Nasdaq's Leap Through 3000 Could Augur More of the Same

Market observers like the new tone on Wall Street, with some suggesting we've seen the near-term bottom.
Author:
Publish date:

San Francisco -- The

Nasdaq Composite Index

sliced through the 3000 level like a hot knife through butter today, although some late-day selling carved off a bit of the advance. Blue-chip averages, meanwhile, acted more like a dull knife trying to cut stale bread, but managed to sustain modest gains.

Friendly

news from companies such as

Qualcomm

(QCOM) - Get Report

-- up 15.8% to an all-time high of 260 1/2 after announcing a 4-for-1 stock split -- helped the tech sector reclaim its role as the market's leader.

After trading as high as 3040.94, the Nasdaq closed up 46.88, or 1.6%, to 3028.51, notching its first close above 3000 and its fourth consecutive record.

Nasdaq Hits 3000: Join the discussion on

TSC

Message Boards.

In addition to Qualcomm, the tech-resplendent index was aided by bellwethers such as

Intel

(INTC) - Get Report

,

Oracle

(ORCL) - Get Report

and

Sun Microsystems

(SUNW) - Get Report

; the

Nasdaq 100

rose 1.7% to a record 2672.72.

Chip and equipment makers were standouts; the

Philadelphia Stock Exchange Semiconductor Index

rose 4.6% to an all-time high of 597.72.

The Comp also got a boost from Internet favorites such as

Yahoo!

(YHOO)

and smaller plays such as

Be Free

(BFRE)

, up 141% from its IPO price of $12.

TheStreet.com Internet Sector

index rose 16.56, or 2.2%, to 769.33. Also,

TheStreet.com

Red Hotsindex was sharply higher, up 20.64, or 8.4%, to 265.83. The 20-stock index tracks action in particularly volatile stocks and is meant to measure so-called hot money.

The bond market's early advance also fueled the rampaging techs, but fixed-income's rally faded. After trading as high as 100 5/32, the price of the 30-year Treasury bond closed up 5/32 to 99 27/32, its yield dipping to 6.14%.

An expected rate hike from the

European Central Bank

tomorrow and concerns about Friday's

employment report

sabotaged the bond market's advance, traders said.

In reaction, the equity markets began to come unglued in the final hour of the session, much as was the case

yesterday. However, the bullish tone was re-established today in the final 30 minutes.

Blue-Chips Slog Despite Merger News

The heart of the session was a bit of a struggle for blue-chips, despite news of a

potential merger between

American Home Products

(AHP)

and

Warner-Lambert

(WLA)

, which gave drugmakers a boost. AHP rose 10.8% and Warner-Lambert gained 7.2%, helping the

American Stock Exchange Pharmaceutical Index

climb 2.9%.

Aided by drugmakers and big-cap tech names, the

S&P 500

climbed 7.19, or 0.5%, to 1354.93, although off its session high of 1360.54

The

Dow Jones Industrial Average

was at its session high of 10,650.35 heading into the final hour of trading. The index then returned all of its gains and fell briefly into negative turf, hitting a low of 10,563.19, before bouncing modestly toward the close. The blue-chip proxy closed up 27.22, or 0.3%, to 10,609.06. The

Russell 2000

rose 6.05, or 1.4%, to 438.44.

General Electric

(GE) - Get Report

and

Philip Morris

(MO) - Get Report

were the Dow's biggest positive influences, offset by weakness in

J.P. Morgan

(JPM) - Get Report

. Financials in general declined again, despite the bond market's advance. The

Philadelphia Stock Exchange/KBW Bank Index

fell 1.7%.

Noting the Dow swung less than 100 points today, Jim Benning, a trader at

BT Brokerage

, said the Nasdaq's advance was more significant than the struggles of the equity market's most public face.

"The Nasdaq has been on a tear and the Dow has been kind of flip-flopping around," Benning said. "But the Dow is so narrowly focused, people read too much into it."

The "sloppy" action in the bonds toward the close did account for the final-hour dip, but the trader is convinced the recent bullishness will continue, noting the fourth-quarter is a historically strong period for stocks.

"People are getting a feeling the

Fed

won't do anything" at its Nov. 16 meeting, he added. If so, "you could very well see the yield on the long bond back through 6%. Even if they do raise rates, it wouldn't shock anybody and I don't think it would hurt the market very much either."

In

New York Stock Exchange

trading, 914.4 million shares were exchanged while advancers bested declining stocks 1,675 to 1,388. In

Nasdaq Stock Market

action 1.33 billion shares traded while gainers led 2,334 to 1,625. New 52-week lows outpaced new highs 91 to 53 on the Big Board while new highs led 212 to 87 in over-the-counter trading.

