Financial stocks continued to fuel a big-time rally at midday on Wall Street. The lower-than-expected gain in the third-quarter
Employment Cost Index
report gave market players the green light to buy, despite next month's still-anticipated
Today's ECI report, a closely watched gauge of wage inflation, came in 0.1 percentage point below analyst expectations at 0.8%. With labor costs rising more slowly than expected, investors got a break from the usual Fed-monitored data that have been pointing toward an interest-rate hike Nov. 16.
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"We still have risk while we move closer to the
meeting," said Alan Ackerman, market strategist at
, "but the data that came out today relieved some anxiety as we approach the next meeting. Wages and prices seem reasonably benign."
Although the market is enjoying today's hefty rally, Ackerman doesn't feel that inflation fears have slipped investor's minds. "We're in the eighth year of an economic expansion," he said. "This has been a long period of good and plenty. Investors are still concerned about the strong U.S. growth rate and the possibility of it leading to inflation as we move forward."
Without a doubt, the session's surge into positive territory was sparked by the financial services comeback. The interest-rate-sensitive stocks took off on today's ECI news. "The return of financial services is great," said Brian Gilmartin, portfolio manager at
Trinity Asset Management
. "Financial services still trade on interest-rate expectations even though the actual effect of interest rates on a bank's earnings is much smaller relative to 10 years ago. They are much better at managing interest-rate risk and asset liability management."
For a change it was the
Dow Jones Industrial Average
making noise in the market and not the tech-laden
Nasdaq Composite Index
. According to Gilmartin, Y2K is putting a lid on a tech-stock buying spree. He said he sees "a rotation going from tech stocks to financial stocks. Tech hardware is being hurt the most, whereas tech software is seeing the least damage. Whether it is perception or reality, Y2K is an overhang that will dampen earnings expectations through the end of the year."
The Dow was soaring 215, or 2.1%, to 10,610, with
, leading the surge with a leap of 6 7/8, or 4.6%, to 157 1/2. American Express managed to hit 158 1/8 during today's rally, an all-time trading high for the stock.
was also enjoying the ride, up 3 1/4, or 2.5%, to 131 3/4.
The Nasdaq Composite Index was advancing 45, or 1.6%, to 2848. Networking stocks were taking the lead in Nasdaq trading, with
up 8 3/4 to 180 3/4 and
mounting 8 5/8, or 17.3%, to 58 3/8.
New York Stock Exchange
, retailers were showing sizable gains despite being overshadowed by the financials' Big Board party.
was climbing 2 3/16 to 40 1/4, while
was hopping 2 to 52 3/4.
Other major indices were storming higher as well, with the broad
bouncing 36, or 2.8%, to 1332, while the small-cap
was gaining 5, or 1.1%, to 421.
TheStreet.com Internet Sector
index was climbing 11, or 1.6%, to 717.
, off 4 5/8, or 6.1%, to 71 1/4, was pushing against the upsurge after yesterday's warning of fourth-quarter margin pressures.
On the Big Board, advancers were leveling decliners 2,036 to 868 on 683 million shares, while on the Nasdaq, leaders were beating laggards 2,137 to 1,516 on 717 million shares. New 52-week lows were leading new highs on the NYSE, 96 to 63, while on the Nasdaq, highs were ahead of lows 107 to 80.
On the bond front, the benchmark 30-year Treasury was up 29/32 to 98 5/32, with its yield at 6.26%. (For more on the fixed-income market, see today's early
Thursday's Midday Watchlist
Mergers, acquisitions and joint ventures
Dura Automotive Systems
was unchanged at 17 3/4 after it agreed to acquire the seat-adjusting systems business of
for $130 million in cash. Meritor inched up 5/16 to 17 15/16.
Earnings/revenue reports and previews
Earnings estimates from First Call/Thomson Financial; earnings reported on a diluted basis unless otherwise specified.
lost 2 to 49 3/16 despite posting third-quarter operating earnings of $1.27 a share, beating the 17-analyst estimate of $1.16 and the year-ago 96 cents. The company said it would aggressively repurchase stock as conditions allow.
Amazon.com was sliding 4 5/8, or 6.1%, to 71 1/4 after it posted a smaller-than-expected loss
last night, but warned losses would deepen in the current quarter.
cut its rating on Amazon to near-term accumulate from buy.
climbed 3/8 to 19 7/8 after it posted a third-quarter loss of 15 cents a share, smaller than the four-analyst estimated loss of 23 cents a share and the year-ago loss of 16 cents a share. All figures reflect pro forma consolidated operations.
added 2 3/8,to 72 13/16 posted third-quarter earnings of $1.16 a share, in line with the 14-analyst estimate and up from $1.03 a share a year-ago.
