Stocks were feeling no pain at midday after swallowing the weaker-than-expected July
Producer Price Index
The PPI gained 0.2% in July, against a forecast of 0.3% in the
poll. That modest increase came despite a 3.4% jump in gas and oil prices; the core rate, which excludes the food and energy sectors, was flat. Economists had expected a gain of 0.1%.
And investors had no problem grasping the PPI's confirmation that worries about a 50-basis-point rate hike at the
Aug. 24 meeting are overblown. The
Dow Jones Industrial Average
was up 167, or 1.6%, to 10,956, led by
, which was happy to entertain the notion that interest rates won't be scaling up at as inexorable a pace as some have been fearing lately.
Broad strength was taking the
Nasdaq Composite Index
up 72, or 2.1%, to 2622. The
was advancing 27, or 2.1%, to 1325, and
TheStreet.com Internet Sector
index was up 17, or 3.5%, to 524. The small-cap
was up 4, or 1%, to 433.
Notwithstanding the market's notorious faint-heartedness of late, things seemed pretty solid on the upside at midday, with the indices holding their morning gains nicely. "I kind of get the sense that it'll stick for right now, said Tim Grazioso, manager of Nasdaq trading at
. "We'll sustain most of these gains."
But there was little consensus on the larger question of whether the PPI data could help the market find a bottom to its recent declines.
Richard Cripps, chief market strategist at
in Baltimore, wasn't buying any of it. "The market has a fair amount of technical damage done to it. I don't think this is going to be the kind of day that changes that. We'd need a big, high-volume day, and you're not going to get that on a Friday in August."
Volume was indeed moderate. The
New York Stock Exchange
had traded 427 million shares, while 559 million shares had changed hands on the
Nasdaq Stock Market
"No matter what the market does, people will still question the conviction of investors ahead of Aug. 24," Cripps said. "If you want to find inflation, you'll find it in the pipeline numbers. This report won't move any fence sitters." (Cripps was referring to the index's core intermediate index, which rose 0.4% in July, the second big monthly jump in a row. Intermediate prices gained 0.5% in June.)
Others were much more optimistic. Thomas McManus, equity portfolio strategist at
Banc of America Securities
, speculated that this rally could mark a near-term bottom, drawing comparisons to the market's rebound after the May PPI came out in line on June 11. On that day, after sliding since early May, the S&P 500 bottomed out at a close of 1293.64 and started a rally that lasted until, well, the recent slide.
With the help of a good
Consumer Price Index
, McManus says, "the stock market is well-poised to move significantly higher, once it realizes that the Fed won't need to pursue an aggressive series of hikes, as it did in 1994."
The market, however, hasn't yet come to that realization. McManus pointed out that the December
federal funds futures contract has priced in 98% of a 50-basis-point hike. That implies two hikes in the Fed's three remaining meetings this year. "In my view, the market's still too worried about the need for a series of hikes," he said.
It was hard to find a soft sector at midday. Check the sector proxies: The
Morgan Stanley High-Tech 35
index, up 3.3%; the
Philadelphia Stock Exchange/KBW Bank Index
, 3% higher; the
American Stock Exchange Pharmaceutical Index
, up 2.1%; the
Philadelphia Stock Exchange Forest & Paper Products Index
, up 1.3%.
Commodities, those old inflation barometers, alone looked droopy toward midday, with the
Philadelphia Stock Exchange Gold & Silver Index
off 0.5% and the
Philadelphia Stock Exchange Oil Service Index
Breadth was looking encouraging. Advancers were topping decliners 1,844 to 975 on the NYSE, where there were 32 new 52-week highs against 102 new lows. In Nasdaq action, advancers were beating decliners 2,259 to 1,271, with 65 new highs and 39 new lows.
Friday's Midday Watchlist
was up 2 1/8 to 65 7/8 after it said it has forged an agreement to buy privately held
for about $246 million in stock, increasing its presence in the data networking market. Xedia manufactures routers for virtual private networking services. With help from Xedia, Lucent would heighten its data networking capability, a weak spot for the number one telecommunications equipment maker.
Xedia's customer list includes
. Lucent expects the deal to be inked by the end of the fiscal quarter and said it will not affect fiscal 2000 earnings.
Mergers, acquisitions and joint ventures
was up 1 to 27 1/8 on a report that it may sell its
magazine division, which includes
Women's Wear Daily
magazines, as well as many trade publications,
The New York Times
reported, citing execs involved in the deal. There are two bidders for the titles:
Conde Nast Publications
. S.I. Newhouse Jr., the chairman of Conde Nast, has offered $650 million for the Fairchild group, the
reported, citing the Disney exec.
Falcon Building Products
is selling its air power tools division,
DeVilbiss Air Power
for $460 million. Pentair was up 1/2 to 41 1/2.
