Nasdaq's Charge Above 3000 Pulling Bystanders Off Sidelines

Many on Wall Street had planned to wait for lower prices before buying, but the ongoing rally is making them worry they'd be left behind.
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It's a lesson Manhattanites have learned well from their horrible little real estate market. When it looks like asset prices can't possibly rise any further, and then they do just that -- start the bidding. It may sound crazy to the buy-the-dip crowd, but it makes a whole lot of sense from where the market's standing today, at the point where long-term investing meets the short-term momentum play.

The major indices were on another magic carpet ride at midsession, led by the

Nasdaq Composite Index

, lately above the 3000 mark and still probing deeper into record territory. Powered by increasingly big-cap technology issues, the Comp was up 39, or 1.3%, to 3007.

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The

Dow Jones Industrial Average

was up 87, or 0.8%, to 10,735, while the

S&P 500

was 12 higher to 1366. Strong breadth was helping the small-cap

Russell 2000

advance 3 to 435.

TheStreet.com Internet Sector

index was exceptional on the downside, off 6 to 756.

The conventional wisdom was that stocks would need to breathe a bit after rallying so strongly and so broadly toward the end of last week. But investors impressed by the market's comeback and unwilling to get left behind were making that thesis look, well, rather conventional.

"Some people are worried that we're in a lockout phase," said Richard Dickson, technical analyst at

Scott & Stringfellow

in Richmond, Va. "The market screams higher and people say, 'I've got to wait for a pullback.' But in a market like this, waiting means paying higher prices. So I think people said, 'Why wait? Here we are, and we're buying it.'"

It's not like people are buying out of blind panic. Though frighteningly fierce, the market's run-up last week was markedly healthier than the sort of strength the indices have shown for some time now. "What you saw last week was a very important bottom," said Barry Hyman, senior market strategist at

Ehrenkrantz King Nussbaum

. "A bottom accompanied by good breadth, strong volume, renewed leadership by the growth stocks, and a very accommodative bond market."

Neither the day's economic data nor a morning

speech by

Fed

boss

Alan Greenspan

were having much effect on the bonds, which were shaving off a few more basis points in yield in an extension of last week's rally. The

Commerce Department

released figures showing personal income unchanged in September. As has been the case for some time, spending outstripped income, growing 0.4% in September on the heels of a revised 0.8% clip in August.

The benchmark 30-year Treasury was up 18/32 to 99 24/32, its yield easing to 6.14%. (For more on the fixed-income market, see today's early

Bond Focus.)

Meanwhile, the market continues to rotate. The possibility that those insatiable consumers aren't anywhere near ready to stop spending was helping send the

S&P Retail Index

was up 1.5%. The

Morgan Stanley Consumer Index

was up 0.5%.

Chip stocks were getting their wind back as the market seems to have decided that yesterday's 6.1 quake in Taiwan won't create any problems for the region's semiconductor industry. The

Philadelphia Stock Exchange Semiconductor Index

was up about 3.3%.

Financials were also looking strong, the Philadelphia Stock Exchange/KBW Bank Index up about 1.7%.

"This is not a one-sector market, as is witnessed by the breadth," Hyman said. "If it were the same old rally, with breadth 2-to-1 to the downside, I'd be suspicious. But that's not what's happening."

Market Internals

Breadth was indeed strong.

New York Stock Exchange:

1,828 advancers, 1,079 decliners, 522 million shares. 58 new 52-week highs, 56 new lows.

Nasdaq Stock Market:

2,056 advancers, 1,568 decliners, 706 million shares. 170 new highs, 65 new lows.

Tuesday's Midday Watchlist

By Eileen Kinsella
Staff Reporter

Tech stocks were hopping as the Nasdaq broke through the key 3000 level. Among top movers helping fuel today's gains,

GoTo.com

(GOTO)

was flying 24 7/8, or 44.3%, to 81 1/8, while recently public

InterTrust Technologies

(ITRU)

was hopping 14 1/2, or 25.5%, to 71 3/8.

Mergers, acquisitions and joint ventures

Barnes & Noble

(BKS) - Get Report

rose 5/8 to 22 1/4 after it said it purchased a 49% interest in

IUniverse.com

.

