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Session Shows Signs of Strength Despite Mixed Indices

The Nasdaq dimmed while the Dow brightened to another high, but solid breadth spoke of health in the broad market.

If someone asks how "the market" did today, tell 'em: "Great!" But beware, when you mention that two of the three "major" market averages ended with losses and the lone gainer -- the

Dow Jones Industrial Average

-- was up just 0.5%, he (or she) will probably look at you like you're that talking sandwich in the OJ (that's orange juice) commercial.

The Dow, erroneously dubbed "the market" by many, rose as high as 10,418.87 around 11 a.m. EDT and ended up 55.50 to another record, 10,395.01.

American Express

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,

Caterpillar

(CAT) - Get Caterpillar Inc. Report

and

International Paper

(IP) - Get International Paper Company (IP) Report

were among the Dow's best performers. Moreover, cyclicals were strong overall. The

Morgan Stanley Cyclical Index

rose 1.7% and the

Philadelphia Stock Exchange Forest and Paper Products Index

jumped 2.4%.

For the second consecutive session,

IBM

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was the Dow's biggest negative influence.

Merck

(MRK) - Get Merck & Co., Inc. (MRK) Report

was also a big drag after

Morgan Stanley Dean Witter

initiated coverage with a neutral rating.

Among the finer points of today's action, market internals improved and the

Russell 2000

rose 4.92, or 1.2%, to 417.24, its highest level since Feb. 4.

In

New York Stock Exchange

trading, 810.9 million shares were exchanged while gainers led losers 1,545 to 1,464. In

Nasdaq Stock Market

activity 1.35 billion shares were exchanged -- the second-busiest day in Nasdaq history and the fifth straight plus-billion-share session -- while gainers led 2,157 to 1,919. New 52-week highs bested new lows 106 to 62 on the Big Board and by 186 to 98 in over-the-counter trading.

Additionally, brokerage stocks -- considered a key gauge of the market's health (or lack thereof) -- were standout performers thanks to strong earnings from

Merrill Lynch

(MER)

and

PaineWebber

(PWJ)

.

Merrill actually dipped 2.6% in a "buy the rumor, sell the news" reaction, but PaineWebber gained 7.3%. Elsewhere,

Charles Schwab

(SCH)

jumped 11.5% and

Lehman Brothers

(LEH)

climbed 3.4%. The

American Stock Exchange Broker/Dealer Index

rose 7.9%.

Internet brokers and banks enjoyed even more impressive gains.

Ameritrade

(AMTD) - Get TD Ameritrade Holding Corporation Report

rose 21.8%,

E*Trade

(EGRP)

gained 31.1% and

National Discount Brokers

(NBD)

climbed 38.3% -- each to a 52-week high. Additionally,

Siebert Financial

(SIEB) - Get Siebert Financial Corp. Report

jumped 45.7% and

J.B. Oxford Holdings

(JBOH)

gained 32.3%.

In the banking sector,

Net.B@nk

(NTBK)

jumped 47.6% after setting a 3-for-1 stock split, while

Florida Banks

undefined

soared 277% after announcing plans to launch online banking.

Tech Bellwether Blues

Neither the

S&P 500

nor the

Nasdaq Composite Index

demonstrated any of the Dow's perkiness or the Russell's forward thrust.

The S&P 500 closed down 8.82, or 0.7%, to 1349.82 while the Nasdaq Comp lost 15.31, or 0.6%, to 2583.50. Both averages were waylaid by sluggish technology stocks, while weakness in transports and consumer favorites also weighed on the S&P 500.

Despite

yesterday's remarkable turnaround, tech investors continue to take profits in the wake of

Compaq's

(CPQ)

profit warning. The common thinking is that traders were awaiting the first-quarter results from

Intel

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to be absolutely, positively sure Compaq's problems were, indeed, company-specific.

After the bell, Intel reported first-quarter earnings of 57 cents a share vs. the consensus estimate of 55 cents.

Even after yesterday's big losses, "Compaq could not mount any rally," noted Randy Billhardt, co-head of equity trading at

PaineWebber

, speaking before Intel's results were released. "People are concerned there's no momentum in that stock, and it carried over into

Dell

(DELL) - Get Dell Technologies Inc Class C Report

and

Gateway

(GTW)

. With Intel you get a big key to the rest of the tech group, especially what they're forecasting for the second and third quarters. You certainly took a blow to the side with Compaq's numbers and need Intel to come out and say it's a Compaq problem."

Intel did issue some cautious comments about revenue growth in the second half and reportedly was down in

Instinet

trading.

Prior to the report, Intel fell 1%. Meanwhile,

Microsoft

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, Dell,

Oracle

(ORCL) - Get Oracle Corporation Report

and

MCI WorldCom

(WCOM)

each ended in arrears.

