainder 40% in bonds and 25% in cash. On
March 1, Hays lowered the equity stake to 47% cash, 25% stocks and 28% bonds.
Today's move marks the third downward revision of the equity quotient of the model since Feb. 15, and is "the most cautious stance in its actual and back-tested history, except for the months preceding the October 1987 market crash," Hays wrote. "Today's change brings
the model into an extremely defensive mode. It does not mean that the market is going to crash, but it does say that the risk in stocks is much greater than the reward potential."
A similar outlook is shared by Roy Blumberg, chief investment strategist at
Chestnut Investment Group/First Allied Securities
"The reality of the situation is the averages are so unreflective of what's going on," Blumberg said. "The Dow's new high is not only not being confirmed by the advance/decline line, but it's doing the opposite. Last week, there were more weekly lows than new highs. You can probably still get a little more here in the averages but unless this thing is going to broaden out, I don't think there's a lot of upside."
New York Stock Exchange
trading, declining stocks were leading advancers 1,556 to 1,220 on 363 million shares. In
Nasdaq Stock Market
activity losers were leading 1,912 to 1,692 on 493 million shares.
The investment chief (and former
talking head) foresees the Dow and S&P 500 down "roughly 10%" from today's opening levels in the coming months. But "by no means is what's going on under the surface going to cause more than an average correction."
Dow's outperformance of broader averages has some prognosticators talking favorably about a leadership rotation away from technology to cyclical, consumer-focused and economically sensitive areas. Blumberg agreed the trend is a "positive sign" but warned "leadership changes happen during declines, not rallies. I can't see us having a massive rotation into more cyclical stocks without the market correcting" first.
Meanwhile, a "wishy-washiness" is prevalent among market players, who have become optimistic after last week's advance, but "if two days from now the market is down, may go back to a cautious stance," he said.
The problem is "we're all unlearning all we've been taught about modern portfolio management. Diversification is bad, buying low and selling high is bad," he said sarcastically. "The only thing that makes sense is to own what's running away to the upside, regardless of valuation. That's what the market is teaching people."
Still, investors would be wise to stick by their investment style, Blumberg advised. "Those that jump to the latest craze are doomed to be punished."
Monday's Midday Movers
As noted above, Intel was up 3 13/16 to 118 3/8 after reaching a deal with the FTC a day before an antitrust trial against the chip maker was set to begin. The feds had argued Intel cut off customers and competitors in part to stifle competition.
took a closer look at the settlement in a
story this morning.
Elsewhere, companies seemed to be cooperating with the sentiment that the beginning of the week is the best time to wine, dine and combine.
- Topping the list was
Browning-Ferris (BFI) , lately up 4 3/4, or 13.7%, to 39 1/2 after
Allied Waste (AW) agreed to acquire the company for $45 a share, excluding the assumption of $1.8 billion in debt. The deal will create the second-largest solid-waste services company in North America, with about $6.6 billion in annual revenue and a national network of landfill, collection, transfer, recycling and other operating assets. The combined company, which will be called
Allied Waste Industries, will be led by Allied Waste's current senior management team. Allied Waste was up 1 9/16, or 10.4%, to 16 9/16. Last week,
TSC reported on the strange
call-buying in Browning-Ferris.
Specialty chemical maker
Albemarle (ALB) - Get Report was down 1 1/4, or 5%, to 23 15/16 after agreeing to buy U.K. phosphate king
Albright & Wilson for about $655 million in cash.
American Bankers Insurance (ABI) was up 5 5/8, or 12.1%, to 52 after
Fortis, an international insurance, banking and investment group, said it will buy the company for $2.6 billion.
BMC Software (BMCS) was up 2 7/8, or 7.5%, to 41 1/16 after agreeing to buy
New Dimension Software (DDDDF) for $52.50 a share, or $650 million, in cash. New Dimension was up 2 3/8 to 51 5/16.
CIT Group (CIT) - Get Report was off 3/8 to 30 3/8 on word it will acquire
Newcourt Credit (NCT) in a $4.17 billion deal that CIT said will create the largest publicly owned company in the commercial finance industry. Newcourt Credit was up 15/16 to 26 3/4.
Homestake Mining (HM) was down 1/2, or 5.3%, to 8 15/16 after announcing it will buy
Argentina Gold for $200 million in stock.
In other news:
was up 6 1/8, or 21.9%, to 34 1/8 after saying the recent volatility in its stock was due to "misconceptions" about its
unit, which it said is a separate legal entity responsible for its own liabilities. Delphi said it didn't expect material financial problems because of the unit.
was up 1 1/4, or 23.8%, to 6 5/8 after announcing fourth-quarter earnings of $1.21 a share, beating the single-analyst view of $1.12 and the year-ago 98 cents. The company also said its quarter same-store sales rose 0.6%.
was up 2 15/16, or 14.6%, to 23 1/16 after
said the company was rumored to be in talks with
to create new products. Compaq was up 3/16 to 34 7/16.
-- no relation to this publication or its parent company -- continued its 85.1% rise from Friday, recently up 2 21/32, or 52.8%, to 7 23/32, after the tiny Internet content provider announced a pact with
. AOL was up 5/8 to 87 5/8.