Alaska Gov. Tony Knowles urged the

Federal Trade Commission

yesterday to block

BP Amoco's

(BPA)

proposed $26.8 billion takeover of

Atlantic Richfield

(ARC) - Get Report

and said he suspended Alaska's talks over the deal with BP Amoco. Shares of BP Amoco fell 1 9/16 to 55 11/16, while Atlantic Richfield dropped 4 13/16, or 5.2%, to 87 3/8.

HomeGrocer.com

said it has obtained $100 million in fourth-round financing from

Amazon.com

(AMZN) - Get Report

,

Martha Stewart Living Omnimedia

(MSO)

and others, which will contribute to the company's expansion into 20 new locations in 2000. Shares of Amazon slid 2 3/16 to 67, while Martha moved up 3/4 to 34 5/8. The online grocer said

Kleiner Perkins Caufield & Byers

and

Hummer Winblad Venture Partners

are among the other investors funding the project.

Sykes Enterprises

(SYKE) - Get Report

rose 11/16 to 31 13/16 and

Perot Systems

(PER) - Get Report

was up 1/8 to 19 3/16 after the companies said they have forged a tech agreement to offer consulting, tech support and other services.

Separately, Perot posted third-quarter earnings of 14 cents a share, in line with the five-analyst estimate and up from a year-ago 9 cents a share.

U S West

(USW)

jumped 1 5/16 to 62 11/16 after shareholders gave their stamp of approval to the company's planned $36 billion merger with

Qwest Communications

(QWST)

, lately rising 1/16 to 35. U S West said 93.7% of the votes favored the deal, which will be voted on by Qwest shareholders today.

Earnings/revenue reports and previews

(

Earnings estimates from First Call/Thomson Financial; earnings reported on a diluted basis unless otherwise specified.

)

Cadmus Communications

(CDMS)

lost 1, or 11.1%, to 8 1/8 after it posted first-quarter earnings of 17 cents a share before charges, missing the three-analyst estimate of 20 cents a share, and the year-ago 31 cents.

Fresh Del Monte

(FDP) - Get Report

gained 3/4 to 42 1/4 posted third-quarter earnings of 21 cents a share, missing the five-analyst estimate of 25 cents and down from the year-ago 44 cents.

Global TeleSystems

(GTS) - Get Report

gained 1 1/16 to 26 1/16 after it posted a third-quarter loss of 59 cents a share, narrower than the six-analyst estimate of a 68-cent loss but wider than the year-ago 42-cent loss.

Oxford Health

(OXHP)

gained 1 15/16, or 15.6%, to 14 3/8 after it posted third-quarter earnings of 29 cents a share, beating the 16-analyst estimate of 15 cents and up from the year-ago 58-cent loss.

Ralston Purina

(RAL)

rose 1/2 to 31 7/8 after it reported fourth-quarter earnings of 36 cents a share, beating the 10-analyst estimate by a penny and up from the year-ago 31 cents.

Rite Aid

(RAD) - Get Report

lost 1/8 to 8 13/16 after it reported an unaudited net loss for the latest 13-week quarter of 6 cents a share. The seven-analyst estimate called for a loss of 26 cents a share. Since announcing preliminary second-quarter results in early October, Rite Aid has continued a review of its accounting, which was undertaken partly as a result of comments of the staff of the

SEC

. The company also continued to evaluate and make necessary adjustments for various matters identified as a result of that review.

Titan

(TTN)

rose 15/16, or 5.85%, to 17 3/16 after it reported third-quarter earnings of 13 cents a share, in line with the five-analyst estimate and up from the year-ago 5 cents a share.

Uno Restaurant

(UNO)

reported fourth-quarter earnings of 40 cents a share, beating the single-analyst estimate of 36 cents and the year-ago 20 cents a share. The company said the latest quarter had compared with 13 weeks for the year-ago period.

Offerings and stock actions

Citibank Worldwide Securities Services

, a unit of

Citigroup

(C) - Get Report

, launched an American depositary receipt program in connection with Italy's sale of shares in

Enel

(EN)

, which is now one of the largest publicly traded electric utilities in Europe. The ADRs were priced at $45 each, and are equivalent to 10 ordinary shares. Lately the ADRs were at 45 3/16.

Kaufman & Broad

(KBH) - Get Report

gained 1 1/16, or 5%, to 22 1/4 after it said it added 4 million shares to its buyback plan.

