After four straight days of gains,
had to break and unfortunately (for those long) it wasn't the stifling heat in New York City. Major proxies suffered not-unsubstantial losses today after the bond market proved unable to sustain intraday gains for a second straight session.
Federal Reserve Bank of St. Louis
were credited with the fixed-income market's afternoon woes. Poole, a nonvoting member of the
Federal Open Market Committee
, said it's "ideal" if the market is "not surprised" when the Fed raises rates. At the
conference, the generally hawkish Fed president also said the U.S. is "more likely to have an inflation problem than people would have guessed six months ago." (Where have you gone,
? The nation's bond bulls turn their lonely eyes to you.
Woo hoo hoo. Hey hey hey.
In reaction, the price of the 30-year Treasury bond fell 11/32 to 89 21/32, its yield rising to 6.00% for the first time since May 11, 1998.
Even before bonds went south, equity gauges were struggling due largely to weakness in technology bellwethers and airlines. The former suffered after
Donaldson Lufkin & Jenrette
trimmed fourth-quarter earning estimates on a six-pack of industry leaders, and the latter after
warned of a profit shortfall.
The combination of the aforementioned sent the
Dow Jones Industrial Average
tumbling as low as 10,724.17 before closing off 143.74, or 1.3%, to 10,765.64.
were on DLJ's hit list and among the biggest drags on the index. Other names sapping the Dow's strength included
Johnson & Johnson
Procter & Gamble
fell 17.19, or 1.3%, to 1317.33 as index components
were also marked down by DLJ. Each slid at between 2.6% and 4.9%, leading the
Morgan Stanley High-Tech 35
Not surprisingly, the
Nasdaq Composite Index
lost 49.65, or 2%, to 2474.56 as
joined the DLJ-demoted tech giants on the downside. The
Internet favorites such as
also suffered, sending
TheStreet.com Internet Sector
index down 16.32, or 2.8%, to 569.55.
soared 14.9% on word
will seek to acquire the 57% of the company it does not already own. Also, Net IPOs
(BWEB:Nasdaq) had stellar opening sessions, rising 81.9% and 64%, respectively.
Meanwhile, airline stocks, which so notably shook-off the ill-effects of
yesterday, couldn't overcome a red flag from US Airways. The
American Stock Exchange Airline Index
fell 3.1% and the
Dow Jones Transportation Average
lost 56.58, or 1.6%, to 3425.38.
"I'm not reading too much into it," Ned Collins, executive VP of U.S. stocks at
Daiwa Securities America
, said of today's decline, noting the Dow remains only about 3% from its all-time high. "I don't think it's the end of the parade or beginning of the end. Volume has dried up a little and it looks more like a lack of bids vs. aggressive sellers."
Trading volumes improved from yesterday's dismal showing, but still demonstrated about as much spunk as a
waitress on the last shift when the AC has given out and all the (lean) pastrami is gone.
New York Stock Exchange
trading, 686 million shares were traded while declining stocks led advancers 1,789 to 1,132. In
Nasdaq Stock Market
activity, 851.6 million shares were exchanged while losers led 2,245 to 1,648. New 52-week highs led new lows 70 to 43 in Big Board activity and by 87 to 43 in over-the-counter trading.
"I still think there's a chance for a summer rally but second-quarter earnings are much more important than what the Fed does," Collins said of the topic du jour. "Bonds have a 25-basis-point, if not 50, increase built in and stocks have a good portion of that. Maybe if the Fed does nothing it's a bigger disappointment."
It's just a trading range (whoa, ho, ho)
It's not the real thing (whoa, ho, ho, ho)
"I think there still are some people that will be surprised, but consensus is shifting toward the reality the
will raise rates," Ronny Kraft, CEO of
Gotham Capital Management
, said of Poole's comments and the market's reaction. "The question is what type of body language is associated. The only way the market gets smacked is if the Fed does a number of hikes or gives out body language it has an inclination to do so. I think it would be very inappropriate and unlikely the market would pull in on any significant level on one interest-rate hike."
The analysis is interesting because Kraft (among others) has been suggesting for some time equity markets are due for a major tumble.
"I don't think this is the big one," the hedge fund manager said. "The market has another leg up. The problem with reading the market right now is there's very little volume but it's higher on distribution days than accumulation days. We're in the summer and we'll be subject to these whipsaws. When you have volume pulled out you have volatility and markets do a lot of weird things."
Kraft does think a big unrest in the stock market is forthcoming -- due most likely to a burgeoning trade deficit and ultimate repatriation by foreigners holding dollars. However, the time is not at hand.
"We're calling for range-bound movement for next month and a half," he said, projecting the S&P 500 will remain bound between roughly 1280 and 1370.
