With the biggest technology stocks undergoing an official correction and Internets in a bear market, no one we know of thinks this pullback thing can be brushed off like some dusty sand from your derriere at the playground.
And so at 11 a.m. EDT, when the
Dow Jones Industrial Average
and to a lesser extent the
Nasdaq Composite Index
switched gears into rally mode, Wall Streeters still weren't all that encouraged. Rather, they thought it was kinda cute that folks were making a go at a rally. Especially considering the 3 o'clock round of selling we've been seeing, market watchers said they wouldn't be surprised if the session ended as a fifth straight day of losses.
"I look around and I see people buying into the dips here," said Tony Cecin, manager of Nasdaq trading at
U.S. Bancorp Piper Jaffray
in Minneapolis. "The Nasdaq has been beaten pretty hard, and I think people are just wondering if this is a decent inflection point and if they should commit more money. But it's too early to have any real conviction -- not until the last hour of trading. The market is more trading-oriented than every before -- there are more people day trading than ever before -- so they're buying now, but they could be selling out in two minutes."
Despite recent bloodletting and intraday volatility, which he expects to continue, the trader said the market still looks healthy. "The market has done a very good job of letting air out of the balloon. And coming off a good run, it's not insane to book a few profits. We're trading in a healthy mood -- there's no panic."
After dropping as low as 2339.12, the Nasdaq lately was up 17 to 2398.
were driving the Comp lower while
were flashing green.
was climbing 1.2% while the
Philadelphia Stock Exchange Semiconductor Index
was adding 1% and the
Morgan Stanley High-Tech 35
was tacking on 1% as well.
Even the lately harpooned
TheStreet.com Internet Sector
index was rising 9, or 1.6%, to 559. But today's broad Internet picture was just clearing up after a blurry morning. Bellwethers
were surging, and Ma Net,
, joined them on the plus side with a rise of 1 3/16 to 116 3/16.
The new-issue Internet portrait was hazier. While
(STRM:Nasdaq) was rocketing 94.6% and
Donaldson Lufkin & Jenrette's
online brokerage unit, was jumping 20%,
(ZIPL:Nasdaq) was losing 15.6% and
Juno Online Services
(JWEB:Nasdaq) was losing 7.7% in their initial offerings.
Part of that weakness may come from a type of elitism developing in the sector, which lately has been cutting off second- and third-tier Net names from previous gains won on simply being dot-com-affiliated. Not helping were comments from
Morgan Stanley Dean Witter
analyst Mary Meeker, who told salespeople this morning that TheStreet.com Internet Sector index could fall another 100 points before finding a base.
Cecin said he didn't think the frailty was specific to ZipLink or Juno. "I have a list here of some of Internet IPOs that have come out over the last few weeks, and many are not only below their first-day close but below their issue price," he said. "So a different mentality has been at work over the last two weeks for these issues. A lot of people are still trying to figure out what they own and if the company's gonna make any money."
The trader also noted that Internet names are still up substantially for the year. As of yesterday's close, TheStreet.com Internet Sector index was up 35.4%. "Could they fall all the way down to flat for the year? Maybe," Cecin said.
After rising as high as 10,636.09 and falling as low as 10,518.70, the
Dow Jones Industrial Average
recently was up 93, or 0.9%, to 10,624. Arguing the bull's case were
, which was up 4.2% after agreeing to license
(no relation to this Web site) streaming technology to deliver courses over the Web.
was up 11 to 1296, and the smallish-cap
was down 2 to 433.
Volume was lighter than yesterday's but better than that at the end of last week. Breadth was negative. On the
New York Stock Exchange
, decliners were leading advancers 1,563 to 1,231 on 507 million shares. And the downs had the ups 2,122 to 1,475 on 676 million shares in
Nasdaq Stock Market
activity. New 52-week lows were outpacing new highs 47 to 17 on the Big Board and 59 to 18 on the Nasdaq.
