It may not be Woodstock, but those guys had nothing on the love-in on trading floors today.
Nasdaq Composite Index
, already on its way to a record, got a free pass from the
. The Fed, as expected, didn't raise rates, but also did not shift to a bias toward raising rates soon -- somewhat unexpected. Fight for your right to party? Hardly.
Less than two hours later, the Nasdaq was at an all-time closing high. Its biggest one-day point gain. A close above 3900 for the first time in history. But breadth is still lousy, with advancers barely beating out decliners on both the
Nasdaq Stock Market
New York Stock Exchange
It took less than two hours for the Nasdaq to go from an overall solid gain to an all-out pool party, rocketing 127.28, or 3.4%, to a record 3911.15 in heavy volume of 1.471 billion shares. After passing 3000
Nov. 3, Nasdaq 4000 is within reach.
But it's a baffling sort of rally. The Fed didn't say it's confident that inflation isn't going to be a threat, or that it's satisfied that the three rate hikes earlier this year would do the trick, and slow the pace of demand to prevent imbalances. No, the Fed folks basically admitted they're freaked about Y2K -- enough even to move to a bias toward raising rates in early 2000.
"What I will do is refer you to do the library:
Extraordinary Popular Delusions and the Madness of Crowds
," said Paul Rabbitt, president of
in Hermosa Beach, Calif. "There's nothing new about mania, and this is mania. Something's got to give in the first quarter. But there's no reason to sell in the next couple weeks -- why fight the seasonal inflows that occur now?"
"The focus of policy in the intermeeting period must be ensuring a smooth transition into the year 2000," the Fed said in its
statement. "The committee remains concerned with the possibility that over time increases in demand will continue to exceed the growth in potential supply, even after taking account of the remarkable rise in productivity growth."
That doesn't sound like a Fed confident that the economy is going to slow enough to stave off inflation all by its lonesome. In the past, the stock market has been collectively accused of misreading the Fed's intentions -- such as in June, when the market reacted as if the Fed was done raising rates, when it wasn't. Is the market doing it again? Well, 23 of 30 primary dealers polled by
saying the Fed would have raised rates had Y2K not intervened, and the fed funds futures traded on the
Chicago Board of Trade
is fully pricing in a rate hike in February.
And the bond market isn't wild about the Fed's statement. The 30-year Treasury bond finished down 9/32 to 95 17/32, yielding 6.47%.
Tom McManus, equity portfolio strategist at
Banc of America Securities
, characterizes the market's reaction as a "buy the rumor, buy the news" approach. The market was looking for a tightening bias -- which was all but given to them -- and it's rallying. "They're saying, 'If it hadn't been for this once-in-many-lifetimes event, we would be telling you we have a positive bias toward tightening,'" he said.
Of course, it's not as if the entire market is running wild. It's the same old story -- big-caps, tech and Net stocks are reaping while everyone else is a sow. The
Dow Jones Industrial Average
gained 56.27 to 11,200.54 on volume of 970 million shares, while the
was up 15.36 to a record 1433.43. The small-cap
put together a fierce postannouncement rally, ending the day up 8.60, or 1.8%, to a 52-week high of 475.79.
A Powerful but Narrow Move
The narrow breadth of the rally is easy to see in market internals. On the Nasdaq, advancers were barely ahead of decliners, 2,148 to 2,056. Advancers were ahead of decliners 1,579 to 1,502 on the Big Board.
A total of 73 stocks reached new highs on the NYSE, with 301 touching new lows. There were a total of 231 new highs on the Nasdaq and 150 new lows.
The mechanical rabbit hasn't changed its stripes: it's still sporting a Nasdaq logo on its butt. Sectors out in front of everyone else today included the semiconductor stocks, up for a second day in a row. The
Philadelphia Stock Exchange Semiconductor Index
rose 31.58, or 4.7%, to 698.88 today.
was up 4 3/16 to 117 3/4. Assembly equipment maker
Kulicke & Soffa
was up 5 1/8, or 13%, to 44 7/8.
Philadelphia Stock Exchange Computer Box Maker Index
rose 11.51 to 375.54 and the
Morgan Stanley High-Tech 35
was up 54 to 1814.
The usual suspects among the Internet names were coasting.
finished the day up 48 1/16, or 21.6%, to 270 3/8;
was up 9 5/8 to 92 1/8, an 11.7% gain; and
rose 36 1/16 to 405 9/16.
