Ask not for whom the bell tolls; it tolls for tech. Following a week of stunning gains, technology stocks took a respite today, sending the
Nasdaq Composite Index
yesterday's record-setting advance.
Meanwhile, cyclical stocks rang loud and clear, helping the
Dow Jones Industrial Average
rumble back into record territory while the
rose modestly to another all-time high.
The Dow rose as high as 10,845.45 before closing up 113.12, or 1.1%, to 10,831.71, eclipsing its Thursday high of 10,727.18. The S&P 500 rose 2.76, or 0.2%, to a record 1362.80, overcoming a midafternoon dip as low as 1356.61.
Blue-chip proxies were enlivened by cyclical plays such as Dow components
Morgan Stanley Cyclical Index
gained 1% while the
S&P Chemical Index
paced Dow laggards, down 6.3% after posting second-quarter earnings in line with estimates and below year-ago results.
Other Dow gainers included
, which led a rebound in bank stocks. The
Philadelphia Stock Exchange/KBW Bank Index
gained a further 0.5% after announcing plans to repurchase up to $3.5 billion in stock and raise its quarterly dividend. But Big Blue was largely alone in positive territory among tech leaders.
Nasdaq Stock Market
bellwethers were particularly soft.
fell 5.9% on word it will pay 17% more than originally announced to acquire Bulletin Board-listed
CAI Wireless Systems
, which rose 18.5%.
fell 4.6%, and
shed 3.4%. With the
losing 2.4%, it's no surprise the Composite shed 49.64, or 1.9%, to 2602.41 after rising as high as 2677.76 in a short-lived upswing this morning.
Net Stocks Turn Sour
The tech-bedeviled index was also betrayed by Internet plays.
TheStreet.com Internet Sector
index, which climbed as high as 731.49 early on, fell 17.30, or 2.4%, to 696.97.
fell 5.6% ahead of its earnings report. After the close, AOL reported third-quarter earnings of 11 cents a share vs. the 34-analyst consensus estimate of 9 cents and year-ago results of 4 cents.
rose as high as 234 after posting better-than-expected earnings
last night but closed up just a fraction at 209 1/4.
Elsewhere in the group,
shed 13.6% after reporting a first-quarter loss of 13 cents a share, 8 cents better than year-ago results but only matching the seven-analyst expectation.
With the Nasdaq having gained over 13% in the five previous sessions, traders mainly took the retrenchment in stride. But Peter Green, director of technical research at
, said there is cause for concern.
"The Nasdaq Comp had a negative outside day, meaning it opened higher than the previous high but closed lower than the previous day's low, accompanied by negative divergence," Green said. "My sense is it's topped out short-term."
The technician expects the index to fall as low as 2525. Beyond that, it has support at 2489 and could "potentially" pull back to its 50-day moving average of 2425.
"My sense is the market wants to discount some international economic recovery," he said, explaining the revival of cyclicals. "With higher growth you may get a minor uptick in inflationary pressure. It's a minor change in psychology."
today said the U.S. supports the selling of up to 10 million ounces of gold to pay for debt relief -- the latest in a series of such statements by finance officials. "Yet gold and gold stocks rallied," the technician observed. "It's pretty interesting." The
Philadelphia Stock Exchange Gold & Silver Index
New York Stock Exchange
trading, 893.1 million shares were exchanged while advancers led losers 1,758 to 1,236. In Nasdaq activity, 1.14 billion shares were exchanged -- its 16th-straight billion-plus session -- while gainers led 2,049 to 1,965. New 52-week highs led new lows 86 to 39 on the Big Board and by 76 to 43 in over-the-counter trading.
Earnings Maven Unsure About Tech
For different reasons than Green, Chuck Hill, director of research at
, is also cautious about the outlook for high tech.
"I don't want to make too much out of this, but it is a concern
that we haven't been seeing upward revisions during the quarter leading up to reporting season in tech," Hill said in an interview at
headquarters this afternoon. "Except
, we're not seeing downward revisions; the estimates are essentially flat. That's not bad, but it is a change in the pattern of seeing stuff inch up in the quarter."
Additionally, there's a pattern of downward earning revisions among intermediate- and small-cap tech companies, so "tech in the aggregate shows some downward revision in the last couple of months," he said.
Moreover, while the pace of negative preannouncements has "slowed in the aggregate here in the first quarter relative to the last several, it's gone up for tech," the researcher observed. "Again, except for Compaq there's not much in big-caps, but there seems to be a greater uncertainty about the outlook for tech earnings than three or six months ago. Then there was pretty good confidence we were on an upswing. Now, it's a little fuzzy.
"On the other side, second-quarter year-over-year numbers are going to look terrific because there's such easy comparisons to last year, even if we trim a little bit," he continued, noting the semiconductor industry is expected to have an 87% year-over-year growth in earnings.
As for the Internet sector, Hill said: "Certainly there's some good news numbers-wise, but I still think it's a huge bubble. But it may get bigger before it breaks."
Look for more of Hill's comments in a Q&A tomorrow.
Among other indices, the
Dow Jones Transportation Average
fell 13.11 to 3597.46, owing largely to an 11% decline in
, which posted disappointing earnings. Elsewhere, the
Dow Jones Utility Average
gained 3.12, or 1%, to 305.71; the
gained 0.19 to 435.16; and the
American Stock Exchange Composite Index
added 2.47 to another record, 774.07.
The price of the 30-year Treasury bond rose 18/32 to 95 26/32, its yield dipping to 5.54%.
