Rate Fears, Floyd Help Sink Stocks

The bond market finished up after an early close due to the horrible weather in New York City.
Author:
Publish date:

Cheeriness on Wall Street today was as scant as people who can remember much about the

USFL

as stocks ended an odd session softer.

Major stock proxies bottomed around noon and then began a gradual rise off their lows. The

S&P 500

and the

Nasdaq Composite Index

even managed to climb into the green late in the day. The S&P 500, however, was the only major gauge to close in positive territory.

The S&P 500 inched up 0.51, or 0.04%, to 1318.48. The Nasdaq Comp gave up 7.45, or 0.3%, to 2806.72. The

Philadelphia Stock Exchange Semiconductor Index

returned to its winning ways after enduring a shellacking yesterday, and rose 0.7%.

Meanwhile, the blue-chip

Dow Jones Industrial Average

fell 63.96, or 0.6%, to 10,737.46. At its session bottom, the Dow had traded down as much as 10626.65.

The

Russell 2000

dropped 6.08, or 1.4%, to 430.25.

TheStreet.com Internet Sector

index lost 9.39, or 1.5%, to 607.85. The DOT had traded as low as 593.58.

Some lousy news on the earnings front and continuing jitters over whether the

Federal Open Market Committee

will raise interest rates when it meets on Oct. 5 took some blame for the market being under pressure for most of the day.

Also, Hurricane Floyd stuck his nose into the market's business and had a negative influence on the market's action, according to some market participants.

Tony Cecin, directory of equity trading at

U.S. Bancorp Piper Jaffray

, said people were a little nervous because of the media sensationalizing Floyd which sparked wondering in the market if the NYSE was going to open tomorrow. He said there were rumors out there that the NYSE might not be able to open and people were lightening up just in case it wouldn't.

However, a message on the Big Board's Web site said: "The Exchange will operate under normal business hours today and tomorrow."

So there.

And throwing an added twist into the market's movements was the fact that tomorrow is a triple-witching Friday, the quarterly expiration of stock options, index options and stock futures.

As for negative earnings news,

FDX

(FDX) - Get Report

, parent of

Federal Express

, posted fiscal first-quarter earnings that came in below Wall Street expectations and -- to make matters worse for the stock -- it also said it might miss earnings expectations for the second quarter.

Investors punished FDX, which provided the biggest drag on the

Dow Jones Transportation Average

. The average swooned 100.72, or 3.3%, to 2986.88,

As for the Floyd factor, the effects of his viciousness began being felt in New York City, sending many stock traders home early. Of course, the NYSE stayed open for business. Meanwhile, the bond market closed early at 1 p.m. EDT on the recommendation of the

Bond Market Association

. The group said it made the suggestion for the early close because of the awful weather and commuting problems due to Floyd's effects on New York as well as

New York Mayor Rudy Giuliani's

recommendation that businesses shutter early.

For its shortened session, the Treasury market fared well. The benchmark 30-year Treasury bond rose 11/32 to 100 18/32, yielding 6.07%.

While trading in the cash market ended early, the

Chicago Board of Trade

observed regular trading hours. Back in New York, the

New York Mercantile Exchange

closed early today. Before shutting down, however, traders managed to bump up crude oil futures prices, helping pump up oil service stocks. The

Philadelphia Stock Exchange Oil Service Index

rose 0.8%.

Paul Rabbitt, president of

RabbittAnalytics.com

, said he's cautious on the overall market right now. One of the reasons for that caution is because this is an historically weak time for the market. Rabbitt, who describes himself as a big-cap growth stock buyer, said two of his current sector favorites are technology and energy.

The strategist said he's a buyer of

Microsoft

(MSFT) - Get Report

,

Tellabs

(TLAB)

,

Hewlett-Packard

(HWP)

,

Xilinx

(XLNX) - Get Report

and

LSI Logic

(LSI) - Get Report

.

As for energy, he said he's a buyer of

Mobil

(MOB)

,

Kerr-McGee

(KMG)

,

Arco

(ARC) - Get Report

and

Noble Drilling

(NE) - Get Report

.

Another area of the market he likes is the gaming group because of recent upgrades from Wall Street analysts, strong price momentum and upward revisions in the group. His favorite gaming stock right now is

MGM Grand

(MGG)

.

On the NYSE, decliners pounded advancers 2,066 to 888 on 730.3 million shares. On the

Nasdaq Stock Market

, losers ripped apart winners 2,500 to 1,358 on 963.7 million shares.

On the NYSE, 212 issues set new 52-week lows while 19 touched new highs. On the Nasdaq, 117 issues set new 52-week lows while new highs totaled 51.

On the Big Board,

America Online

(AOL)

was most active with 16.8 million shares changing hands. It fell 1 5/16 to 87 9/16.

On the Nasdaq,

Quintiles Transnational

(QTRN)

was most active with 39.5 million shares changing hands. Quintiles cascaded 42.6% after issuing an earnings warning.