Among other indices, the
fell 2.89, or 0.6%, to 443.76; the
Dow Jones Utility Average
fell 0.90, or 0.3%, to 332.37; and the
American Stock Exchange Composite Index
dipped 5.23, or 0.7%, to 772.92.
Elsewhere in North American equities, the
Toronto Stock Exchange 300
fell 73.08, or 1%, to 6937.67 and the
Mexican Stock Exchange IPC Index
rose 6.94, or 0.1%, to 5428.88.
Report: CNN Won't Have Dobbs to Kick Around Anymore
UPDATE (8:20 p.m. EDT) -- After this story originally ran,
reportedly confirmed that Lou Dobbs has resigned to join news and entertainment startup Space.com effective Friday
will resign from the network after butting heads with
reported. The wire service cited "people at the cable network."
The long-simmering feud between Dobbs, host of
"Moneyline," and Kaplan went loudly public May 20, when Kaplan ordered the network to switch to coverage of a speech by
during Dobbs' show and Dobbs resisted. "
President Rick Kaplan wants us to return to Littleton," Dobbs told viewers in finally relenting.
Dobbs, like Kaplan, is a member of
executive committee, and he has chafed at having to report to Kaplan.
initial report was silent on Dobbs' plans.
Naturally, Wall Street's rumor mill was churning this evening about what Dobbs will do next, even as sources at
report that a meeting purportedly scheduled to announce his resignation has been postponed twice.
"He's just sitting in his office waiting for a call from Ted," one television insider quipped, referring to
founder, sailing billionaire and
. But the source, a veteran of the industry, speculated "nothing" is going to happen tonight, although Dobbs is not hosting "Moneyline" this evening (meaning the graphics folks at
can scrap the "with Lou Dobbs" part of the title).
One rumor has Dobbs heading up his own Internet company, and cases of champagne reportedly were chilling outside his office.
The Wall Street Journal Interactive Edition
reported that Dobbs is said to be planning an investment in
Space.com, which thus far is a one-page Web site featuring a
John F. Kennedy
quote and a teaser line.
However, the thought is "ridiculous," one Wall Street player said. "A legitimate journalist leaving to run an Internet company would signal the top of the market." (Of course, many a legitimate journalist would beg to differ.)
The source speculated it would make more sense for Dobbs to go to
, perhaps to replace
co-host on the never-lived-up-to-the-hype "Business Center" program.
But TV insiders say the notoriously prickly Dobbs would never share the spotlight with anyone. If he were going to
it'd be for something much bigger than a mere on-air job, they said.
Aaron L. Task and John J. Edwards III
Tuesday's Company Report
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.
As noted above, Infoseek stormed up 6 5/16, or 14.9%, to 48 5/8 after Disney last night said it's in talks to buy the rest of the company, possibly in exchange for an Internet tracking stock. Disney, which has a 43% stake in Infoseek, lost 1 1/4 to 29 5/8. (
had a look at why it's still not quite a world of laughter for Disney shareholders in a
piece this afternoon.)
DrKoop.com, an online health-care company named after
C. Everett Koop
, the former surgeon general, rocketed 7 3/8, or 81.9%, to 16 7/16 with 26.6 million shares traded after the stock's 9.38 million-share IPO priced at $9 a share last night.
served as the company's lead underwriter. Competitor
Superior Consultant Holdings
sank 2 13/16, or 7.8%, to 33 3/8.
Elsewhere in new issues, BackWeb Technologies soared 7 11/16, or 64.1%, to 19 11/16 after
priced its 5.5 million-share IPO top-range at $12 a share. The Israeli company makes Internet software.
Mergers, acquisitions and joint ventures
revved up 1 7/16 to 38 after
The Wall Street Journal
reported the company is in talks to acquire the auto and homeowners' insurance operations of
in a deal valued at more than $500 million. CNA Financial lost 1/8 to 42 13/16.
American Mobile Satellite
hopped up 3 9/16, or 21.6%, to an annual high of 20 3/16 after signing an agreement with privately held
to buy the remaining 78% it doesn't own in
for about $144 million.
Bank of New York
jumped 2 3/8, or 6.9%, to 37 1/16 after agreeing to sell its
commerce-finance unit to the
financing arm of
for $1.8 billion in cash. GM slipped 1 3/8 to 67 3/4.
lowered 3/16 to 18 15/16 after saying it completed the previously announced sale-leaseback agreement under which it bought 619 wireless communications towers from
for about $262 million in cash. Powertel closed flat at 23 15/16.
shot up 1 3/32, or 27.3%, to 5 1/8 after announcing a set of technology and licensing agreements with
, including a total investment by Mister Softee of $125 million. Microsoft lowered 7/8 to 79 3/8.
tacked on 5/16 to 92 1/8 after saying it will be the exclusive preset portal on new
computers. NEC added 1/4 to 56.
