Like the mythological phoenix, the biblical
or the once-forgotten-now-bigger-than-ever
, Internet stocks rose from the dead today. Meanwhile, a huge decline in
and the failure of other bellwether tech stocks to sustain a midday bounce weighed on major market proxies.
After overcoming a potentially debilitating start, U.S. gauges eventually succumbed to ongoing concerns about Brazil, renewed worries about a possible devaluation by China, and the continuing feeling stock prices have detached from rationality. Other global markets were whipsawed by similar factors.
The unsettling developments helped the bond market, however. The price of the 30-year Treasury bond climbed 22/32 to 102 16/32, its yield falling to 5.09%.
Dow Jones Industrial Average
closed down 143.41, or 1.6%, to 9120.67, but well off its morning low of 9088.49. IBM accounted for about half of the decline, falling 8.6% after
last night posting better-than-expected fourth-quarter earnings but failing to produce revenue growth that pleased the Street.
"They admitted the execution of the hardware game plan was flawed, but IBM's tale of woe is not that bad," said Hugh Johnson, chief investment officer at
, which is long Big Blue. "But it comes at a time when we all have wobbly knees and we're sitting on the fence ready to take money off the table. It doesn't really matter whether it's Brazil or China or IBM or
. We were overvalued, there was too much optimism and that made some seasoned portfolio managers skittish."
Johnson said he remains bullish and has not made any "significant" changes to his portfolio in recent weeks. But he is bothered by the combination of "too much optimism" and "both speculation and overvaluation in large-cap technology stocks."
The conditions have existed before but "this time we're letting some of the air out of the bubble slowly," he observed. "That's good, but I'm surprised. It's not the way these markets have been."
'The same things keep resurfacing and we keep getting the same knee-jerk reaction out of momentum players,' said D.A. Davidson's Jim Volk. 'There's a lot money running very scared in this market, but they keep bouncing back.'
were also notable Dow losers as financial names were again rattled by emerging market concerns. Brazil's
fell another 1.8% today, following losses of more than 3% overnight in Hong Kong's
and 5.4% in South Korea's
. Major bourses in London and Frankfurt each fell about 2.7% today.
stood out on the upside amid a strong session for retailers.
Nasdaq Composite Index
opened at is low as 2303.82 as the forces behind
yesterday's conspired against the tech proxy once more. A recovery in bellwethers such as
helped the index rebound and forge as high as 2365.11 in the afternoon. But the session ended with the Comp off 5.84, or 0.2%, to 2338.88.
gained 0.1% but the
Philadelphia Stock Exchange Semiconductor Index
dipped 1.3%, due mainly to weakness in
A Bargain? Sure, Sort Of
Meanwhile, Internet stocks benefited from the continued adulation of investors, who perceived the creation of bargains in the recent selloff.
TheStreet.com Internet Sector
index closed up 7.37, or 1.5%, to 490.01, but down from its midday high of 504.78. Notable net gainers included
"It's not as though we've killed off speculation or overvaluation," Johnson added, noting the performance of Internet names, Cisco and
, which rose 14% after posting better-than-expected earnings. First Albany does not have positions in either Cisco or BMC.
closed down 9.97, or 0.8%, to 1225.19 after falling as low as 1217.97. The
dipped 1.61, or 0.4%, to 422.44.
Traders and pundits alike were somewhat perplexed by the market's indecisiveness today, although most were impressed by its resiliency.
"These guys have all forgotten to take their lithium," said Jim Volk, co-head of institutional trading at
in Portland, Ore. "One minute Brazil is no problem, the next it is. Two weeks ago China said it would not protect foreign banks, but it didn't matter. Now all of a sudden it's a problem. The same things keep resurfacing and we keep getting the same knee-jerk reaction out of momentum players. There's a lot money running very scared in this market, but they keep bouncing back."
Volk observed the ability of the Dow to hold above 9100 and the ability of the overall market to withstand the "clocking" given to IBM, Intel and other tech leaders. "You'd think the rest of the market would capitulate but I don't see a 300 to 400 point correction in the cards."
The trader observed trading had "gotten a little quiet today," particularly on the
New York Stock Exchange
. "I think everyone is a little tired after a long, grueling week," he said. "It was a four-day week that seemed like a six-day week."
In NYSE trading, 785.9 million shares were exchanged while declining stocks whipped advancers 1,815 to 1,221. In
Nasdaq Stock Market
action 1.021 billion shares traded -- the 12th straight session with more than
a billion shares exchanged -- while losers led 2,197 to 1,826. New 52-week lows bested new highs 53 to 21 on the Big Board and while new highs led 58 to 30 in over-the-counter trading.
"We're still down but at least we're not getting raped like earlier this morning," added one West Coast trader, who asked not to be identified (can't imagine why). "It was ugly this morning. The difference is, when you watch the tape it's not like they're crushing these stocks. It's not frantic selling, like
is selling their
position. Then this market would be really scary."