Among other indices,

Dow Jones Utility Average

surrendered 1.96, or 0.6%, to 309.02, while the

American Stock Exchange Composite Index

slipped 6.68, or 0.8%, to 790.80.

Elsewhere in North American equities, the

Toronto Stock Exchange 300

slid 59.23 to 7004.40 and the

Mexican Stock Exchange IPC Index

gained .39 to 4970.24.

Thursday's Company Report

By Tara Murphy
Staff Reporter

(

Earnings estimates from First Call/Thomson Financial; new highs and lows on a closing basis unless otherwise specified. Earnings reported on a diluted basis unless otherwise specified.

)

Companies with negative earnings news were taking a blow. FDX sunk 5 7/8, or 12.4%, to 38 1/4, after it delivered negative earnings and outlook news. The company reported first-quarter results of 52 cents a share, 2 cents shy of the 11-analyst estimate of 54 cents, and above the year-ago 50 cents, hurt by higher fuel costs and lower-than-expected growth in domestic packages. The company warned that second-quarter and full-year results could fall below analyst expectations, and said fuel costs could hurt its 2000 operating income by as much as $150 million. FDX said it would institute cost-cutting measures to deal with lower growth rates, which include a possible fuel surcharge.

Xerox

(XRX) - Get Report

declined 4 5/16, or 9.1%, to 42 3/4 after CFO Barry Romeril said at a

SG Cowen

technology conference that poor exchange rates in Brazil and Europe could dent its revenue growth.

Coinstar

(CSTR) - Get Report

plummeted 10 13/16, or 49.2%, to 11 3/16 after

Donaldson Lufkin & Jenrette

cut its recommendation to market perform from buy. Yesterday, Coinstar said it expects third-quarter earnings to fall below estimates.

Mergers, acquisitions and joint ventures

Pulp and paper maker

Asia Pacific

(ARH)

fell 1/16, or 9%, to 5/8 after it said it axed plans for a stock swap with

UPM-Kymmene

. Asia Pacific, also known as APRIL, said financial problems and political upheaval in Indonesia prompted the transaction's cancellation.

AT&T

(T) - Get Report

popped 1 to 45 1/2 and

British Telecom

(BTY)

added 5 1/4 to 153 after the companies said they plan to form an alliance of their mobile phone operations. The alliance, called

Advance

, will have annual sales of $12 billion, but will not be formed as a separate company.

Computer distributor

CHS Electronics

(HS)

advanced 1/8, or 5.7%, to 2 5/16 after it said it brought

Raymond James & Associates

on board to strategize options that would boost shareholder value, including a possible merger or sale.

Freedom Securities

(FSI) - Get Report

was unchanged at 13 13/16 after it agreed to buy small stock dealer

Hill Thompson Magid

for $45 million in cash and stock. Freedom said the acquisition of the dealer in 8,000 small stocks would enable it to participate in the growth of small-cap trading.

General Electric

(GE) - Get Report

hopped 1 1/4 to 117 1/4 after its subsidiary

NBC

said it would invest $415 million in

Paxson Communications

(PAX)

for a 32% stake in an effort to extend its reach to U.S. households. Paxson skidded 1 1/16, or 7%, to 14.

Photronics

(PLAB) - Get Report

rose 1 3/8, or 5/7%, to 25 5/8 after saying it would buy

Align-Rite International

(MASK)

for about $115 million in stock. Align-Rite jumped 4 13/16, or 32.9%, to 19 1/2.

Visual Networks

(VNWK)

slipped 7/8 to 38 3/4 after it agreed to buy closely held

Inverse Network Technology

in a stock deal worth about $177 million.

Earnings/revenue reports and previews

American Greetings

(AM) - Get Report

added 3/16 to 25 13/16 despite posting a second-quarter loss of 39 cents including charges. The year-ago earning per share figure was 20 cents. The three-analyst estimate called for break-even results. No per share figures from operating income were provided in the most recent quarter.

Biomet

(BMET)

shed 3 15/16, or 12.6%, to 27 1/8, despite reporting first-quarter earnings of 35 cents a share, in line with the 21-analyst estimate and up from 30 cents a year ago.

Brush Wellman

(BW) - Get Report

was off 15/16, or 5.7%, to 15 7/16 after it warned investors that it would probably miss third- and fourth-quarter earnings consensus estimates of 6 cents and 27 cents a share respectively, due to alloy expansion expenses. Last year, the company posted third-quarter earnings of 4 cents a share and a fourth-quarter loss of 2 cents.

Carnival

(CCL) - Get Report

climbed 1 5/8 to 42 7/16, after it posted third-quarter earnings of 67 cents a share, better than the 23-analyst estimate of 64 cents a share, an up from 58 cents a year ago.

Circuit City

(CC) - Get Report

advanced 1 1/16 to 38 5/8 after posting second-quarter earnings of 36 cents a share from continuing operations, in line with the 14-analyst estimate, and up from 22 cents a year ago.

