When the bell rings tomorrow, the stock market will close out the year with double-digit gains for the fifth time in a row. In those five years, the
will have gained something like 170% -- or about as well as
TheStreet.com Internet Sector
index will have done this year.
When stocks have a good year there is usually a mass of investors looking to take some of their chips off the table once January comes around. But after a good year, there is also usually a flood of new cash into 401(k)s and the like. This is the dynamic that the market is contending with today.
"It's the traditional tug-of-war," said Gary Kaminsky, managing director of private banking at
. "There's concern about the amount of profit-taking that's anticipated Monday, but there seems to be a belief that there is going to be a lot of supply."
For today, said Kaminsky, the profit-taking worries are weighing on the market. Nowhere is that more noticeable than in the highflying Internet sector.
The TSC Internet index was lately off 28, or 6.5%, to 407. Among the sector's bellwethers,
was down 18 1/16, or 5.5%, to 313 3/8.
was down 14 1/4, or 9.2%, to 140 1/2.
was down 22, or 8.2%, to 247 13/16.
"Nothing actually sparked it," said Dan Mathisson, head stock trader at
D.E. Shaw Securities
, of the selling that started midmorning. "It started like any other day and then the bottom dropped out. We're talking crowd behavior, and once the selling starts you get a lot of day traders that are just trying to play in the currents."
Amazon and Yahoo! were trading in lockstep, and Mathisson said there were some who were trying to game that. "A lot of people are playing the intraday spread. If Amazon drops 5 points and Yahoo! just sits there, people are buying the Amazon and shorting the Yahoo!"
Of the action in the Internet stocks, Kaminsky said, "The only recent history we can look at is the biotech rally in '90 and '91. For every one that went up, nine went down into the single digits and many disappeared. There will be some great survivors that are going to dominate the online world."
But he compared the more tertiary issues that have recently jumped unfavorably with Atlantic City.
Movements in the broader market were a lot more staid. The
Dow Jones Industrial Average
was off 5 to 9316 while the S&P 500 was down 3 to 1239. The tech-logged
Nasdaq Composite Index
was down 12 to 2170. The small-cap
was down a fraction to 410.
After the strong run stocks have had over the last few months, a pullback wouldn't be out of order, said Carl Bhathena, vice president at
Holland Capital Management
"We may be due for a breather in the near term," he said. "But that is not to say that we're not setting up the stage for January to be relatively healthy. You would expect it to be a strong period for stocks, especially growth-related issues."
New York Stock Exchange
, breadth was on relatively even footing, with advancers leading decliners 1,420 to 1,388 with 337 million shares crossing hands. In
Nasdaq Stock Market
activity, decliners were beating advancers 2,092 to 1,815 on 561 million shares.
The 30-year Treasury bond was up 14/32 to 102 10/32, dropping the yield to 5.10%.
Wednesday's Midday Movers
Aaron L. Task
of the day, the "who is this company and can you believe that move?" du jour. The direct merchandiser was up 3 15/16, or 55.8%, to 11 after trading as high as 22 5/8 on news it has signed a deal with
to bring 20 Genesis Direct brands to Excite's flagship portal sites. Excite, however, was down 3 5/8, or 7.5%, to 44 7/8, declining along with most other big Internet names.
In the "we have a Web site so you must buy our stock" category,
D.G. Jewellery of Canada
was up 1 3/16, or 29.7%, to 5 1/2 on news it plans to market its jewelry online. Separately,
was up 9/16, or 7.2%, to 8 7/16 after issuing a press release (no, seriously) confirming it has an online site and will soon centralize the Web offerings of its operating companies.
was up after announcing -- along with broker/dealer
Track Securities Corp.
-- that it will offer online trading services.
On the clammy side of the Internet mania pillow, some of this week's biggest gainers were down hard this morning, including
, down 12 1/16, or 29.7%, to 28 3/4;
was off 3 1/2, or 40.3%, to 5 3/16;
Active Apparel Group
, down 7 1/16, or 37.1%, to 12; and
, lower by 12 3/8, or 27.4%, to 33.
Additionally, online brokers were down after a big run-up in recent trading and some cautious comments in a Heard on the Street column in
The Wall Street Journal
. Notably lower were
National Discount Brokers
, down 7 1/16, or 22.4%, to 24 7/16, and
, lower by 10 3/8, or 17.3%, to 49 3/4.
traded up 5/8 at 66 3/4 on reports that the networker is sealing deals to divest certain extra operations of
, which it acquired in October. Earlier in the morning shares climbed as high as 69 5/8.
Next week Ascend is expected to announce plans to unload two Stratus divisions, one through a leveraged buyout and the other through a straight sale, according to analyst Chris Stix with SG Cowen. Stix, who reiterated a strong buy rating on Ascend, expects the company to announce plans to unload a third unit by the end of January. He did not name any buyers for the previously announced deals. Cowen has not banked any deals for Ascend.
Ascend's $822 million stock purchase of Stratus, greeted with skepticism when it was first announced Aug. 3, is now seen as a positive step in Ascend's strategy of helping telephone carriers ease voice traffic onto computer networks. Ascend bought Stratus for its specialized voice-signalling technology, and is discarding operations it doesn't need.
An Ascend official declined to comment on Cowen's report. Stix's colleague Vijay Rajamani was not immediately available for comment.
was up 3/4, or 10.3%, to 8 despite reporting third-quarter earnings of 2 cents a share, matching the 13-analyst forecast but down from the year-ago 14 cents. The company said it expects the adverse retail conditions that hurt its third-quarter results to damage its fourth-quarter performance as well. The estimate calls for fourth-quarter earnings of 18 cents vs. the year-earlier 37 cents.
was up 1 11/16, or 15.7%, to 12 7/16 after reporting fourth-quarter earnings of 4 cents per share, up from 1 cent a year ago as revenues rose 12%. No earnings estimates were available.
In other news:
, which fell 19% yesterday after saying it will have to restate earnings for 1996, 1997 and 1998, was down a further 1 13/16, or 8.3%, to 20.
Hambrecht & Quist
lowered its recommendation to hold from buy.
Advanced Micro Devices
was up 1 13/16, or 6.6%, to 29 5/16 after
made some positive comments about the chip maker's shipments this quarter. Other chip names were higher in concert, including
, lately up 3 1/8 to 87 1/8 and
, up 5/8 to 13 7/16.
was down 23/32, or 65.7%, to 3/8 after saying last night it will have to weigh strategic alternatives, including the sale of some or all assets and a shutdown of operations, because majority shareholder
will not increase its existing credit capacity. Lockheed Martin was up 3/16 to 83 13/16.
was up 1, or 21.6%, to 5 5/8 following an upgrade to buy from neutral at
was down 2 1/2, or 5.7%, to 41 1/2 after being downgraded to hold from outperform at
Wheat First Union
was higher by 13/16, or 8.4%, to 10 7/16 after being upgraded to buy from outperform by
Salomon Smith Barney
Electronic Data Systems
was up 7/8 to 49 15/16 thanks to an upgrade from
to near-term accumulate from neutral.
was up 11/16, or 15.3%, to 5 3/16 after saying it will buy back up to 1.5 million shares.
was higher by 1/2, or 7.3%, to 7 5/16 after announcing a buyback of up to $5 million of its shares.
was up 3/16 to 17 after setting a buyback of up to 5% of its common shares.
was up 1 15/16, or 106.9%, to 3 13/16 after signing a deal with
which will use the company's real-time operating system in its new digital television set-top box.
was down 1/16 to 187 1/16.