Getting Some Support From Durables?
With the 30-year Treasury recently down 12/32 to 92 16/32, lifting its yield to 5.78%, the bond market wasn't showing much of a reaction to April's
orders report. (For more on the fixed-income market, see today's early
But Jack Ablin, managing director at
Colonial Asset Management
in Jacksonville, Fla., said stocks may be seeing the orders report as evidence the economy is cooling off and that the
won't have to raise interest rates.
"New home sales have been falling and mortgage rates have been rising in advance of Treasuries, so maybe some people will latch onto
the durable goods number as a break, as some optimism," Ablin said. He added that he found today's gold price move -- down 40 cents to $270 an ounce -- as further evidence against a rate hike.
For stocks, meanwhile, the strategist expects this "moderate pullback" to last until the second-quarter earnings season, after which he expects a summer rally. After that, he expects market nervousness due to Y2K concerns. "We've already seen the Y2K issue hit software vendors for the first and second quarters, but we expect that to permeate further. The good news is we know exactly when 2000 is gonna hit," he said with a laugh.
"We've got a lot of individual investors, high-net individuals in business, and they're nervous -- there's no question. One of our largest accounts just asked us to move from 70% to 30% equities. And that's largely because of Y2K. Then we have other folks who can wait three, five years, and say, 'Hey, we can ride through this market.'"
But the concern for many investors these days, Ablin said, is momentum.
"A lot of these highfliers in Net and high tech, they've rallied on the momentum side of things," he said. "Now, a lot of momentum players have broken down. Take AOL
which Colonial bought in the 80s, when it was at 170, people saw 150 as a great opportunity to get in cheap. Now that it's at 110, people are thinking, 'Geez, maybe the momentum factor is gonna work against me now.'"
Wednesday's Midday Movers
The hitherto movin' and shakin' Internet sector has assumed a slower gait of late, and that change is exemplified by the flat performance of some Net IPOs today. Mini-AOL and free email provider Juno Online Services was trading flatter than a can of
, down 1, or 7.7%, to 12 after being priced last night at 13; electronic company filings provider
(EDGR:Nasdaq) was kerplunking down a teenie, or 0.7%, to 9 7/16; ZipLink was off a gargantuan 2 3/16, or 15.6%, to 11 7/8. Donaldson Lufkin & Jenrette unit DLJdirect was up 6, or 20%, to 26. The big exception was Latin American online giant
(STRM:Nasdaq), up 14 3/16, or 94.6%, to 29 3/16.
focused on DLJdirect in a story
this morning and wrote about Juno in a story
Far from Silicon Alley and deep in the heart of Texas,
was getting the snot knocked out of it, lately down 11 5/8, or 44.3%, to 14 3/4 on the heels of Monday's lackluster earnings report and a report in
The Wall Street Journal's
Texas Journal section focusing on the company's bloated market capitalization.
In other news:
Fiber-optic cable maker
was surging 4 1/16, or 8.5%, to 52 1/16 on no company-specific news.
continues to act volatile after its agreement to buy
. The online health information firm was advancing 12 9/16, or 18.9% to 79 1/2.
is giving back some of the gains from its two recently announced contracts with the
Defense Advanced Research Projects Agency
. The stock was lately off 2 7/8, or 9.9%, to 25 1/4.
Platinum Technology International
was up 2 7/8, or 28%, to 28 15/16 after
last night said it cut a deal with the
to complete its $3.5 billion purchase of the mainframe software firm. Justice is requiring Computer Associates to sell six of its mainframe systems management software products and some related assets.
Security First Technologies
, a provider of Internet services for financial institutions, continues shave off points in the wake of last week's announcement that it will buy
. Securities First was lately down 3 13/16, or 11.3%, to 30 1/16.
was falling 6 3/4, or 12.4%, to 48 1/4 after a
Wall Street Journal
report highlighting the patent litigation surrounding its pulsating excimer lasers.