Two top execs of a proposed three-way aluminum merger refused to rule out a potential counterbid for
, up 1/2 to 67, for which
bid earlier this week,
reported. Shares of Alcoa dropped 9/16 to 67 3/16 on the news. The execs were from Canada's
, which was off 7/16 to 35 1/8 and France's
, also down, 5/8 to 30 1/2. Alcan, Pechiney and
earlier this week set a three-way merger.
was down 1/8 to 4 5/8 after it announced plans to sell 13 land-based drilling rigs to
. The $48 million transaction is Parker's way out of U.S. onshore oil and gas drilling, the core of its business. President and CEO Bob Parker Jr. said the sale was in line with its long-term growth strategy. Unit shares were up 1/2, or 6.2%, to 8 1/2 on the news.
have suspended plans for a television network aimed at women, only two months after announcing an ambitious strategy to combine their cable assets and women's content,
The Wall Street Journal
reported. Time Warner shares traded up 1 3/8 to 68 3/4.
Earnings/revenue reports and previews
The world's largest household appliance maker, Sweden's
was off 1 to 42 3/4 even after forecast the company forecasted higher 1999 profits.
was up 13/16 after it said it scaled down its second-quarter noncash goodwill write-off, reducing EPS charges for the quarter to 58 cents from 59 cents. The company told
that the changes have no impact on current or future prospects.
dropped 3 27/32, or 34.8%, to 7 7/32 after announced that it would postpone its second quarter earnings report. The company said it was awaiting results from an independent auditors review.
has written several times on Sabratek, most recently
Offerings and stock actions
was up 5 1/16, or 46.6%, to 16 1/16 in its trading debut. The stock is up from its initial price of $11 a share.
popped up 14 1/8, or 102.6%, to 28 1/2 in its first day of trading. The stock was priced at $14.
was up 3/8 to 34 7/8 after
Morgan Stanley Dean Witter
raised its rating from an outperform to strong buy.
was up 1/2 to 22 after
upgraded it to buy from attractive.
biotech analyst Eric Hecht started coverage on
with an near-term accumulate and long-term buy rating. Shares of Genentech was up 2 1/4 to 170 3/4.
was up 5/8 to 27 1/2 after PaineWebber upgraded it to attractive from neutral.
popped up 2 3/16 to 100 when
upgraded it to buy from outperform.
to buy from neutral. Shares of Scientific-Atlanta soared up 4 5/8 to 44 7/16.
Merrill Lynch downgraded
to near-term neutral from near-term accumulate and the firm downgraded it to long-term accumulate from long-term buy. After the close Stewart warned it expects to earn 25 cents to 27 cents a share in the third quarter, lower than the current three-analyst estimate of 29 cents a share; and 17 cents to 19 cents a share in the fourth quarter, below the current nine-analyst estimate of 25 cents. Stewart shares were off 3, or 32.5%, to 6 on the news.
dropped 1 3/8 to 61 1/2 when PaineWebber downgraded it to attractive from buy.
was up 1 3/4 to 47 15/16 on news that a federal court threw out a suit filed by
for its unsuccessful $10 billion takeover bid for Computer Sciences. Computer Associates said a U.S. district court found no evidence to support accusations that it used confidential information when bidding for Computer Sciences in early 1998. Computer Sciences was up 1 3/8 to 66 1/16.
stock may have been unfairly pounded by sky-high expectations for toy sales related to
Star Wars Episode I -- The Phantom Menace
, and now some think the stock is a bargain, the Heard on the Street column in the
reported. Shares of Hasbro were up 1 3/8 to 26 15/16.
The New York Stock Exchange suspended
Red Roof Inns
common stock from trading today, after hotel group
acquired more than 99% of its shares. A tender offer by Accor, which expired yesterday, left fewer than 600,000 Red Roof Inn shares left for the public. The NYSE usually suspends or eliminates a stock if public shares dip under 600,000.
was off 1/16 to 65 15/16 after it said it's cutting 2,500 jobs worldwide, about 1,100 more than it planned when it unveiled a cost-savings program late last year.
The Inside Wall Street column in
, penned this week by Jeffrey M. Laderman, offers up a bullish article on
. Elsewhere in the column, William S. Brennan of
Pacific Growth Equities
U.S. Plastic Lumber
and has a target on the stock of 16 within the next 12 months. It closed yesterday at 8. American Tower shares were up 3/8, while U.S. Plastic Lumber was up 1 1/4, or 15.6%, to 9 1/4.
, the dominant maker of bar-code printers, was up 5/8 to 47 3/8 after Andrew Stephens, portfolio manager of the
Artisan Mid Cap Fund
, said in Inside Wall Street that he thinks the stock will reach 60 to 65 in the second half of next year.