Caveat emptor. The initial rush of buying that greeted stocks at the onset of 1999's first trading day evaporated, leaving major indices mixed.
Market internals sustained their positive bent throughout and the
Nasdaq Composite Index
set yet another record high, but the day finished on a far less robust stance than its early movement indicated. Transportation names failed miserably to sustain early gains, while weakness in drug makers, retailers and energy concerns also weighed on blue-chip averages.
Meanwhile, the bond market was battered by weakness in the dollar vs. the newly offered euro and Japanese yen. On its first day of trading in London, the euro rose to $1.1831 up from $1.17 at the open, while the dollar lost 2.10 yen to 111.77. The price of the 30-year Treasury bond fell 30/32 to 101 16/32, sending its yield up to 5.15%.
The tech-enflamed Nasdaq retreated from its intraday high of 2233.57 but still managed to close up 15.36, or 0.7%, to a new all-time best of 2208.05. Tech bellwethers
each closed with gains albeit off intraday highs; the
Philadelphia Stock Exchange Semiconductor Index
each rose 1%.
Internet names also helped the Nasdaq.
TheStreet.com Internet Sector
index gained 6.84, or 1.7%, to 413.26, led by
, which rose 10.5%.
Among major equity measures, the
suffered the greatest fall from grace. Rather than setting a new standard, as its intraday high of 1248.81 would have, the index closed off 1.13, or 0.1%, to 1228.10.
Dow Jones Transportation Average
closed down 31.66, or 1%, to 3117.65 after rising as high as 3158.39 early in the session. Profit-taking in
, which slid 2.9%, weighed most heavily on the transports.
Dow Jones Industrial Average
closed up just 2.84 to 9184.27 after reaching as high as 9350.33 at mid-morning. Still, the index closed up from its late-day worst of 9122.47.
was enough to offset notable weakness in
AT&T rose 2.8% following an upgrade to near-term accumulate from neutral by
. The gains belied the possible threat posed by a combination between
. After reported talks between the firms were confirmed, Bell Atlantic shed 3.8% while AirTouch closed off 5.8%;
NationsBanc Montgomery Securities
cut its rating on AirTouch to hold from buy.
The Bell Atlantic-AirTouch merger talks ignited speculation of another round of merger-and-acquisition activity. That, in turn, helped brokerage stocks; the
American Stock Exchange Broker/Dealer Index
rose 4.1%, outpacing the 0.4% rise in the
Philadelphia Stock Exchange/KBW Bank Index
, once as high as 424.72 closed off 0.70, or 0.2%, to 421.26.
"It's a little bit of a concern but I don't want to overplay it," said Robert Harrington, co-head of block trading at
. "You can't place too much importance on one day in this market, especially a Monday and the first day after New Year's. I'm not sure you can infer any major macro trends off this action."
Like most traders, Harrington was unable to pin the reversal on any one event, noting there wasn't "a whole lot to highlight" and the big news events -- the advent of the euro and the Bell Atlantic-AirTouch deal -- were already in the market.
"The only think I'm getting is people had some money to put to work early but once that dried up, the market came right in and the futures came in pretty strong." The S&P futures cash contract for March closed down 1.13 at 1228, he said.
New York Stock Exchange
trading, 882.7 million shares were traded while advancers bested declining stocks 1,723 to 1,433. In
Nasdaq Stock Market
activity, 938.5 million shares were exchanged while gainers led 2,275 to 1,992. New 52-week highs bested new lows 130 to 13 on the Big Board and by 135 to 24 in over-the-counter trading.
In part because of the market internals, Greg Nie, chief technical analyst at
in Chicago, was not overly concerned about the fade by major market gauges.
"I think you take it with a grain of salt," Nie said. "There's a little more of a tug of war than the majority
bullish camp would like to see, but it's still a step forward because of volume and the advance/decline line was positive. If advance/decline ended negative, that would be a degree or two more disturbing."
Because the advance/decline remains below its April peak -- and in fact has not broken its downtrend -- positive breadth is the key to sustaining the upward trend evident in the fourth quarter, Nie said.
"It's part and parcel of question the bulls face -- do they have the firepower necessary to fulfill expectations, which are one of the negative indications?" he said. "I would not be surprised by a head fake to the downside in the next couple of days, especially if we see tax-loss selling. That might provide some nervous tension for a couple of days, which perversely would be good because it would help sentiment, which is an overall negative."
