The Lee brothers played the role of the stock and bond markets today: Home Lee and Ug Lee, that is. Bonds tumbled, taking stocks along for the ride, amid rumors that hedge-fund problems would compel the
to hold an emergency meeting, perhaps as early as this weekend.
Both fixed-income and equity markets finished with substantial losses, but by day's end market players were talking more about the hazards of rumors on summer Fridays than about the moral hazard of central bankers bailing out hedge funds.
was cited as a likely candidate for salvation, having been hit with redemptions in recent weeks, according to various press reports. But
, whose report yesterday that Tiger faced $3 billion in redemptions likely contributed to today's jitters, backed off the story today around 3:15 p.m. EDT.
There is "absolutely no reason to bail them out," a spokesman for the fund group said. "Tiger is not going under. It's absurd."
The $3 billion figure cited by Faber yesterday was "way high," the spokesman said, adding Tiger could cover its June 30 redemptions "four times over" just by using available cash.
What made the rumors all the more plausible was the fact that Robertson's funds have had a tough time of it this year. The flagship Tiger fund was down roughly 8% through the end of May, though May's 0.8% gain marked its first up month of the year.
Fed officials didn't return phone calls seeking comment.
reported that central bank officials declined to comment on the rumors.
At the time of Faber's report, the
Dow Jones Industrial Average
was just beginning to push off its session low of 10,448.72 as word filtered out Tiger wasn't coming to the Fed, cup in paw. The index didn't exactly storm into the close, but it finished off its nadir, down 130.76, or 1.2%, to 10,490.51.
Other market averages sported similarly unfashionable sessions, as stocks as a whole followed the bond market's ill-conceived pattern.
The price of the 30-year bond fell 1 2/32 to 87 26/32, its yield rising to 6.15%, its highest level since Nov. 10, 1997.
In another light-volume session and with traders already paranoid about the prospect of rate hikes later this month, the hedge fund rumors probably contributed to the bond market's ailments. But fixed-income participants said the onrushing supply of corporate bonds and issuers' desire to lock in relatively low rates before any tightening occurs were greater contributors. Corporate Treasurers can effectively secure rates by shorting Treasuries, thus exacerbating the long bond's precarious situation.
As is their wont (certainly not "want"), growth stocks were most beguiled by the bond market's losses. The
Nasdaq Composite Index
fell 36.74, or 1.5%, to 2447.88, while
TheStreet.com Internet Sector
index lost 19.84, or 3.5%, to 550.24.
Broader market averages failed to elude the downdraft. The
slid 9.18, or 0.7%, to 1293.64 after trading as low as 1287.88. The
lost 4.26, or 1%, to 438.01.
"The bond market is not doing well, so the stock market is not doing well," said Doug Myers, vice president of equity trading at
in Atlanta. "Tiger has been having a hard time of late, but I'm not worried about those rumors. It's just people collectively pulling in their horns, taking their chips off the table."
There were "no big standouts" among stocks today, Myers said, save for Internet stocks, which continued a recent trend to the downside. "Everybody knew they were a bubble and all bubbles burst. When they deflate, they deflate quicker than anybody wants."
Big Net names such as
each fell around 10%, while secondary plays like
dotted the list of big percentage losers, off 16.8%.
Losses among Internet favorites may be contributing to the ongoing absence of substantial volume, as retail investors previously enamored of the group may be unwilling to trade with the group in decline, or unable because of losses suffered therein.
New York Stock Exchange
action, 694.1 million shares were traded -- the sixth sub-700 million session in the past seven trading days -- while declining stocks bested advancers 1,676 to 1,269. In
Nasdaq Stock Market
activity, 758.3 million shares were exchanged, while losers led 2,122 to 1,664. New 52-week lows swamped new highs 171 to 55 in Big Board activity, though new highs led 75 to 32 in over-the-counter trading.
Rumors and Unpleasant Revisions
"I think a Fed meeting would not make sense unless there's a global crisis we don't know about," said Ronny Kraft, CEO of
Gotham Capital Management
, a New York-based hedge fund. "The problem with the stock market is bonds can't find a bottom until equities crack. Bonds clearly are a better investment, but people are not making that decision."
Kraft, who has been urging caution since April, believes inflation has been revived. He noted upward revisions to previous-month figures in last week's productivity report and today's retail sales data.
Today's economic data did nothing to dissuade traders from the notion the Federal Reserve will tighten at its meeting at the end of the month.
Producer Price Index
rose 0.2% in May, 0.1% excluding the volatile food and energy sectors; both numbers were in line with expectations. But the retail sales increase for May came in at 1% vs. the 0.8% consensus. Moreover, the April retail sales figures were revised to up 0.4% from up 0.1% previously.
Among other indices, the
Dow Jones Transportation Average
fell 23.93, or 0.7%, to 3344.47; the
Dow Jones Utility Average
gained 0.72, or 0.2%, to 328.72; and the
American Stock Exchange Composite Index
dipped 2.43, or 0.3%, to 765.82.
For the week, the Dow industrials shed 309.33, or 2.9%; the S&P 500 lost 34.11, or 2.6%; the Comp slid 30.29, or 1.2%; the Russell 2000 dipped 4.32, or 1%; and the DOT fell 3.22, or 0.2%. Additionally, the Dow transports tumbled 118.26, or 3.4%,; the Dow utilities fell 2, or 0.6%; and the Amex Composite slid 15.16, or 1.9%.