Elsewhere in North American equities, the
Toronto Stock Exchange 300
gained 11.21 to 7063.29 and the
Mexican Stock Exchange IPC Index
dipped 22.76 to 5382.39.
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.
rung up 1/16 to 53 after reporting first-quarter operating earnings of 61 cents a postsplit share, including the impact of its March 9
acquisition, beating the 18-analyst forecast of 57 cents and moving ahead of the year-ago 45 cents.
Nippon Telegraph & Telephone
gained 1 3/8 to 54 3/8 after agreeing to team up with AT&T in the global network solutions business.
tacked on 2 to 66 1/4 after
The Wall Street Journal
reported that the company is in preliminary discussions to align itself with either Microsoft or AOL to counter Telephone's $54 billion cash-and-stock bid for
. Comcast previously offered $48 billion in stock. MediaOne rose 3 to an all-time high of 81 13/16. Microsoft dropped 4 to 84. Ahead of today's postclose earnings, AOL gave up 9, or 5.6%, to 153.
previewed the earnings report from Ma Net in a
piece this morning.
Mergers, acquisitions and joint ventures
Park Place Entertainment
shot up 2 1/4, or 24.7%, to an all-time high of 11 3/8 after agreeing to buy
and other gaming assets from
for $3 billion in cash. The sale excludes the
golf resort and casino in Las Vegas. Starwood fell 11/16 to 34 5/16.
grew 4 1/2, or 10.4%, to 47 13/16 after announcing an agreement with
to form a joint-venture company, to be named TABU Apparel Services, that will provide garment-manufacturing services for the casualwear market. Burlington skidded 1/2, or 6.2%, to 7 9/16.
Earnings/revenue reports and previews
expanded 2 11/16, or 6.4%, to 44 3/4 after last night posting first-quarter earnings of 5 cents a share, coming in ahead of expectations for a break-even quarter.
eBay picked up 1/4 to 209 1/4 after rising as high as 234 following last night's first-quarter earnings of 5 cents a share, 3 cents ahead of the 10-analyst forecast and above the year-ago penny. Meanwhile, online auction house
-- rallying lately on word of an online audio auction planned for tonight -- sprouted up 2 13/16, or 17.1%, to an all-time high of 19 5/16.
climbed 6 7/8, or 16.8%, to an all-time high of 48 1/16 after last yesterday reporting second-quarter earnings of 21 cents a share, beating estimates of 11 cents.
sank 1 9/16, or 5.3%, to 28 even after last night topping first-quarter earnings estimates by 2 cents a share.
advanced 1, or 6.8%, to 15 3/4 after last night matching fourth-quarter earnings estimates for 6 cents a share.
flourished 2 13/16 to an all-time high of 98 1/16 after setting a 2-for-1 stock split and reporting third-quarter earnings of 39 cents a share, a penny above the 11-analyst view and ahead of the year-ago 33 cents.
swelled 7 3/8, or 18.3%, to an all-time high of 47 7/8 after last night topping first-quarter earnings estimates by 3 cents with a profit of 20 cents a share.
lifted 1 19/32, or 19.6%, to 9 3/4 after last night meeting first-quarter expectations for a loss of 3 cents a share.
tacked on 1 5/16, or 7%, to 20 1/16 after last night reporting a first-quarter profit of 28 cents a share, 4 cents higher than expected.
rose 3 1/2, or 8.6%, to 44 after last night posting third-quarter earnings of 34 cents a share, in line with estimates.
powered up 2, or 6.4%, to 33 3/8 after last night posting first-quarter earnings of 44 cents a share, a penny above estimates.
In other earnings news:
Offerings and stock actions
increased 3 11/16, or 11.4%, to 36 3/16 after setting a 5-for-4 stock split.
tumbled 3 3/8, or 6.4%, to 49 3/16 after
KLM Royal Dutch Airlines
announced plans to sell its 10.6 million-share stake in the company through a public offering. Late yesterday, Galileo beat first-quarter earnings estimates by a penny a share. KLM added 1 1/16 to 30 5/8.
gave up 2 to 40 1/4 after filing for a 1.75 million-share offering.
, a digital communications company, soared 17 3/8, or 108.5%, to 33 1/2 after
Credit Suisse First Boston
priced its 3 million-share IPO at $16 a share.
climbed 2, or 10%, to 22 after
Morgan Stanley Dean Witter
raised it to outperform from neutral.
sliced off 3 15/16, or 11%, to 31 3/4 after Morgan Stanley Dean Witter cut it to outperform from strong buy. Last night, the company missed first-quarter earnings estimates by 6 cents with a profit of 51 cents a share.
rose 4 13/16, or 11.8%, to 45 3/4 after
upgraded the stock to its recommended list from market perform.
hopped up 3 3/4, or 9.9%, to 41 5/8, matching an all-time high, after
BT Alex. Brown
upgraded it to strong buy from buy.
surged 2 3/16 to 53 13/16 after
NationsBanc Montgomery Securities
started coverage with a buy.
U S West
slid 1 3/4 to 53 1/2 after
lowered it to accumulate from buy.
flew 2 3/8, or 5.8%, to 43 5/8 on last night's news it will replace
in the S&P 500 after the close Friday. And
flew 3 1/2, or 6.8%, to an all-time high of 54 13/16 on word it will replace
in the index.
Toys R Us
expanded 1 1/4, or 5.7%, to 23 1/16 after announcing plans to establish a separate Internet sales unit in a strategic partnership with
, a Silicon Valley venture-capital firm. The company also said it acquired a 500,000-square-foot, automated distribution center in Memphis, Tenn.