Among other indices, the
Dow Jones Transportation Average
fell 31.01, or 1%, to 3063.80; the
Dow Jones Utility Average
rose 1.74, or 0.6%, to 308.73; and the
American Stock Exchange Composite Index
slid 0.30, or 0.04%, to 704.69.
For the week, the Dow industrials fell 219.88, or 2.4%; the S&P 500 shed 18.05, or 1.5%; the Nasdaq Comp dipped 9.32 or 0.4%; the Russell 2000 slid 4.61, or 1.1%; TheStreet.com Internet index lost 14.36, or 2.8%; the Dow transports lost 84.73, or 2.7%; the Dow utilities rose 2.19, or 0.7%; and the Amex Composite fell 4.60, or 0.6%.
Elsewhere in North American equities today, the
Toronto Stock Exchange 300
slid 41.85, or 0.6%, to 6593.91 and the
Mexican Stock Exchange IPC Index
fell 37.17, or 1%, to 3686.03. For the week, the TSE 300 lost 165.51, or 2.4%, and the IPC gained 79.26, or 2.2%.
Friday'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.
IBM, whose positive earnings have been pricing into the stock for weeks, sliced off 17 1/4, or 8.8%, to 179 3/4 following last night's fourth-quarter report of $2.47 a share, 2 cents higher than the 21-analyst expectation and up from the year-ago $2.11. Big Blue's CFO said in a conference call that the company made progress on picking up the pace of growth in the fourth quarter and it sees the momentum carrying into this year. He backed predictions of industry technology spending growing at an 8% to 9% rate in 1999 and said the still-struggling PC sector "sure feels a lot better than it has at any time in the past few years."
Morgan Stanley Dean Witter
dropped the stock to outperform from strong buy while upping its price target to 210 a share from 181.
Credit Suisse First Boston
increased its 1999 earnings estimate to $7.50 a share from $7.42 while upping its price target to 230 a share from 185.
Salomon Smith Barney
raised its price target to a range of 230 to 240 from 215. (
examined why a good quarter wasn't enough for IBM investors in a story this afternoon.)
Mergers, acquisitions and joint ventures
lifted 11/16 to 28 5/8 after acquiring
, a subsidiary of Canada's
, for about $400 million, including the assumption of $91 million in debt. As part of the transaction, Bergen obtained the option to purchase Counsel's 9% stake in
, which took in 5/16 to 7 1/4.
eBay shot up 14 1/2, or 8%, to 196 3/4 after
said the company may be entering a marketing pact with
. Compaq shed 1 1/2 to 46 3/16.
agreed to sell its satellite businesses to
in two transactions for about $1.82 billion.
TCI Satellite Entertainment
, the publicly traded section of Primestar, tumbled 1 13/32, or 56.3%, to 1 3/32 on the deal. Hughes added 1 7/8 to 46 5/8.
jumped 2, or 6.6%, to 32 1/2 after doubling the value of its contract with
to $600 million. NorTel slipped 1/2 to 53 1/2. Yesterday, Williams posted a fourth-quarter loss of 2 cents a share, missing the 14-analyst forecast for a profit of 20 and falling below the year-ago profit of 16 cents.
Earnings/revenue reports and previews
Air Products & Chemicals
dropped 3/4 to 35 7/8 after posting first-quarter earnings of 55 cents a share, a penny shy of the 12-analyst view but up from the year-ago 53 cents.
soared 2 1/2, or 43.5%, to 8 1/4 after reporting fourth-quarter earnings of 30 cents a share, excluding gains from a settlement of a dispute with
. The three-analyst outlook called for 17 cents vs. the year-ago 19 cents.
BT Alex. Brown
raised the stock to buy from market perform.
brought in 2 3/16, or 13.7%, to 18 1/4 after last night beating fourth-quarter earnings estimates by 2 cents a share. Today, BT Alex. Brown raised the stock to buy from market perform.
gave up 3 1/16, or 8.3%, to 33 3/4 after Credit Suisse First Boston and
Warburg Dillon Read
separately downgraded the stock to hold from buy. Last night, the company posted first-quarter earnings of 29 cents a share, in line with expectations.