Elsewhere in North American equities today, the
Toronto Stock Exchange 300
dipped 4.22 to 6917.13 and the
Mexican Stock Exchange IPC Index
shed 131.94, or 2.5%, to 5234.65. For the week, the TSE 300 fell 23.01, or 0.3% and the IPC slid 136.61, or 2.5%.
Friday'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.
(PHCM:Nasdaq) proved to be one of the most shag-alicious Net IPOs in recent memory, warding off investor Dr. Evils who have (reasonably?) been trading initial offerings with a little less enthusiasm than a few months ago. PHCM shimmied up 24, or 150%, to 40 1/8 after
Credit Suisse First Boston
priced its 4 million-share IPO above-range at $16 a share. The price range for the offering was raised to $14 to $15 from $10 to $12. Phone.com, formerly known as Unwired Planet, provides software for delivery of Internet services over wireless phones.
Elswhere in Internet names, eBay lost 16 3/4, or 9.2%, of its groove to 165 7/8 after would-be auction buyers and sellers saw this for too long: "We're sorry, but the eBay system is temporarily unavailable. We extend our utmost apologies for this inconvenience, and we thank you for your patience. ... The Automatic Auction Extension Policy provides details about when eBay will automatically extend auctions following an unscheduled outage." Investors were punishing the online auctioneer for the site's second
outage in as many days.
failed to behave, deflating 6, or 5.7%, to 99 1/2 amid lingering concerns over a slowing subscriber base overseas due to the prevalence of free Internet access.
Mergers, acquisitions and joint ventures
shot up 6 3/8, or 32.9%, to 25 3/4 after Belgian particle accelerator maker
Ion Beam Applications
agreed to acquire the company for $27 a share, or $214 million.
Earnings/revenue reports and previews
jumped 1 9/16, or 30.9%, to an annual high of 6 5/8 after late yesterday posting first-quarter earnings of 3 cents a share vs. the year-ago loss of 4 cents
CMGI shed 11 3/4, or 11.6%, to 89 3/4 after the Internet venture firm last night posted a third-quarter operating loss of 29 cents a share and a net loss of 30 cents. The seven-analyst forecast called for a quarterly loss of 13 cents, reversing year-ago earnings of 9 cents a share.
reported on the company's conference call last night.
Discount Auto Parts
lowered 5/8 to 23 11/16 after saying fourth-quarter sales rose 15.2% from a year ago to a record $140.8 million. Comparable-store sales, however, were flat.
skidded 3 7/8, or 15.7%, to 20 7/8 after warning its second-quarter earnings will come in around 30 cents a share, below the four-analyst forecast for 38 cents. The emergency vehicle and safety and signaling products maker blamed weakness in certain industrial markets and lower-than-expected productivity in its fire rescue vehicle unit.
(who knew?) swelled 2 1/4, or 21.6%, to 12 3/4 after last night saying its second-quarter earnings would meet or beat the 14-analyst estimate of 7 cents a share thanks to strong revenue growth. The e-commerce software provider made a dime in the year-ago quarter.
kicked up 23/32, or 9.8%, to 8 1/16 after reporting second-quarter earnings of 25 cents a share, missing the five-analyst forecast for 33 cents and falling behind the year-ago 35 cents.
closed flat at 4 after recording second-quarter earnings of 15 cents a share, 2 cents lower than the three-analyst outlook and below the year-ago 21 cents.
declined 3 1/4, or 7%, to 42 15/16 after last night saying it sees second-quarter earnings, excluding charges, coming in flat with the year-ago second quarter, when the company made 69 cents a share. The six-analyst estimate called for 75 cents. The maker of
jeans blamed a "difficult" European market and shipping difficulties. Today,
slashed the stock to accumulate from strong buy.
Offerings and stock actions
vaulted 2 1/16, or 11.5%, to 19 15/16 after the company's board approved a Dutch auction self-tender offer for up to 2 million shares at between 18 and 22 apiece.
expanded 2 7/8, or 11%, to 29 1/8 after announcing a $200 million repurchase program.
excelled 3 3/8, or 7.8%, to 46 1/2 after last night approving a buyback of up to 6 million shares at 50 apiece.
gave up 1 1/16 to 56 1/2 after last night setting a 3-for-2 stock split.
popped up 1 3/8, or 13.1%, to 12 1/8 after
raised it to accumulate from strong buy.
shaved off 3 3/16, or 11.2%, to 25 3/8 after
SG Cowen Securities
lowered it to buy from strong buy due to less-than-expected demand for the company's flagship product,
added 2 to 57 3/4 after
Morgan Stanley Dean Witter
restarted coverage with a strong buy.
grew 2 7/16 to 71 7/8 after
Deutsche Banc Alex. Brown
started coverage with a buy.
advanced 9/16, or 11.3%, to 5 3/4 after Adams Harkness pushed it up to accumulate from market perform.
picked up 1/8 to 37 15/16, following an earlier high of 40 5/16, after
lifted the stock's Class B shares to long-term buy from accumulate.
slipped 3/16 to 42 5/8 after announcing plans to sell its
subsidiary to privately held
Science Applications International
. Financial terms of the deal were undisclosed.
surged 11/16, or 8.9%, to 8 7/16 after an unnamed New York money manager told
Inside Wall Street column that the company could reinvent itself as a technology superstore or be acquired by a big office-supply retailer, such as