Mattel

(MAT) - Get Report

rose 9/16 to 14 1/8 after saying it plans to spin off

Learning Co.

unit

Genealogy.com

. Mattel said

A&E Television

,

Hearst Interactive

and others will contribute $37.5 million in initial funds to the plan.

Nextel Communications

(NXTL)

added 1/16 to 83 7/8 after it said its 30 million-share Class A offering was priced at Monday's closing of 83 13/16.

Morgan Stanley Dean Witter

,

Goldman Sachs

,

Credit Suisse First Boston

,

Deutsche Bank Securities

,

Merrill Lynch

and

PaineWebber

served as underwriters for the deal.

PurchasePro.com

(PPRO)

popped up 13 15/16, or 34.9%, to 54 1/2 after it said Chairman and CEO Charles Johnson plans to acquire $1 million of the company's stock.

Goldman Sachs is expected to price a 25 million-share IPO for

Webvan

(WBVN)

at $11 to $13 a share tomorrow night.

Analyst actions

U.S. Bancorp Piper Jaffray

raised its price target in

Air Express

(AEIC)

to 33 from 30. Shares of Air Express were bouncing 15/16 to 30 3/16.

Credit Suisse First Boston started coverage of

Expeditors International of Washington

(EXPD) - Get Report

as a strong buy, and

Circle Group International

(CRCL)

as a hold. Expeditors International shares were slipping 1/16 to 38 1/8, while Circle Group was hopping 1 to 25 1/8.

Morgan Stanley Dean Witter started coverage of

Hertz

(HRZ)

with an outperform rating. Shares of Hertz were gaining 1/4 to 43 7/8.

Credit Suisse First Boston analyst Wendell Laidley started coverage of

Interwoven

(IWOV)

with a buy rating and a price target of 105. Interwoven was jumping 3 1/8 to 84 7/8.

PaineWebber upped its earnings estimates for

Micron Technology's

(MU) - Get Report

first-quarter 2000 to 88 cents a share from 79 cents and for calendar year 2000 to $4.27 from $4.19. Micron Technology was popping 3 11/16 to 76 1/4.

Warburg Dillon Read

rolled out coverage of

Province Healthcare

(PRHC)

with a buy rating and a price target of 21. Province Healthcare was adding 5/16 to 16 5/8.

Donaldson Lufkin & Jenrette

said it started coverage of

SCI Systems

(SCI) - Get Report

with a buy recommendation. SCI Systems shares were climbing 3 7/16, or 7%, to 52 1/2.

Goldman Sachs

upped its price target on

STMicroelectronics

(STM) - Get Report

to 125 from 85 and reiterated its market outperformer rating. STMicro was soaring 9 11/16, or 10.7%, to 99 1/2.

Warburg Dillon Read raised its price target on

Teva Pharmaceuticals

(TEVIY)

to 70 from 69.

Merrill Lynch

raised its intermediate rating on the stock to accumulate from neutral. Shares of Teva were mounting 1/16 to 49 3/8.

Miscellany

Abbott Labs

(ABT) - Get Report

was sinking 2 1/4, or 5.5%, to 38 1/8 after it said it plans to pay the federal government $100 million to satisfy terms of a deal to cover its diagnostic manufacturing operations in Lake County, Ill.

DaimlerChrysler

(DCX)

was falling 9/16 to 75 5/8 on a

Wall Street Journal

report that it is expected to announce plans to discontinue its

Plymouth

brand, due to decreasing sales in recent years. According to the

Journal

, DaimlerChrysler could cut back on costs by axing Plymouth, without affecting its high-volume product lines.

General Electric

(GE) - Get Report

was jumping 3 to 132 5/16 after it said Chairman and CEO Jack Welch plans to retire in April 2001. A company spokesman said that it has not named a replacement for Welch.

Gilead

(GILD) - Get Report

received a blow to its stock price after the

Food and Drug Administration

rejected its AIDS treatment

Adefovir

. Shares plummeted 17 7/16, or 27.6%, to 45 15/16 from yesterday's closing price of 63 3/16.

Separately,

Bristol-Myers Squibb

(BMY) - Get Report

said it received FDA approval for its once-a-day form of AIDS treatment

Videx

. Prior to the approval, the drug needed to be taken twice a day. Bristol-Myers was sliding 15/16 to 76 5/16.