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Nice rally.

Yeah, about as nice as a surprise visit from

Slobodan Milosevic

for Sunday dinner.

After opening on the plus side, major stock proxies quickly reversed their upward trajectory, and amid the lunch hour on Wall Street they were mostly under water.

Arguably the weakest (or most horrid) action in the market was in the Internet sector. Internet Sector

index -- which opened solidly higher thanks to a

Business Week Online

report that said



is in talks to acquire


(ATHM) - Get Free Report

-- quickly tumbled from its early intraday peak and subsequently fell deep in the red. The DOT had traded as high as 553.42 and as low as 517.54. It was lately down 25, or 4.6%, to 515.

However, Excite@Home President George Bell was quoted on


this morning as saying there was "no truth to the story" on

BusinessWeek Online

. Excite@Home was down slightly while Yahoo! was off 5%.

As for the

Dow Jones Industrial Average

, it was down 22, or 0.2%, to 10,624.


(IBM) - Get Free Report


American Express

(AXP) - Get Free Report

were the biggest drags on the Dow. The Dow had traded as high as 10,727.97.

Elsewhere, the

S&P 500

was down 12, or 0.9%, to 1316. The S&P 500 peaked at the 1336.06 level. The

Nasdaq Composite Index

was down 58, or 2.2%, to 2565. The Nasdaq Comp traded as high 2649.21.


Nasdaq 100

was off 2.1%. Meanwhile, small-caps were getting hammered. The

Russell 2000

was off 8, or 1.9%, to 434.

Sector-wise, online brokers were getting shellacked after a Wall Street analyst released a report on online trading volumes. And the volumes weren't robust. On the news,

Charles Schwab


was off 9.3%;


(AMTD) - Get Free Report

was down 12.3%; while



was down 14.1%.

Gold stocks were soaring. The

Philadelphia Stock Exchange Gold & Silver Index

was up 4.1%.

In the Treasury market, the 30-year bond was lately down 5/32 to 88 2/32, yielding 6.13%. (For more on the fixed-income market, see today's early

Bond Focus.)

Volume was less than robust and breadth was -- as one would expect on a weak day -- was decidedly poor.

Despite the overall weakness, stocks are poised for a pop, according to some.

"I think we're probably ready for a rally," said Louis Todd, head of equities trading at

J.C. Bradford

, or "a bounce of some sort" in the major indexes -- the Dow, the S&P 500 and the Nasdaq Comp.

Todd said -- when the Dow was up about 60 points late in the morning -- that the average, which opened strong, sold off and then snapped back, "will close higher from here."

However, bonds weren't giving stocks much of a hand. Todd pointed out that stocks are competing with the yield on the long bond which "makes it tough for stocks."

Some of the blame for the selling into this morning's rally came from fears that interest rates are headed higher, according to some.

People are worried about the next

Federal Open Market Committee

meeting, Todd said, adding that there seems to be about a 60% belief that rates are going higher in the wake of

Federal Reserve


Alan Greenspan's



testimony. "That's got people worried," Todd said.

The FOMC is slated to meet Aug. 24.

Traders also have their eyes on Friday's release of the July

employment report


On the

New York Stock Exchange

, decliners were outpacing advancers 1,920 to 939 on 413 million shares. On the

Nasdaq Stock Market

, losers were beating winners 2,647 to 1,032 on 579 million shares.

On the NYSE, 100 issues had set new 52-week lows while 23 had touched new highs. On the Nasdaq, 76 issues had set new 52-week lows while new highs totaled 45.

Meanwhile, among other indices, the

Dow Jones Transportation Average

was down 1.1%, the

Dow Jones Utility Average

was up 0.2% and the

American Stock Exchange Composite Index

was down 2%.

On the Big Board,

America Online


was most active with 27.1 million shares changing hands. It was down 5 1/8, or 5.6%, to 87 3/4.

On the Nasdaq,


(INTC) - Get Free Report

was most active, with 20 million shares changing hands. It was down 5/8 to 70 11/16.

Tuesday's Midday Watchlist

By Eileen Kinsella
Staff Reporter

Yahoo! lost 6 3/4, or 5% to 125 9/16 and Excite@Home slipped 11/16 to 42 1/4 after Excite@Home President George Bell denied a

Business Week Online

story which reported the companies had held talks over the last six weeks about a possible merger. Yahoo! reportedly would buy Excite@Home for some amount greater than its market value of $17 billion.