Internet stocks are "obvious choices" for some tax-loss selling in the coming days, the technician said, as well as "extended tech issues" such as Sun Microsystems and
which "had big runs in the latter portion of the year."
But Nie remains "cautiously bullish" and believes any selling that does emerge will prove to be "very modest" for the broader market. He views support for the Dow at 8800 to 9000 and sees an "upside objective" of 10,500 sometime in the first half of the year.
"If real big firepower is the there it could happen sooner than later -- it's not that big of a move from here," he said. "But it gets back to momentum. We'll post a series of new highs in the early part of 1999 if demand is there to fulfil the bullish expectations already in place. It's not a problem if bulls pass the momentum test
as evidenced by market breadth. It's circular logic, but it applies."
Among other indices, the
Dow Jones Utility Average
lost 0.39, or 0.1%, to 311.91, and the
American Stock Exchange Composite Index
fell 5.38, or 0.8%, to 683.61.
Monday's Company Report
By Heather Moore
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.
Bell Atlantic lost 2 1/16 to 51 15/16 after confirming yesterday it's in talks to buy AirTouch Communications for roughly $45 billion in stock. After NationsBanc Montgomery Securities lowered it to hold from buy, AirTouch slipped 4 3/16, or 5.8%, to 68 1/4.
Elsewhere in telecommunications, AT&T picked up 2 1/8 to 77 7/8 after
upgraded it to near-term accumulate from neutral and to long-term buy from accumulate. The firm said its 12- to 18-month price target for Telephone is 94 a share. Merrill also said it expects AT&T to announce the details of its merger with
Wednesday. AT&T is expected to separate its highly dilutive cable and wireless units into one tracking stock, which would exclude the consumer long distance business.
European telecom stocks soared thanks to the euro's debut and chatter about the potential Bell-AirTouch combination.
hopped 5, or 15.3%, to an all-time high of 37 3/4;
Royal PTT Telecom
hopped 6 3/8, or 12.7%, to 56 5/8;
hopped 6 9/16, or 8.3%, to an all-time high of 85 1/2;
Telefonica de Espana
hopped 9 1/8, or 6.7%, to 144 1/2;
hopped 13 1/2, or 8.4%, to an all-time high of 174 5/8; and
hopped 7 3/4, or 6.4%, to an all-time high of 128 3/16.
, which publishes
multimedia sports information, scored 1 15/16, or 12.5%, to 17 9/16 after announcing an e-commerce deal in which Amazon.com will become CBS SportsLine's online retail partner for books, video and music. Amazon.com, whose shares will split 3-for-1 after today's close, jumped 33 3/4, or 10.5%, to 354 15/16.
Elsewhere on the Internet,
gave up 6 5/16 to 148 13/16 after earlier rising to 157 1/2 following news that its members spent more than $1 billion in holiday shopping. Auctioneer
brought in 27 5/16 ,or 25.6%, to 134 1/16 and
, which owns 80% of uBid, climbed 9 3/16, or 28.9%, to 41 1/4.
Mergers, acquisitions and joint ventures
, the merged company of
, fell 1/8 to 90 5/8 on 11.6 million shares in its first day of trading.
, which replace Amoco in the S&P 500, closed down 2 3/16 to 90 13/16 after rising as high as 93 1/4.
shot up 5 5/8, or 5.9%, to an all-time high of 101 11/16 after delaying the consolidation of its two financial services arms,
added 2 3/16 to 55 1/4 after
called off plans to sell its $1 billion Tioxide business to DuPont and
amid objections from the
Federal Trade Commission
. ICI shed 1 9/16 to 33 3/8, and NL Industries picked up 1/4 to 14 7/16.
vaulted 1 7/8, or 14.7%, to 14 5/8 after late Thursday completing its split into separate hotel and gambling operations. Under the split, its new gambling company,
Park Place Entertainment
, acquired the Mississippi casino operations of
. Park Place scored 1 1/8, or 17.7%, to an annual high of 7 1/2.
sliced off 3 1/2, or 8.9%, to 35 7/8 after announcing it bought privately held
in a move to dive into the e-commerce security arena.
Pool Energy Services
lifted 1 7/8, or 17.4%, to 12 5/8 after announcing merger negotiations with rival
. The companies previously squabbled over a $273 million hostile bid from Nabors, which took in 15/16, or 6.9%, to 14 7/16.