Happy Days: Here Again

"Last week we felt the lows made were the lows and made a strong bullish case that was the bottom," said Courtney Smith, chief investment officer at

Orbitex Management

. On Oct. 25, Smith recanted a bearish stance he'd held for the previous four to five months.

"From a fundamental point of view, it's hard to find any economic news showing anything but a slowdown," particularly in the consumer sector, Smith said, explaining his change of view. "That gave the market the fundamental underpinning to say even if the Fed does raise rates, it won't be more than a quarter" percentage point.

Strength in the manufacturing sector "won't pick up the slack" for the consumer sector that is "finally starting to come down," the strategist argued.

In the

National Association of Purchasing Management Index

report Monday, the prices-paid component rose but prices received didn't, Smith noted.

Because manufacturers are "heavily weighted to raw materials, prices paid are skyrocketing, but they can't pass through those things. Consumers won't pay," he said. "There's not going to be any inflation."

In addition, the strategist was enthused about the technical picture of last week's rally, particularly Friday, which he dubbed a "liftoff kind of rally."

As for today, "this is all according to plan," he said with a chuckle. "It never happens that way, but I'll take it," advising investors to "buy, buy and more buy."

In a recent edition of his newsletter he was a bit more specific, recommending technology and health-care stocks, with favorites including

EMC

(EMC)

and

Immunex

(IMNX)

, as well as jeweler

Tiffany

(TIF) - Get Report

.

Among other indices, the

Dow Jones Transportation Average

rose 8.42, or 0.3%, to 2976.50; the

Dow Jones Utility Average

slid 0.03 to 306.54; and the

American Stock Exchange Composite Index

dipped 0.44, or 0.1%, to 804.08.

Elsewhere in North American equities, the

Toronto Stock Exchange 300

rose 18.38 to 7233.7 and the

Mexican Stock Exchange IPC Index

jumped 314.06, or 5.7%, to 5793.85.

Wednesday's Company Report

By Eileen Kinsella
Staff Reporter

(

Earnings estimates from First Call/Thomson Financial; earnings reported on a diluted basis unless otherwise specified. New highs and lows on a closing basis unless otherwise specified.

)

The Nasdaq's first-ever close above 3000 was powered by strong gains in

Commerce One

(CMRC)

soaring 47 5/8, or 23%, to 254, while Qualcomm climbed 35 1/2, or 15.8%, to 260 1/2. For more details on Qualcomm's latest earnings quarter, take a gander at the

story reported by

TheStreet.com/nytimes.com

joint newsroom.

Meanwhile American Home Products rose 5 7/16, or 10.8%, to 55 13/16 and Warner-Lambert gained 5 5/8, or 7.2%, to 83 13/16 after the companies confirmed they are negotiating a $65 billion merger. AHP Chairman John Stanford would likely be tapped as chairman of the merged company, while Warner-Lambert Chairman Lodewijk J.R. de Vink is expected to become CEO.

TheStreet.com/nytimes

joint newsroom reported on the merger in a

story this morning.

Mergers, acquisitions and joint ventures

Alcoa

(AA) - Get Report

slipped 7/8 to 59 11/16 after it announced its plans to buy

Hyundai's

interest in

Aluminum of Korea

.

America Online

(AOL)

rose 5 3/4 to 138 7/8 and

Blockbuster

(BBI) - Get Report

gained 1 3/8 to 13 7/8 after they set a multiyear pact whereby Blockbuster will become the premier home video provider on AOL's Entertainment Channel, while AOL will be heavily promoted through Blockbuster. As part of the pact, AOL will make a $30 million equity investment in

Blockbuster.com

.

TheStreet.com/nytimes

joint newsroom reported on the

new venture in a separate story.

American Greetings

(AM) - Get Report

inched up 3/4 to 25 13/16 after it said it's acquiring

Gibson Greetings

(GIBG)

for $10.25 a share in cash, or $162.3 million. Gibson gained 3 7/16 to 8 7/8. American Greetings said the takeover is expected to be additive to earnings in the upcoming fiscal year.

General Electric gained 2 3/8 to 131 3/8 after its unit

NBC

offered about $700 million for

Chronicle Publishing's

San Francisco

KRON

television station, the

Journal

reported, citing people familiar with the bid.

Separately,

Lehman Brothers

upped its price target on General Electric to 150 from 130. Earlier this week, chairman and CEO John Welch said he would retire in April 2001.

Gilat Satellite

(GILTF)

climbed 4 1/16, or 7.4%, to 59 5/8 after it said it is not in negotiations to be bought by

Microsoft

(MSFT) - Get Report

. Shares of Microsoft lost 1/2 to 92.