Additionally,

Cisco

(CSCO) - Get Cisco Systems, Inc. Report

lost 3% on word it will acquire

GeoTel Communications

(GEOC)

for $2 billion. GeoTel rose 27.8% but did little to aid the

Nasdaq 100

, which fell 2%.

"Look at Cisco -- that's telling me that people are taking some profits and moving on, or they're concerned the trends are not as favorable as they were," Billhardt said. "And, let's be honest, the valuations of these stocks are unheard of. It's not unreasonable to see some profit-taking. Some of the action today was people saying 'let's take some profits and reassess what kind of problem this is and react accordingly tomorrow.'"

The trader was encouraged however, noting "people have found alternatives" to big-cap technology, naming cyclicals which have done "phenomenally well."

In NYSE trading, Gateway,

Lucent

(LU)

and

Micron Technology

(MU) - Get Micron Technology, Inc. (MU) Report

joined IBM on the downside, although

Hewlett-Packard

(HWP)

TheStreet Recommends

rose 3.6%. The

Morgan Stanley High-Tech 35

lost 1.5% and the

Philadelphia Stock Exchange Semiconductor Index

shed 2%.

Net proxies, meanwhile, were mixed.

TheStreet.com Internet Sector

index fell 14.26, or 1.8%, to 776.18 while

TheStreet.com E-Commerce Index

gained 10.57, or 7.8%, to a record 146.16.

A third-straight session of small-cap outperformance had some pundits predicting the long-awaited small-cap revival is at hand. But Roy Blumberg, chief investment strategist at

Chestnut Investment Group/First Allied Securities

, isn't among them.

"Certainly it's a positive sign and I'm glad to see the market broaden out, but leadership changes usually take place in selloffs, not rallies," Blumberg said. "My bet is, it's an early sign people realize valuation means something and are shifting into other areas. But I don't think it's a significant trend or long-lasting until the market corrects."

The strategist and money manager hopes the trend signals "the correction will be as narrow as the rally was," but he still contends there will be a correction of 10% "or so" in the second quarter. Still, "with the kind of speculation we're seeing, precise timing is difficult" to assess, he said.

Among other indices, the

Dow Jones Transportation Average

fell 39.97, or 1.2%, to 3295.92; the

Dow Jones Utility Average

shed 0.74, or 0.3%, to 298.01; and the

American Stock Exchange Composite Index

rose 2.48, or 0.3%, to 737.80.

The price of the 30-year Treasury bond fell 20/32 to 96 14/32, its yield rising to 5.50%.

Elsewhere in North American equities, the

Toronto Stock Exchange 300

lost 25.58 to 6913.30 and the

Mexican Stock Exchange IPC Index

slipped 6.97 to 5296.31.

Tuesday's Company Report

By Heather Moore
Staff Reporter

(

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.

)

GeoTel Communications excelled 12 3/16, or 27.8%, to an all-time high of 55 15/16 on news Cisco will buy it for $2 billion. Under terms of the deal, Cisco will exchange 0.51 of a share for each share and option of GeoTel. Cisco dropped 3 9/16 to 114 1/8.

Companies that provide online trading or banking services continued to watch their stocks log 10%, 20%, even 270% gains.

Charles Schwab jumped 15 1/2, or 11.5%, to an all-time high of 150 1/2 after

CIBC Oppenheimer

upgraded it to strong buy from hold and set a price target of 200 a share. E*Trade jumped 29 7/8, or 31.1%, to an all-time high of 125 1/2; Ameritrade jumped 31, or 21.8%, to an all-time high of 173 1/4; and National Discount Brokers jumped 23 15/16, or 38.3%, to an all-time high of 86 1/2.

Meanwhile,

Sanchez Computer Associates

(SCAI)

shot up 47 9/16, or 149.2%, to an all-time high of 79 7/8 following a weekend trade show where the financial-services software company talked up its new Internet banking service.

Equitex

(EQTX)

shot up 18 1/8, or 77.5%, to an all-time high of 41 7/8 on yesterday's news that it will acquire

First TeleBanc

in a stock deal to create an Internet bank called

Net1Bank

. And Florida Banks soared 22 13/16, or 276.5%, to an all-time high of 31 1/4 after saying it will offer real-time, full-service Internet banking.

Still elsewhere, Net.B@nk advanced 75 1/2, or 47.6%, to an all-time high of 235 1/32 after announcing a 3-for-1 stock split.

TeleBanc

(TBFC)

advanced 33 7/16, or 31.1%, to an all-time high of 140 1/2 after saying it will offer 3.8 million shares at $105 a share. And

Marketing Services Group

(MSGI)

advanced 9 1/2, or 22.8%, to an all-time high of 51 1/4 on enthusiasm about the company's e-commerce operations.