Mergers, acquisitions and joint ventures

America Online shed 5 1/8, or 5.6%, to 87 3/4 and

Radiant Systems


jumped 4 1/16, to 19 15/16 after the companies announced a retail services pact. AOL said it would make an unspecified investment in Radiant.

British American Tobacco

(BTI) - Get Free Report

moved up 1/16 to 9 3/8 after it agreed to buy the 58% of


that it does not already own for roughly $6.8 billion.

Earnings/revenue reports and previews



lost 1 1/16 to 35 11/16 after posting second-quarter earnings of 57 cents a share, a penny shy of the 10-analyst estimate of 58 cents and up from the year-ago 54 cents.


(EQ) - Get Free Report

fell 2 1/8 to 62 1/8 after it posted second-quarter after-tax operating earnings of $1.22 a share, ahead of the nine-analyst estimate of $1.14 and up from the year-ago operating earnings of 98 cents.

Global Crossing


lost 2 7/16 to 37 5/16 after posting a second-quarter loss of a penny a share, in line with the single-analyst estimate and narrower than the year-ago loss of 58 cents.

Global Telesystems


rose 2 1/16 to 34 1/2 after reporting a narrower-than-expected loss of 66 cents a share, compared with a five-analyst estimate of a loss of 69 cents, but wider than the year-ago loss of 34 cents.


(HRC) - Get Free Report

moved up 1/2 to 12 3/4 after posting second-quarter earnings of 27 cents a share, in line with the 11-analyst estimate but down from the year-ago 28 cents.


(LC) - Get Free Report

slipped 7/8 to 52 1/2 after it posted second-quarter operating earnings of 68 cents, ahead of the one-analyst estimate of 65 cents but down from the year-ago operating earnings of 76 cents.

Mylan Laboratories

(MYL) - Get Free Report

edged up 5/16 to 23 after it reported first-quarter earnings of 25 cents a share, a penny shy of the eight-analyst estimate and down from the year-ago 28 cents.

PE Biosystems

(PEB) - Get Free Report

ascended 5 1/or 10.2% to 59 1/4 after it reported fourth-quarter earnings of 85 cents a share, better than the eight-analyst estimate of 42 cents, and up from 57 cents a year ago. The company had a 2-for-1 stock split July 26 but reported fourth-quarter earnings on a pre-split basis.



moved up 1 3/8 to 13 15/16 after reporting fourth-quarter earnings of 26 cents a share, in line with the five-analyst estimate and up from 11 cents a year ago.

Offerings and stock actions

BigStar Entertainment

(BGST:Nasdaq) was down 1 15/16, or 19.4%, to 8 1/16 in a poor first day of trading.

Prudential Securities

late yesterday priced 2.5 million shares at $10 each, cut from a planned 3.1 million shares at $12 to $14 each.

(FLWS) - Get Free Report

was wilting in its public debut, down 1 1/2, or 7.1%, to 19 1/2.

Goldman Sachs

last night priced 6 million shares at $21, above the expected range of $16 to $18.

(QUOT:Nasdaq), was down 1 1/16, or 9.7%, to 9 15/16 in early trading, after being priced top-range at $11 a share yesterday by

Hambrecht & Quist


Analyst actions


(CI) - Get Free Report

lost 5 3/4, or 6.4%, to 83 3/4 after

Merrill Lynch

downgraded the stock to near-term accumulate from near-term buy.


(DISH) - Get Free Report

rose 4, or 6.2%, to 68 1/2 after

Banc of America Securities

upgraded the stock to buy from outperform.

Johnson & Johnson

(JNJ) - Get Free Report

rose 2 1/8 to 94 1/16 after

J.P. Morgan

upgraded the company to buy and set a price target of 110.

Wells Fargo

(WFC) - Get Free Report

lost 1/2 after Banc of America Securities upgraded the stock to buy from market perform.




sank 13 3/4, or 57.6%, to 10 1/4 after an announcement last night that the

Food and Drug Administration

had not approved a cancer painkiller.



gained 2 13/16, or 12.3%, to 26 after the company reported results from an early trial phase of a tumor-shrinking drug.

St. Paul


lost 1/16 to 32 1/8 after it announced a cost-cutting plan under which the company expects to eliminate 1,000 jobs.