Earnings/revenue reports and previews
slid 7/8, or 5.1%, to 16 1/4 after saying it expects to report a roughly break-even fourth quarter and that profits in 1999 will remain weak. The company also agreed to sell an idle coal dock in Wayne County, W.Va., which will result in a fourth-quarter after-tax gain of $4.6 million. The gain will be partially offset by a charge of $2.4 million for environmental liabilities, the company said. The three-analyst forecast called for fourth-quarter earnings of 9 cents a share vs. the year-earlier 52 cents.
tumbled 1 1/4, or 16.4%, to 6 7/16 after warning it sees fourth-quarter earnings falling below expectations due to lower revenue. The eight-analyst view called for 12 cents vs. the year-earlier 23 cents.
pulled in 2 1/4, or 11.3%, to an annual high of 22 1/4 after saying it sees fourth-quarter earnings coming in at 3 cents to 4 cents a share above estimates. The six-analyst forecast called for 19 cents vs. the year-ago 16 cents. The company attributed the news to higher shipments of its automatic-dimming rearview mirrors, improved gross margins on certain mirror products due to higher yields and certain year-end transactions and adjustments.
stumbled 1 1/2, or 5.2%, to 27 7/16 after setting a fourth-quarter restructuring charge of $20 million, or 68 cents a share, and warning of a quarter loss of 47 cents to 52 cents a share. Libbey said its capacity realignment will add 16 cents to 18 cents to its operating income in 1999. The five-analyst prediction called for fourth-quarter earnings of 64 cents a share vs. the year-ago 58 cents.
added 1/4 to 12 1/8 after saying it sees fourth-quarter earnings of about 14 cents a share, below its October projection of about 20 cents. The three-analyst forecast called for 16 cents vs. the year-ago 30 cents.
lowered 13/16 to 24 after posting fourth-quarter earnings of 30 cents a share, beating the 18-analyst estimate by a penny and the year-earlier figure by 7 cents.
soared 7/8, or 35%, to 3 3/8 after saying late Thursday it will take an unspecified fourth-quarter charge to cover the costs of a restructuring program. The company plans to cut about 45 professional staff jobs and about 72 manufacturing operations jobs.
sank 6 7/8, or 31.4%, to 15 after warning it will post a first-quarter loss of 14 cents to 16 cents a share. The three-analyst estimate called for earnings of a penny vs. the year-ago loss of 28 cents. The company blamed weakness in technology licensing revenue associated with several significant transactions which failed to close in the quarter.
shed 1 11/16 to 56 7/8 after reporting first-quarter earnings of 21 cents a share, in line with the 16-analyst expectation and higher than the year-ago 18 cents.
Offerings and stock actions
shaved off 3 5/8, or 11.1%, to 29 1/8 even after setting a 2-for-1 stock split. Making investors a little happier was
, which expanded 8 11/16, or 18.6%, to 55 7/16 after announcing a 2-for-1 split. And
brought in 24 15/16, or 19.2%, to 155 after announcing a 2-for-1 split and a 4.58 million-share offering.
dropped 2, or 5.6%, to 34 1/16 after
sliced it to attractive from buy.
skidded 7 1/2, or 9.5%, to 71 1/4 after
slashed it to long-term attractive from buy.
withered 2 1/4, or 11.5%, to 17 1/2 even after
BT Alex. Brown
began coverage with a buy.
decreased 1 5/16, or 7.3%, to 16 23/32 after
dropped it to market outperform from recommended.
tumbled 3 1/4, or 8.2%, to 36 1/2 after Merrill Lynch lowered it to near-term neutral from accumulate, maintaining its long-term buy.
gave up 3 1/4, or 8.2%, to 36 1/2 after
Salomon Smith Barney
downgraded it to outperform from buy based on valuation.
ING Barings Furman Selz
lowered the company to buy from strong buy.
Sunrise Assisted Living
slipped 2 5/16 to 49 3/16 after
cut it to accumulate from buy.
fell 2 1/2, or 7.7%, to 30 1/8 even after
started coverage with an attractive.
Intel took in 2 1/4 to 120 13/16 after introducing its new
processors at 366 and 400 megahertz. The new processors are the first among many low-cost PC products to be rolled out this year, the company said.