Eastman Chemical

(EMN) - Get Report

fell 2 3/8, or 5.1%, to 43 15/16 after warning its third-quarter earnings would fall below the estimated 68 cents a share because of higher oil and natural gas costs, which hurt its bottom line.

Fairchild

climbed 1/4 to 9 9/16, after reporting fourth-quarter earnings of 6 cents a share, a penny better than the three-analyst estimate of 5 cents, but lower than 24 cents a year ago.

Kopin

(KOPN) - Get Report

lost 1 1/2 to 30 9/16, after saying it expects a third-quarter loss of 3 cents to 5 cents a share, compared with the four-analyst earnings per share estimate of 3 cents.

MGM Grand

(MGG)

fell 2 1/2, or 5%, to 47 1/4 despite its CFO Jim Murren informing the

Wall Street Journal

that he was "very comfortable" with the analysts' third-quarter consensus estimate of 47 cents a share, reported in

Reuters

.

Motorola

(MOT)

hopped 1 1/16 to 87 11/16 after it said that it anticipates fiscal 2000 earnings of $3 even with the acquisition of

General Instrument

(GIC)

. Analysts were expecting the company to posted fiscal 2000 earnings of $3.05. Shares of General Instrument were up slightly at 47.

Paychex

(PAYX) - Get Report

climbed 1 11/16, or 5.5%, to 32 1/16 after posting first-quarter earnings of 17 cents a share, a penny better than the nine-analyst estimate, and up from a year ago 13 cents.

PMI Group

(PMA)

slid 3/8 to 39 13/16 despite saying it expects third-quarter and full-year earnings to top expectations as a result of strong volume in new insurance writing.

PaineWebber

upgraded the stock to buy from attractive.

Ralcorp

(RAH)

skidded 1/16 to 17 1/4 after it said that its interest in

Vail Resorts

(MTN) - Get Report

would create a loss of $2.5 million in its fourth quarter, down from the year-ago $3.3 million-loss. Vail posted a fourth-quarter loss of 39 cents a share, down from the year-ago 48 cent-loss. Despite the loss, shares of Vail rose 1/16 to 19 1/8

Tektronix

(TEK)

lost 9/16 to 33 7/16 after reporting first-quarter earnings of 20 cents a share before charges, ahead of the seven-analyst estimate of 17 cents and up from a year-ago loss of 9 cents.

Offerings and stock actions

Axa Financial

(AXF)

declined 1 11/16 to 55 5/16 after it set a 2-for-1 stock split in the form of a dividend. The dividend would be paid on Oct. 1 to shareholders of record Sept. 27.

B.J's Wholesale Club

(BJ) - Get Report

slipped 7/16 to 27 15/16 after set a $50 million-share repurchasing plan after finishing a $50 million share buyback approved in Aug. 1998.

Luminant Worldwide

(LUMT)

soared 8 5/16, or 46.1%, to26 3/8 after making its trading debut.

Deutsche Banc Alex. Brown

priced the 4.6 million-share IPO above its $15 to $17 range at $18 a share.

Analyst actions

Go2Net

(GNET)

fell 1 5/16 to 67 15/16 after

Prudential Securities

rolled out coverage of the stock with an accumulate rating and a price target of 90.

Kennametal

(KMT) - Get Report

was unchanged at 25 11/16 after

ING Barings

upped its rating on the stocks shares to buy from hold.

McCormick

(MKC) - Get Report

bounced 1 1/4 to 33 1/4 after Merrill Lynch analyst Eric Katzman upped its fiscal 1999 and year 2000 earnings estimates to $1.67 from $1.63 and $1.86 from $1.79 respectively.

Miscellany

American Home Products

(AHP)

jumped 3 1/2, or 8%, to 46 3/4 after

The Wall Street Journal

reported it may be near a $3 billion settlement to resolve injury claims by users of its diet drugs. The paper said an announcement on a deal could happen within days, but added that terms were sketchy, and the deal could still fall apart. PaineWebber raised the stock to attractive from neutral.

Avanir Pharmeceuticals

(AVNR)

fell 45% to 9/16 after it said the

FDA

asked for more information on its docosanol cream to remedy oral-facial herpes before giving its final approval.

DaimlerChrysler

(DCX)

lost 3/4 to 71 5/16 after it reached a tentative agreement on a new contract with the

United Auto Workers

, which covers more than 70,000 workers. Meanwhile talks continued at a slower pace at

General Motors

(GM) - Get Report

, mounted 1 3/8 to 65 3/16 and

Ford Motor

(F) - Get Report

, advanced 3/16 to 49 15/16, where the UAW has indefinitely extended contracts.

The

Nasdaq

stock market announced it plans to slice charges and restructuring pricing for its automated trading system

SelectNet

in an effort to compete with rival electronic communications networks. The Nasdaq said that it would charge members $1 per trade for their first 50,000 transactions, while the following 50,000 orders would only cost 70 cents each. Members would be charged 30 cents for any additional trades. Nasdaq spokesperson Scott Peterson said the stock marker plans to file with the

SEC

to complete the changes.