TheStreet.com Internet Sector
index rose 60.32 points to close at a record 1159.07 today.
Yes, there's no shortage of people who believe the market is due for a correction, but many believe it's not going to happen until the first quarter.
"I think it ends fairly shortly, with a technology correction," said Rabbitt. "If you look back, 15 months ago the Nasdaq corrected 15% over a 2-month period. There's no selling now because people want to hold on past the first of the year for tax purposes, but I think the selling will come into the tech sector."
Rabbitt believes the financial sector will be one of those to rebound if the economy begins to slow and interest-rate environment improves. Today the financial stocks performed admirably after the announcement. Dow components
were up 1.66% to 157 13/16 and 1.69% to 128 15/16.
, despite losing CEO John McCoy (no, not from
Law & Order), was also higher, up 11% to 33 3/8.
wrote about Bank One earlier today.
Elsewhere in North American equities, the
Toronto Stock Exchange 300
gained 118.64 to 8250.00 and the
Mexican Stock Exchange IPC Index
rose 33.15 to 6976.75.
Tuesday's Company Report
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
popped 16 1/2, or 5.8%, to 301 7/8 after it entered a strategic alliance with
, which provides high-speed Internet access over cable lines, to speed up their network. Road Runner is a joint venture between
Media One Group
and closely held publisher Advance/Newhouse. Road Runner will use Akamai servers in its network to improve the speed of its Web sites. Time Warner slipped 0.9% to 65 5/8, Media One inched up 0.6% to 78 7/16, Microsoft climbed 3 1/16 to 115 7/8 and Compaq gained 2 7/8, or 9.7%, to 27 9/16..
gained 3/4, or 6.3%, to 12 7/8, after it said it is exploring strategic options for its units. The company also said chairman Chuck Neinas is stepping down as CEO.
slipped 3/8 to 10 7/8 after it said its board withdrew approval of a proposed merger with
saying the proposed deal was not in the best interests of shareholders. Genzyme rose 3 3/4, or 9.8%, to 42. Cell Genesys also said the value of its equity ownership of
had increased by about $230 million since its merger agreement with Genzyme was announced in October. Shares of Abgenix added 5 5/8, or 5.3%, to 112.
Columbia Energy Group
, which has been pegged by
as an acquisition prospect, climbed 2 1/2 to 60 1/2 after it said other companies are showing interest in it and are willing to make higher bids. NiSource tacked on 1 1/8, or 6.8%, to 17 3/4. According to an
filing, both companies said that interested firms have been invited to participate in a second round of bidding. Two months ago, Columbia rejected an $74-per-share offer from NiSource, which made way for rival bids.
slipped 1.3%, to 58 15/16 after saying it and venture capital firm
have teamed up with a cluster of sports stars including
to form an online sporting goods store.
, as the venture will be known, expects to start selling sporting goods on the Internet next month, and has plans to go public next year. MVP.com will receive $85 million in advertising from CBS over four years.
For additional coverage of the MVP.com
acquisition, check out a separate story from the
Delta & Pine Land
slipped 11/16 to 15 1/2 after saying it was disappointed
had withdrawn its merger approval filing with the
U.S. Justice Department
and said the life sciences group owes Delta & Pine $81 million in termination fees. Shares of Monsanto fell about 1, or 3.2%, to 36 1/16.
For additional coverage of Delta's
demands, check out a separate story from the
fell 1/16 to 98 15/16 after it agreed to acquire
for $192 million in a cash tender offer. Softworks inched up 7/32 to 9 9/16.
gained about 4, or 2.9%, to 157 3/4 after
The Wall Street Journal
network said it completed a series of new long-term affiliation deals for
that it expects could bring in more than $1.5 billion in subscriber fees over the next 10 years.
added 1 to 76 3/16 after it said it formed a cooperative agreement with
including supplying engines and transmissions to GM and joint cooperation in technology. Honda said the agreement would not involve the automakers taking any equity stake in each other. GM lost about 1, or 2.7%, to 70 5/8.
slipped 1/16 to 18 1/4 after it agreed to buy privately held meat and poultry processor
Corporate Brand Foods America
for $261 million. IBP said it expects the acquisition to be dilutive to 2000 earnings by 7% to 10% a diluted share. The current seven-analyst estimate calls for earnings of $2.71 a share.
gained 2 3/4, or 18%, to 18 1/16 after it agreed to be acquired for $725 million by an investor group led by former
Jerome York. The $19 a share price represents a 44% premium over the share's average price over the past 30 days. York will be chairman and CEO of the company.