Starwood Financial Trust

(APT) - Get Report

lost 2 7/8 to 21 1/16 and

TriNet Corporate Reality

(TRI) - Get Report

added 13/16 to 24 after shareholders favored Starwood's planned $696.5 million stock purchase of TriNet.

Earnings/revenue reports and previews

Axa Financial

(AXF)

slipped 1/4 to 33 11/16 after it posted third-quarter earnings of 54 cents a share, a penny ahead of the 12-analyst estimate and up from the year-ago 31 cents.

Federal Realty Trust

(FRT) - Get Report

rose 7/16 to 19 9/16 after it posted third-quarter funds from operations of 60 cents a share, a penny better than the six-analyst estimate and up from a year-ago 54 cents a share.

Kenneth Cole

(KCP)

rose 2 1/8, or 5.3%, to 42 1/2 after it posted third-quarter earnings of 57 cents a share, beating the seven-analyst estimate of 53 cents and up from the year-ago 42 cents.

Cyprus Amax

(CYM)

lost 1/8 to 19 7/16 after it reported a third-quarter loss of 17 cents a share, wider than the six-analyst estimate of a 16-cent loss but narrower than the year-ago 38-cent loss.

HealthSouth

(HRC) - Get Report

lost 1/16 to 6 1/8 after it posted third-quarter earnings of 16 cents a share, in line with the nine-analyst estimate but down from the year-ago 28 cents.

Hercules

(HPC)

inched up 5/8 to 24 1/8 after it posted third-quarter earnings of 57 cents a share, missing the 11-analyst estimate by a penny and down from the year-ago 74 cents.

Intimate Brands

(IBI)

slipped 3/4 to 38 5/16 after it said October same-store sales rose 10%.

PhyCor

(PHYC)

fell 3/8, or 15.8%, to 2 after it reported third-quarter earnings of 7 cents a share, missing the 16-analyst estimate of 9 cents and down from the year-ago 15 cents.

Reckson Associates

(RA) - Get Report

rose 1/16 to 19 1/2 after it posted third-quarter funds from operations of 58 cents a share, beating the 10-analyst estimate of 56 cents and the year-ago 52 cents.

Thermo Instrument

(THI)

added 5/16 to 10 5/8 after it posted third-quarter earnings of 18 cents a share, missing the two-analyst estimate by a penny but up from the year-ago 3 cents a share.

Tommy Hilfiger

(TOM)

climbed 1 3/16 to 28 5/16 after it posted fiscal second-quarter earnings of 79 cents a share, ahead of the 15-analyst estimate of 73 cents and above the year-ago 60 cents.

United HealthCare

(UNH) - Get Report

dropped 2 3/8 to 52 15/16 after it posted third-quarter earnings of 81 cents a share, beating the 22-analyst estimate of 78 cents and ahead of the year-ago 66 cents.

Whirlpool

(WHR) - Get Report

fell 3 1/2 to 68 1/16 after saying it was set to report record financial performance for fiscal 1999 despite shipping problems. The company said its fourth-quarter earnings are expected to be in line with the nine-analyst estimate of $1.46, up from the year-ago $1.09.

Offerings and stock actions

PaineWebber

recommended that

Abbott

(ABT) - Get Report

shareholders switch into

Baxter

(BAX) - Get Report

noting that, "things continue to worsen" for Abbott, and "things are improving" for Baxter. Abbott fell 1 3/16 to 36 13/16, while Baxter edged up 13/16 to 63 7/8.

Apollo

(APOL)

advanced 1 3/8, or 5.2%, to 24 after it said it set a $40 million addition to its existing stock buyback.

Be Free soared 16 15/16, or 141.1%, to 29 in its trading debut.

Donaldson Lufkin & Jenrette

priced the 5.6 million-share IPO top-range at $12.

PaineWebber raised its price target on

EchoStar Communications

(DISH) - Get Report

to 76. Shares rose 5 9/16, or 8.8%, to 69 3/4.

Tyco International

(TYC)

gained 1 1/2 to 41 after it said it set a 20 million-share repurchasing program.

Thomson Multimedia

(TMS)

tacked on 10 3/16, or 45.2%, in its trading debut.

Goldman Sachs

priced the 21.1 million-share IPO at $22.588 a share.

Goldman Sachs upped its expected price range for

Webvan's

(WBVN)

25 million-share IPO to $13 to $15 from $11 to $13. The offering is set to price on Thursday. For more on Webvan, check out

TheStreet.com's

Adam Lashinsky's

column.

Viad

(VVI) - Get Report

rose 1/4 to 25 after it said it plans to add $30 million to $50 million to its current $150 million share repurchasing program.