Earnings/revenue reports and previews
expanded 3/16 to 11 1/2 after reporting fourth-quarter earnings of 28 cents a share, 2 cents higher than the three-analyst forecast but below the year-ago 39 cents.
excelled 9/16 to 17 13/16 after recording a fourth-quarter loss of 12 cents a share, narrower than the four-analyst outlook for a loss of 18 cents but wider than the year-ago loss of 9 cents.
collapsed 5 3/4, or 43.8%, to an all-time low of 7 7/16 after warning second-quarter earnings will fall significantly below the four-analyst forecast of 15 cents a share. Along with disappointing sales trends, the company blamed the warning on a switch to a new consumer credit provider, which has resulted in a reduction in credit approvals. (Last month,
wrote about Select's shenanigans with mattress studies.)
tumbled 1, or 7%, to 13 3/8 after last night saying it sees second-quarter earnings of 6 cents a share due to a continuation of problems identified in the first quarter. The five-analyst outlook called for earnings of 14 cents vs. the year-ago 17 cents. The problems include the transition to a new enterprise resource planning system at its
subsidiary, right-sizing activities (yes, the company actually said "right-sizing activities" -- presumably with a straight face) at the
division, and new product introduction issues at the
German Honsberg Lamb
Following Friday's warning from UAL's
, US Airways said its second-quarter earnings will come in around $1.80 to $1.85 a share. The 11-analyst estimate called for $2.15 a share. The airline cited softer-than-expected May traffic and higher-than- expected costs. US Airways tanked 2 11/16, or 5.2%, to 48 7/8. After
Deutsche Banc Alex. Brown
chopped its second-quarter earnings estimate to $2.65 from $3.10, UAL tanked 2 9/16 to 63 13/16.
shaved off 1/2 to 40 11/16 after Deutsche lowered its second-quarter view for the company to $1.65 from $1.95.
As mentioned earlier, Donaldson Lufkin & Jenrette trimmed fourth-quarter earnings estimates on six big-tech names, citing curtailed Y2K-related spending. Compaq lost 15/16 to 22 15/16; Dell lost 1 3/4 to 34; H-P lost 3 7/16 to 90 9/16; IBM lost 3 7/8 to 116 5/8; Sun Microsystems lost 1 5/8 to 59 3/16; and EMC lost 2 to 51 3/4. Separately,
U.S. Bancorp Piper Jaffray
analyst Ashok Kumar said analysts' consensus second-quarter earning estimate for Compaq of 22 cents a share is too high due to product write-downs.
climbed 1/16 to 61 13/16,
climbed 1 5/8, or 5.4%, to 31 7/8 and
climbed 1 3/8 to 56 1/16 after
Warburg Dillon Read
initiated coverage of the semiconductor equipment makers with buys. The firm set a price target of 67 for Applied Materials, 47 for LAM and 69 for Novellus.
rung up 1 1/2 to 56 15/16,
rung up 2 3/8 to 66 7/8 and
rung up 1 1/16 to 69 11/16 after
CIBC World Markets
raised its recommendation on the stocks to strong buy from hold. The firm also lifted MCI WorldCom, which gave up 2 3/8 to 89, and
, which advanced 1 to 55, to strong buy from buy.
Morgan Stanley Dean Witter
began coverage of WorldCom,
and SBC with outperforms. Sprint lost 3/4 to 56 5/16. The firm also began coverage of GTE and Bell Atlantic with strong buys and Ameritech,
with neutrals. Telephone skidded 1/16 to 53 7/16; BellSouth skidded 3/4 to 46 1/8.
sloughed off 1 7/16 to 32 3/16 even after
raised its price target for the stock to 41 from 31 a share.
swelled 1 1/4, or 6.5%, to 20 3/8 after
started coverage with a buy, citing valuation, rebounding earnings and cash flow generation.
fell 1 3/4, or 11.1%, to 14 after Morgan Stanley Dean Witter dropped it to neutral from strong buy based on price and valuation.
dwindled 3 1/16 to 117, off an earlier intraday high of 123, after
increased its 12-month price target to 140 from 125 a share.
Bernard L. Madoff Investment Securities
are expected to announce plans to create a new electronic trading system,
The Wall Street Journal
reported. Goldman shed 2 3/16 to 63 3/4; Merrill shed 7/8 to 73.
WellPoint Health Networks
surged 2 11/16 to 86 1/8 on last night's news it will replace
in the S&P 500 after today's close. Yesterday, Harnischfeger filed a voluntary petition for reorganization under Chapter 11 bankruptcy. Separately, WellPoint filed with regulators to resell 9 million shares.
grew 1 3/4 to 38 7/16 on word it will replace
S&P SmallCap 600
after Friday's close. Resound is being acquired by
grew 1 3/16 to 35 31/16 on word it will replace
S&P MidCap 400
on June 14. Nine West is being acquired by