For additional coverage of the Micro Warehouse
buy, check out a separate story from the
climbed 1/8 to 14 1/8 after it said it will sell its Austrian-based plastics extrusion systems unit to
for $47 million in cash. Milacron said the deal will result in a gain of 30 cents a share.
slipped 9/16 to 125 15/16 after it said it will buy
for $285 million.
Rohm & Hass
slipped 3/16 to 37 after it said it plans to sell its Industrial Coatings business to German chemical group
for $175 million.
was unchanged at 17 15/16 after it said it would not meet with
, calling Chesapeake's $500 million hostile takeover offer inadequate and risky. Chesapeake slipped 3/16 to 29 11/16. Last week, Shorewood turned down Chesapeake's offering, saying it was holding preliminary negotiations with other interested companies.
fell 1.6%, to 40 after
reported it is expected to announce an agreement to buy
National Bancorp of Alaska
, citing sources familiar with the situation.
Earnings/revenue reports and previews
said it backs 1999 earnings estimates of $2.08 a share, 2000 estimates of $2.70. Shares rose 1 7/8 to 67 1/4.
gained 1/2 to 36 1/4 after it reported second-quarter earnings of 68 cents a share, beating the 10-analyst estimate of 66 cents and the year-ago 58 cents.
popped 5 3/8, or 5.5%, to 103 after it reported third-quarter earnings of 9 cents a share, which include $799,000 in preferred dividends. The four-analyst estimate was for 13 cents a share, while the year-ago earnings were 19 cents a share. Emmis also declared a 2-for-1 stock split.
Great Atlantic & Pacific
inched up 5/8 to 26 5/16 after it reported third-quarter earnings of 47 cents a share, beating the six-analyst estimate of 40 cents. The year-ago result was a loss of 23 cents a share, which included a charge.
was unchanged at 11 3/16 after it said it plans to take a fourth-quarter charge in order to streamline operations at its industrial distribution unit.. The company said it expects to take pretax charges of about $12 million, or 32 cents a share. The single-analyst estimate called for earnings of 35 cents a share.
National Discount Brokers
fell 3 7/8, or 11.1%, to 31, despite reporting second-quarter earnings of 25 cents a share, beating the two-analyst estimate of 4 cents but down from the year-ago 32 cents.
National Service Industry
slipped 1/2 to 27 1/16 after it posted first-quarter earnings of 60 cents including a charge of 2 cents. The company said its earnings were hurt by the effects of two hurricanes on six of its textile rental facilities and by a $1 million pretax charge for costs related to the closure of its California lighting facility. The five-analyst estimate was for 61 cents, while the year-ago earnings were 62 cents.
National Service also announced that Hugh Sawyer resigned as president and CEO of its National Linen Service division, effective Dec. 31. Sawyer will become president of
, a unit of
. Allied Holdings was unchanged at 6.
dropped 1 1/8, or 11.1%, to 9 after it warned it sees lower-than-expected fourth-quarter revenue and earnings-per-share, but said it is looking for increased momentum in the second quarter and second half of next year. The company said it expects fourth-quarter earnings to be in the range of 20 cents to 25 cents a share, excluding charges, below the current 11-analyst estimate of 40 cents a share.
For additional coverage of Navigant's
earnings warning, check out a separate story from the
resumed coverage of
as a near-term and long-term accumulate. Shares of Apple climbed 4 7/16 to 102 1/2.
US Bancorp Piper Jaffray
started coverage of
with a strong buy rating and a price target of 60. Shares of Allscripts hopped 6 1/4, or 17.2%, to 42 1/2.
Donaldson, Lufkin & Jenrette
sliced its ratings on
Burlington Northern Santa Fe
Canadian National Railway
to market perform from buys. Yesterday, the two companies announced their plans for a $19 billion merger. Shares of Burlington Northern lost 2 11/16, or 10.2%, to 23 1/2, while Canadian National skidded 1 5/16 to 27 3/4.
Deutsche Banc Alex. Brown
upped its rating on Burlington Northern to buy from market perform.