Analyst actions

Bear Stearns

upped its price target on

Apple

(AAPL) - Get Report

to 90 to 95 from 75 to 80. Apple rose 1 1/4 to 81 1/2.

Morgan Stanley Dean Witter

sliced its rating on

Beckman Coulter

(BEC)

to neutral from outperform. Beckman inched up 1 to 50 1/4.

Merrill Lynch

upgraded shares of

Deere

(DE) - Get Report

to accumulate from neutral. Deere jumped 1 7/8, or 5.1%, to 38 9/16.

PaineWebber

cut its rating on

Goldman Sachs

(GS) - Get Report

to neutral from attractive, citing price. Goldman slipped 1 to 68 3/4.

Hambrecht & Quist

sliced its rating on

Hutchinson Tech

(HTCH)

to market perform from buy. Hutchinson fell 4 1/8, or 17.8%, to 19.

J.P. Morgan

sliced its rating on

Navistar

(NAV) - Get Report

to market perform from buy. Navistar dropped 3 1/4, or 7.8%, to 38 3/8.

Credit Suisse First Boston

upgraded

Nortel Networks

(NT)

to strong buy from buy. Nortel rose 3 1/8, or 5.1%, to 64 1/8.

Merrill Lynch reinstated coverage of the following oil stocks with buy ratings:

Totalfina

(TOT) - Get Report

, which skidded 1 to 64 3/4;

Texaco

(TX) - Get Report

, which inched up 9/16 to 60 1/16;

Conoco

(COC)

, which slipped 3/8 to 26 3/4;

Exxon

(XON) - Get Report

, which fell 1 1/8 to 73; and

Amerada Hess

(AHC) - Get Report

, which moved up 1/8 to 55 3/8.

Merrill also started coverage of

Royal Dutch

(RD)

,

Shell Transport

(SC) - Get Report

,

Chevron

(CHV)

and BP Amoco with accumulate ratings. Royal Dutch gained 1/2 to 60, Shell Transport stumbled 5/16 to 45 7/16, Chevron added 5/16 to 89 1/16 and BP Amoco fell 1 to 54 1/4.

Merrill Lynch upped its rating on

Oxford Health Plans

(OXHP)

to near-term accumulate from neutral. Oxford rose 1 11/16, or 10.9%, to 17 1/8.

J.P. Morgan downgraded shares of

Paccar

(PCAR) - Get Report

to market perform from buy. Paccar fell 3 5/16, or 7%, to 43 15/16.

First Boston upgraded

Razorfish

(RAZF)

to strong buy from buy. The stock dropped 3 1/2 to 74 3/4.

PaineWebber raised its price target on

Sapient

(SAPE)

to 155 from 120. Sapient declined 1 1/2 to 128 15/16.

Merrill Lynch

rolled out coverage of

Spanish Broadcasting

(SBSA)

with a buy rating and a price target of 36. Shares rose 2 5/8, or 9.7%, to 29 1/2.

Miscellany

Calpine

(CPN)

added 1 3/8 to 57 7/8 after saying it gained rights to build and operate a 500 megawatt, gas-fired power planet in Oxford, Conn. The company said it would spend $250 million to build its

Towantic Energy Center

, which would open in late 2002.

DaimlerChrysler

(DCX)

lost 5/16 to 74 15/16 after it announced plans to discontinue its Plymouth product line at the end of the 2001 model year.

Host Marriot

(HMT)

climbed 1/8 to 9 1/8 after it said COO Christopher Nassetta would replace the retiring Terence Golden as president and CEO.

Philip Morris rose 2 15/16, or 12.2%, to 26 15/16 and

R.J. Reynolds

(RJR)

added 1 13/16, or 9%, to 21 7/8, on news that the Florida Supreme Court will hear a tobacco industry appeal about how punitive damages should be decided in a massive class action suit known as Engle.

Two weeks ago, an appellate court ruled that the jury hearing the case could determine a lump-sum punitive damage award that legal experts say could amount to hundreds of billions of dollars. The high court's decision to hear the tobacco industry's appeal could derail the appellate court ruling.

The U.S. Government sued seven large utilities with aging coal-fired plants for allegedly polluting the air throughout the Midwest and East Coast states. The lawsuits accused

American Electric Power

(AEP) - Get Report

,

Cinergy

(CIN)

,

TECO Energy

(TE)

,

Southern Indiana Gas & Electric

(SIG) - Get Report

,

FirstEnergy

(FE) - Get Report

,

Illinova

(ILN)

and

Southern

(SO) - Get Report

of modifying more than 24 power plants without installing equipment required by law to control smog, acid rain and soot. Most of the stocks were down modestly on the news.