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Quick Rise in Stocks Slows in Take-a-Break Session

Internet stocks move to the plus side but the major indices trade lower.

Stocks were a bit on the squishy side early this afternoon, as blue-chips paced major market averages on the downside while the tech sector was taking a well-deserved breather.

The blue-chip

Dow Jones Industrial Average

was softer, but off its lows. It was down 64, or 0.6%, to 10,752. The Dow, weighed down the most by its cyclical components, had traded as low as 10,713.72 before coming off that level.


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was the biggest drag on the index.

Cyclicals in general were getting beaten up a bit today, noted Scott Curtis, senior equity trader at

Brown Brothers Harriman

. The

Morgan Stanley Cyclical Index

was off 1%. Curtis pointed out that since last week's release of the

Consumer Price Index

report, there's been more of a rotation back into tech stocks.

The weakness in stocks was blamed in part on squishiness in the bond market and that stocks were just taking a break after their recent run-up.

Treasuries were modestly lower. The 30-year bond was lately down 15/32 to 88 29/32, yielding 6.06%. (For more on the fixed-income market, see today's early

Bond Focus.) Internet Sector

index was up 3, or 0.5%, to 598. In Net news,

data out of

Media Metrix


said Internet usage rose 1.3% in May from April, reversing April's decline.


S&P 500

was down 5 to 1344. The

Russell 2000

was unchanged at 449. E-Finance Index

was up 27/32, or 1%, to 86 5/8, as it makes its debut today on the

American Stock Exchange

. The index tracks the activities of online brokers, online banks and online-transaction companies. The ticker symbol is XEF. Options on the index will be available for trading later this summer on the Amex. Historical data indicate the index would have risen approximately 180% since the beginning of 1999.


Nasdaq Composite Index

was down 8 to 2623. From the close on June 14 to early this afternoon, the Nasdaq Comp has risen roughly 9.3%.

Elsewhere in techland, the

Nasdaq 100

was down 0.3%, the

Morgan Stanley High-Tech 35

was down 0.7% and the

Philadelphia Stock Exchange Semiconductor Index

was down 0.3%.

Paul Rabbitt, president of

, said expectations of whopping earnings growth in the tech sector have driven the recent rally in the Nasdaq.

In tech, he said he likes semiconductors and some of the box makers, like


(IBM) - Get International Business Machines (IBM) Report




, for example.

As for Net stocks, Rabbitt said: "I think the Internet stocks should not be chased."

Rabbitt said he likes sectors in part where earnings revisions have been strong, like the industrial, energy and commodities arenas for example.

Rabbitt said he's been buying

Briggs & Stratton

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Avis Rent A Car



Brokerage stocks were weaker, returning some of yesterday's outsized advance. Estimate-beating earnings from

Lehman Brothers


failed to inspire the sector today, although brokerage issues have rallied sharply ahead of upcoming earnings reports. Lehman was down 4.3%. (Shocking that a brokerage firm outstripped Wall Street estimates, isn't it?)

Coming up on the brokerage earnings front:

Goldman Sachs

(GS) - Get Goldman Sachs Group, Inc. (GS) Report

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Morgan Stanley Dean Witter


are both slated to report earnings this week.

As for market internals, on the

New York Stock Exchange

, decliners were leading advancers 1,575 to 1,195 on 403 million shares. On the Nasdaq, losers were beating winners 2,029 to 1,530 on 540 million shares.

On the NYSE, 67 issues had set new highs 52-week while 37 had touched new lows. On the Nasdaq, 80 issues had set new highs while new lows totaled 31.

On the Big Board,



was most active, with 18.2 million shares changing hands. It was up 2 1/16 to 24 3/16.

On the Nasdaq,


(CSCO) - Get Cisco Systems, Inc. Report

was most active, with 18.7 million shares changing hands. It was up 1/2 to 62 1/16.

Meanwhile, among other indices, the

Dow Jones Utility Average

was up 0.6%, the

American Stock Exchange Composite Index

was up 0.3% and the

Dow Jones Transportation Average

was down 0.8%.

Tuesday's Midday Movers

By Heather Moore
Staff Reporter

As noted above, Lehman Brothers was losing 2 9/16 to 57 3/4 after posting second-quarter earnings of $2.09 a share, smashing the 11-analyst

First Call

outlook of $1.68 a share but moving down from the year-ago $2.12. Lehman's move seems to reflect today's downward action in finance stocks more than any reaction to its earnings report. Among other brokerages,



was down 3.7%,

Merrill Lynch


was down 3.8%,

Donaldson Lufkin & Jenrette


was down 2.5%, Morgan Stanley Dean Witter was down 3.1% and Goldman Sachs was off 1.4%.


Ramp Networks

(RAMP:Nasdaq) was growing 3 1/2, or 31.8%, to 14 1/2 after

BancBoston Robertson Stephens

priced its 4 million-share IPO mid-range at $11. The company provides shared Internet access for the small-office market.


(SALN:Nasdaq) was faring less well in its debut, off 1/4 to 10 1/4 after

W.R. Hambrecht

priced 2.5 million shares at $10.50 each through a Dutch auction.




was hopping 4 1/4, or 30.2%, to 18 3/8 after two firms started coverage of the ISP yesterday.

In other news:



was up 2 5/8, or 5.7%, to 48 7/8 after last night

Abbott Laboratories

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agreed to acquire the company in a stock swap valued at $7.3 billion. Under the terms of the deal, each Alza share will be exchanged for 1.2 Abbott shares. Abbott said it expects to record a charge of $100 million in 1999 related to the deal and that it sees dilution of 3 cents a share in 2000 earnings. Abbott was down 1 3/16 to 43.


(KNL) - Get Knoll, Inc. Report

was up 1 3/4, or 7.1%, to 26 9/16 after last night agreeing to be acquired by

Warburg Pincus Ventures

and members of Knoll Management for $28 a share in cash.

Time Warner


was up 1 1/2 to 68 3/16 after

Merrill Lynch

named the stock its Focus One stock of the week.

Earnings/revenue movers

Cabletron Systems

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was down 1 9/16, or 9.9%, to 14 3/16 even after last night reporting first-quarter earnings of 4 cents a share, topping the 20-analyst estimate by 3 cents and moving ahead of the year-ago break-even results. The company also announced a strategic alliance with Compaq.


(SYX) - Get Systemax Inc. Report

was down 1 3/16, or 10%, to 10 11/16 after last night saying it sees second-quarter operating earnings of 18 cents to 20 cents a share, which would be behind the three-analyst call for 31 cents. In the year-ago period, the company earned 20 cents.