Credit Suisse First Boston
raised its 2000 earnings estimate on
to 40 cents from 35 cents a share.
raised its price target to 40 from 36, and upped its 2000 earnings estimates to 37 cents from 35 cents. Shares of Cabletron added 1 to 28 3/4.
After yesterday's close, Merrill Lynch rolled out coverage of
with an intermediate accumulate, long-term buy rating and set a 12-month-to-18-month price target of 300. CMGI soared 48 1/16, or 21.6%, to 270.
PaineWebber raised its rating on
to buy from attractive. Shares of Conoco bounced 1 1/16 to 22 3/4.
Salomon Smith Barney
started coverage of
with a buy rating and a price target of 70. Shares of GetThere.com tacked on 11 1/4, or 36.4%, to 42 3/16.
upped its price target on four telecom equipment stocks.
target was raised to 360 from 225, while
target was upped to 570 from 460.
price target was boosted to 125 from 85, while Motorola's was lifted to 165 from 120.
Shares of Foundry jumped 20, or 6.8%, to 314 and Qualcomm shot up 30 1/16, or 6.4%, to 496 7/8, while Nortel mounted 6 13/16, or 7.3%, to 99 5/9. Shares of Motorola skidded 1/4 to 138 3/4.
upped its rating on
to buy from neutral. Shares of Go.com popped 6 1/8, or 28%, to 28.
was started at a strong buy by Deutsche Banc Alex. Brown. Shares of NBC Internet bounced 14 1/8, or 17.8%, to 93 1/4.
US Bancorp Piper Jaffray upped its price target on
NorthEast Optic Network
to 90 from 60. Shares of NorthEast Optic lifted 15 7/8, or 26.4%, to 76 1/2.
Morgan Stanley Dean Witter rolled out coverage of
with an outperform rating. Shares of Portal Software rose 1 3/8 to 111.
Offering and stock actions
hopped 15 1/2, or 7.7%, to 216 1/2 after it announced Monday night that it set a 2-for-1 stock split.
edged up 1 9/16 to 38 5/16 after it said it will spin off its e-commerce unit to create an e-health company.
climbed 3 7/32, or 10.7%, to 33 3/16 after it said Chairman and CEO John McCoy has decided to step down from his positions. McCoy was facing pressure as a result of the company's floundering credit card division. Former Chairman Verne Instock has been tapped as a temporary replacement for the chief executive duties.
For additional coverage of Banc One's
changes at the top, check out a separate story from the
gained 11/16, or 5.9%, to 12 3/8 after it said co-founder Joel Elftmann is retiring as president and CEO but will continue as chairman. Donald Mitchell, a former president of Air Products Electronic Chemicals, was named to succeed Elftmann as president and CEO.
was continuing to fly after yesterday's news that it plans to rival Internet services giants like
by reducing its service fees. The stock soared 33 7/8, or 102.8%, to 66 3/4.
received a pop in early morning trading, as confused investors entered orders for the stock instead of Juno Online. In heavy volume, shares of Juno Lighting hit an intra day trading high of 12 9/16. Juno Lighting finished the day up 1/2 to 11.
Procter & Gamble
slipped 3 1/8 to 104 1/2 after it said a judge issued a temporary restraining order against a rival, citing false advertising related to a sweeping and dusting product. P&G said the order was related to its Swiffer, and an ominous-sounding product called Pledge Grab-It, made by
tacked on 3 3/8, or 8.3%, to 44 after it said it would move to the
New York Stock Exchange
on Jan. 3. Qwest will trade under the stock symbol "Q".
According to new market data from
search engine service is now five times as popular as its closest rival, CMGI's
. WebSideStory said that Yahoo experienced an increase in popularity this fall and is now handling roughly 56% of all search engine referrals. CMGI's Alta Vista managed 11.18^%. Shares of Yahoo flew 36 1/16, or 9.7%, to 405 9/16.
The "Heard on the Street" column in the
took a look at a two-sided investment strategy, known as a "paired trade," aimed at profiting from valuation gaps between two related securities. The latest such pairing to pop up is that of
. In this case, investors were buying shares of Williams, while shorting, or selling, its telecommunications offshoot. The hope is that Williams' management will unlock the hidden value in its energy assets by potentially spinning off its Williams Communications shares. Shares of Williams Communications slid 1 1/2, or 5.6%, to 24 15/16, while Williams declined 11/32 to 28 9/16.