BMC Software rose 5 7/16, or 14.1%, to 43 15/16 after last night recording third-quarter earnings a nickel ahead of expectations.
climbed 6 3/4, or 17.5%, to an all-time high of 45 13/16 after yesterday topping fourth-quarter earnings estimates by 6 cents a share.
slid 7 1/8, or 24.1%, to 22 5/8 after last night posting fourth-quarter earnings of 31 cents a share, on target with estimates.
stumbled 1 7/8, or 27.3%, to 5 after missing second-quarter earnings estimates by 16 cents a share yesterday.
lost 1 3/8, or 5.8%, to 24 15/16 after yesterday reporting fourth-quarter earnings of 51 cents a share, in line with estimates.
lifted 9/16 to 45 1/16 after reporting fourth-quarter earnings of 28 cents, beating the 14-analyst view by a penny but falling below the year-earlier 47 cents.
skidded 5/8 to 32 after recording fourth-quarter earnings of 55 cents a share, in line with the eight-analyst view and up from the year-ago 51 cents.
lowered 3 1/16, or 23.6%, to 10 after last night forecasting that its fourth-quarter results will not meet expectations. The five-analyst estimate called for earnings of 6 cents a share from the developer of broadband video networking equipment.
fell 7/8, or 9.7%, to 8 1/8 after last night warning it sees first-quarter results coming in at break-even and that two members of its senior management team quit. The company said it's realigning its operations to focus on business functions instead of three decentralized product business units. Analysts called for 4 cents in the first quarter vs. the year-earlier 7 cents. The company also posted fourth-quarter earnings of 7 cents a share, 2 cents ahead of the six-analyst forecast but below the year-ago 13 cents.
Just for Feet
slipped 3 7/8, or 21.8%, to 14 after last night predicting its fourth-quarter earnings will be lower than the seven-analyst estimate for profits of 25 cents a share.
hopped 2 3/16 to 50 1/16 after last night topping third-quarter earnings estimates by 2 cents a share.
tumbled 2 3/8, or 12.1%, to 17 5/16 even after last night reporting fourth-quarter earnings of 31 cents a share, above the outlook for 12 cents but below the year-ago 52 cents.
decreased 1 13/16, or 8.5%, to 19 3/4 after last night missing third-quarter earnings estimates by 3 cents a share.
was trimmed 11 1/2, or 7.6%, to 139 1/2 even after beating third-quarter earnings estimates by 7 cents a share yesterday.
lost 1 7/16, or 24.7%, to 4 7/16 after last night warning that it expects its fourth-quarter results to come in near the third quarter's 4 cents a share, citing lower-than-expected incoming orders. The three-analyst estimate called for 16 cents vs. the year-earlier 21 cents.
sloughed off 2 3/16, or 22%, to 7 3/4 after last night posting second-quarter earnings of 8 cents a share, falling below forecasts for 17 cents.
shot up 1 3/4, or 20.1%, to 10 5/16 after last night beating fourth-quarter earnings estimates by 5 cents a share.
sliced off 2 3/16 to 63 3/16 after posting fourth-quarter earnings of 72 cents a share, beating the 17-analyst view of 70 cents and moving ahead of the year-earlier 62 cents.
In other earnings news:
Offerings and stock actions
brought in 23 1/2, or 117.5%, to 43 3/4 in its trading debut today. The 2.5 million-share IPO was priced at 20 this morning by Credit Suisse First Boston.
Elsewhere among new offerings,
soared 27 3/8, or 152%, to 45 3/8 in the high-speed digital communication services company's IPO.
priced the 7.8 million-share offering top-range at 18 a share this morning.
surged 7 5/8, or 63.5%, to 19 11/16 in its 3.5 million-share IPO. The offering of shares in the 3D graphics company priced at 12 a share last night by underwriter Morgan Stanley Dean Witter.
International Microcomputer Software
grew 1, or 8.4%, to 12 15/16 on market chatter the company is thinking of spinning off its e-commerce operation,
, and taking it public.
vaulted 3, or 8.7%, to 37 7/8 after BT Alex. Brown started coverage with a strong buy.
added 2 to 87 7/8 after Bear Stearns upgraded the stock to buy from neutral and the company's CEO made an appearance on
rose 3/16 to 88 1/4 on word it's considering selling its Internet-access business to
in exchange for $1 billion in @Home stock. The deal ultimately would keep AT&T in control of its Net assets, because AT&T is acquiring
, @Home's controlling shareholder. @Home, which jumped 3 13/16 to 101, plans to buy Excite for $6.7 billion.
Jones New York
expanded 4 1/2, or 18.8%, to 28 1/2 after Morgan Stanley Dean Witter upgraded the stock to strong buy from outperform and Credit Suisse First Boston initiated coverage with a strong buy.
Pixar Animation Studios
declined 1 7/8 to 38 after
upped it to accumulate from hold.
took in 2 3/16 to 38 11/16 after Morgan Stanley Dean Witter raised it to outperform from neutral.
slid 7 5/16, or 5%, to 139 after saying shortly before the closing bell that it will not begin Phase III studies of its MK-869 to treat depression. The stock was at 144 1/4 at 4 p.m. but skidded in late composite trading. The drug giant said recently completed Phase II dose-finding studies for MK-869 suggested antidepressant activity for at least one of the tested doses but that they were not definitive due to a high placebo response rate.