American International Group
jumped 5 3/4, or 6.2%, to 98 3/4 after it posted third-quarter earnings of 79 cents a share, a penny shy of the 20-analyst estimate but up from the year-ago 69 cents.
jumped 3 5/8, or 8%, to 48 13/16 after it reported third-quarter earnings of 5 cents a share, beating the seven-analyst estimate by a penny and the year-ago 5-cent loss, which includes charges. The company attributed increased revenue to growth at
and its television segment.
Clear Channel Communications
rose 3 1/2 to 81 1/2 after it posted break-even results for the third quarter, in line with the seven-analyst estimate but down from 5 cents a year ago.
slipped 1/2 to 40 7/8 after it reported first-quarter earnings of 37 cents a share excluding charges, a penny better than the 13-analyst estimate but lower than a year-ago 42 cents.
inched up 5/16 to 28 3/8 after it reported third-quarter operating earnings of 67 cents a share, missing the nine-analyst estimate of 69 cents but up from a year-ago 61 cents a share.
dropped 2 3/16, or 8.3%, to 24 1/8 after it posted third-quarter earnings of 74 cents a share before charges, better than the seven-analyst estimate of 73 cents, but down from a year-ago 76 cents a share.
rose 7/8 to 34 3/8 after it reported third-quarter earnings of $1.18 a share, beating the 10-analyst expectation of $1.07 a share, and the year-ago $1.01 a share.
rose 3 5/8, or 5.4%, to 70 11/16, after a drop in pretrading. CEO Carly Fiorina said she was comfortable with the latest forecasts after analysts cut profit estimates. TheStreet.com wrote about H-P's
earnings worries yesterday.
climbed 3/16 to 9 1/4 after it reported third-quarter earnings of 17 cents a share, in line with the 15-analyst estimate and up from 15 cents a year ago.
jumped 2 3/16, or 6.9%, to 34 after it posted third-quarter earnings of 13 cents a share, a penny better than the 10-analyst estimate and up from a year-ago 10 cents a share which includes a charge.
rose 1/16 to 40 11/16 after it posted third-quarter earnings of 47 cents a share excluding charges, beating the 18-analyst estimate of 41 cents and the year-ago 35 cents.
fell 1/16 to 55 9/16 after it reported third-quarter earnings of $1.20 a share, beating the 13-analyst estimate and the year-ago 30 cents a share.
moved down 1/8 to 17 5/8 after it reported third-quarter earnings of 47 cents a share, in line with the 10-analyst estimate and even with the year-ago earnings.
jumped 5 1/8, or 6.6%, to 82 3/4 after it posted third-quarter earnings of 55 cents a share, a penny ahead of the 25-analyst estimate and up from the year-ago 19 cents.
gained 11/16 to 28 3/8 after it reported first-quarter earnings of 16 cents an ADR, better than the five analyst estimate of 14 cents but down from the year-ago 20 cents.
Pharmacia & Upjohn
tose 2 15/16 , or 5.7%, to 54 3/16 after posting third-quarter earnings of 47 cents a share before charges, in line with the 17-analyst estimate and up from the year-ago 41 cents. The company said U.S. prescription sales were up 17% in the latest quarter.
Procter & Gamble
gained 3 3/4 to 103 1/16 after it posted first-quarter core earnings of 88 cents a share, in line with the 12-analyst estimate but up from 80 cents a year ago.
lost 1/16 to 15 5/8 after it reported third-quarter earnings of 80 cents a share, a penny shy of the 13-analyst estimate but up from 43 cents a year ago.
Offerings and stock actions
Lehman Brothers cut its 1999 earnings estimates on
to $1.53 from $1.54. Despite the move, CVS rose 1 1/8 to 40 1/8.
Credit Suisse First Boston
upped its rating on
to buy from hold. Exxon gained 2 1/8 to 73 7/8.
Merrill Lynch raised its rating on
to near-term accumulate from neutral. Sara Lee inched up 15/16 to 26 9/16.
Deutsche Bank Alex. Brown
raised its price target for
to 100 from 93. Sun rose 4 1/8 to 96 3/4.
Brown Brothers Harriman
with a buy rating. Time tacked on 3 9/16, or 5.7%, to 66 9/16.
Merrill Lynch raised its price target on
William Wrigley Jr.
to 87 from 81. Wrigley moved up 1 1/16 to 78 7/8.
The Heard on the Street column in
The Wall Street Journal
says some investors have begun to pull back on
after eyeing a drop in its closely watched "unearned revenue" account to $4.13 billion on Sept. 30, from $4.24 billion in June. Microsoft inched down 7/8 to 90.