Mergers, acquisitions and joint ventures

Ericsson

(ERICY)

tacked on 1/16 to 25 5/8 on word it's acquiring

Torrent Networking Technologies

for $450 million and

Internet Protocol

for $46 million and that the acquisitions may negatively influence 1999 results.

Informix

(IFMX)

, which makes software for e-commerce sites, surged 1 11/16, or 24.3%, to 8 21/32 after teaming up with

CyberCash

(CYCH)

, which makes e-commerce payment technology, to offer customers a secure way to process online business transactions. CyberCash hopped up 5 13/16, or 38.4%, to 21 1/8.

Premiere Technologies

(PTEK)

swelled 1 3/4, or 11.3%, to 17 1/4 after agreeing to promote unified messaging services and Web-based communications with

Sun Microsystems

(SUNW) - Get Sunworks, Inc. Report

. Sun Micro shed 2 5/16 to 65 1/2.

RealNetworks

(RNWK) - Get RealNetworks, Inc. Report

gave up 17, or 6.9%, to 229 -- after rising as high as 163 3/4 -- following news that it's buying privately held

Xing Technology

, a developer and provider of MP3 software, for up to $75 million in stock. RealNetworks expects to record a charge for acquisition-related costs after closing the deal, to be completed in the third quarter.

Earnings/revenue reports and previews

Firstar

(FSR)

added 1 9/16 to an all-time high of 103 7/16 after reporting first-quarter earnings of 27 cents a share vs. the year-ago 21 cents, both reflecting a 3-for-1 stock split. The 16-analyst estimate called for 77 cents on a pre-split basis.

Harley Davidson

(HDI)

scored 2 9/16 to 60 7/8 after last night reporting first-quarter earnings of 38 cents a share, 2 cents above the 14-analyst outlook and higher than the year-ago 29 cents.

Hewlett-Packard expanded 2 7/16 to 70 13/16 after Chief Executive Lewis Platt said the company is on track to record double-digit sales growth in 1999, with the second half of the year providing most of the strength. Platt sees a rebound in recently sluggish sales due, in part, to an expected recovery in Asia.

Rare Hospitality

(RARE) - Get Ultragenyx Pharmaceutical, Inc. Report

vaulted 4 5/16, or 31.8%, to an annual high of 18 after last night saying it sees first-quarter earnings of 33 cents to 34 cents a share, excluding items. The six-analyst outlook called for 29 cents vs. the year-ago 22 cents. The company said its

LongHorn Steakhouse

unit provided most of the growth, with a 5.2% increase in same-store sales for the quarter.

Rent-A-Center

(RCII) - Get Rent-A-Center Inc Report

picked up 2 9/16, or 10.2%, to 27 13/16 after last night saying it expects first-quarter earnings coming 20% higher than the eight-analyst forecast for 28 cents a share, reflecting its acquisition of

Thorn Americas

. The company earned 31 cents in the year-ago period.

Versant

(VSNT)

climbed 1/2, or 29.6%, to 2 3/16 after last night saying it sees a first-quarter loss of 14 cents to 17 cents a share, including restructuring charges. The three-analyst view calls for an operating loss of 20 cents. The company lost 65 cents in the year-ago period.

In other earnings news:

Offerings and stock actions

Metromedia Fiber Network

(MFNX)

reeled in 9 11/16, or 14.2%, to an all-time high of 77 15/16 after setting a 2-for-1 stock split.

MIH

(MIHL)

surged 2, or 11.1%, to 20 after

Merrill Lynch

last night priced its 9.1-million-share IPO top range. MIH is a multinational provider of pay-TV services and technology based in the British Virgin Islands.

Analyst actions

Coca-Cola

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popped up 1 7/16 to 63 5/16 after Merrill Lynch upgraded it to near-term accumulate from neutral.

DaimlerChrysler

(DCX)

tacked on 1 3/8 to 98 5/8 after Merrill Lynch upgraded the stock to near-term buy from accumulate.

Knight-Ridder

(KRI)

lifted 2 to 53 on heavy volume after

Credit Suisse First Boston

lifted it to buy from hold.

Knight/Trimark

(NITE)

climbed 20 1/8, or 20.7%, to an all-time high of 117 1/2 after CIBC Oppenheimer started coverage with a strong buy.

Miscellany

AMR

(AMR)

sloughed off 2 1/4 to 65 5/16 after saying it's been cooperating with

Justice Department

investigators for two years but that it plans to keep its discussions private. The announcement was issued as a response to a piece in

The Wall Street Journal

which said investigators are closing in on an antitrust case against AMR's

American Airlines

unit for allegedly driving a small rival out of the airline's hub in Dallas.