Steamy Embrace of Tech Lingers as Broader Market Stands By

Microsoft and a slew of other tech names are holding the market's attention almost completely.
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The market's passion for technology stocks continued unabated, with the sector vastly outperforming the rest of the market.

The

Nasdaq Composite Index

was up 37, or 1.6%, to 2406. Tech issues were the market's stars, as they have been for some time, sky-high valuations and all, with key tech-sector barometers all sporting solid gains.

Ricky Harrington, senior vice president and technical analyst at

Interstate/Johnson Lane

, said tech's leadership of the market is the same characteristic that was prevalent late last year, with narrow leadership concentrated in tech stocks. That's "not a good situation," he said.

The large-cap

Nasdaq 100

was up 1.8%. The

Philadelphia Stock Exchange Computer Box Maker Index

was up 1.9%, the

Morgan Stanley High-Tech 35

was up 2.4%, while the

Philadelphia Stock Exchange Semiconductor Index

has risen 3%.

Stocks have been buoyed in part today by as-expected and better-than-expected news on the earnings front and by stock split announcements.

Internet stocks were sporting solid gains, albeit not very Internet-like. You know, percentage rises in the mere double figures and all.

TheStreet.com Internet Sector

index has jumped 15, or 3.1%, to 512.

Dominating the news out of cyberspace was the world's biggest personal computer maker,

Compaq

(CPQ)

. The company announced plans to spin off its

AltaVista

Internet search engine unit and establish it as a publicly traded company. Compaq rose 5.5% and was most active on the

New York Stock Exchange

with 15.7 million shares changing hands.

Compaq also said it signed an Internet technology deal with

Microsoft

(MSFT) - Get Report

to share communication and community capabilities between AltaVista and the

Microsoft Network

. Microsoft rose 7 11/16 to 169 9/16. Mister Softee was most active on the

Nasdaq Stock Market

on volume of 16.1 million shares.

Harrington pointed out that just the increase in market value today in Mister Softee is equal to a number of major corporations.

In the wake of the news,

Inktomi

(INKT)

and Microsoft said the Microsoft Network will phase out the Inktomi search engine as its primary search platform. Inktomi took a hit and was lately off 10.3%.

Meanwhile, the

Dow Jones Industrial Average

was up 37, or 0.4%, to 9240.

A bunch of Dow components reported earnings today, including

Boeing

(BA) - Get Report

,

Johnson & Johnson

(JNJ) - Get Report

,

Merck

(MRK) - Get Report

,

Coca-Cola

(KO) - Get Report

and

McDonald's

(MCD) - Get Report

. In response to the earnings reports, the stocks were mixed.

The companies either met or exceeded Wall Street expectations with their earnings reports, much like the results reported yesterday.

One of the biggest movers in the Dow --

IBM

(IBM) - Get Report

-- didn't pop on earnings news. Big Blue surged thanks to its widely anticipated announcement that it set a 2-for-1 stock split. The stock lately was up 2 3/16 to 184 3/16.

Dan Marciano, head of equity trading at

First Albany

, said he sees the Dow trading in a range of 9100 to 9500-9600 for a while. He pointed out that with earnings season coming to a close, there is nothing really out there tangible that you can spot that can give the market guidance. He said the situation in Brazil was a nonevent for right now.

"We're sort of in Never-Never Land," he said of the market.

Meanwhile, Marciano noted that he didn't think the market has seen the last of the 401(k) and IRA money coming in. Those new money flows at the beginning of the year led to the market's quick jump earlier this year.

"We got some good news with

Xerox

(XRX) - Get Report

and Microsoft with the splits," Marciano said before IBM announced its split. "Those things are going to help and keep the market going."

As for direction short-term, there's not much more out there for the market to chew on other than earnings, said Interstate/Johnson Lane's Harrington.

The

S&P 500

was up 6, or 0.5%, to 1240. The small-cap

Russell 2000

was up 1, or 0.3%, to 423.

Currently, it's a market of individual stocks, Marciano said, noting that the only group in trouble is the oil and gas stocks. Oil-service stocks were getting buried today. The

Philadelphia Stock Exchange Oil Service Index

was off 5.1%.

Among other market indices, the

Dow Jones Utility Average

was down 0.5%, the

Dow Jones Transportation Average

was down a fraction and the

American Stock Exchange Composite Index

was up a fraction.

In the Treasury market, the 30-year bond was lately up 5/32 to 102 7/32, yielding 5.10%. (For more on the fixed-income market, see today's early

Bond Focus.)

Market internals were mixed. On the

New York Stock Exchange

, decliners were edging advancers 1,548 to 1,293 on 457 million shares. On the

Nasdaq Stock Market

winners were beating losers 1,900 to 1,818 on 576 million shares.

On the NYSE, 46 issues had set new 52-week lows while 31 had touched new highs. On the Nasdaq, 67 issues had set new highs while new lows totaled 29.

Tuesday's Midday Movers

By Heather Moore
Staff Reporter

McDonald's has its greasy finger on what today's session seems to be about: earnings and stock splits. Along with setting a 2-for-1 split, the fast-food giant reported fourth-quarter earnings of 64 cents a share, on target with the 16-analyst

First Call

forecast and above the year-ago 58 cents. The stock lately was up 3 13/16, or 5%, to 79 3/4.

Adding to today's Microsoft-related news, Amsterdam-based

United Pan-Europe Communications

and Mister Softee agreed to establish a strategic technical services partnership. The companies plan to set up a number of joint projects to deliver Internet and other interactive services such as digital video to UPC and non-UPC broadband customers in Europe. UPC is majority-owned by

United International Holdings

(UIHIA)

, which was up 6 3/4, or 17.9%, to 44 1/2.

In other news:

Delia's

(DLIA)

was up 1 9/16, or 10.4%, to 16 11/16 after late yesterday filing with regulators for an IPO of $46 million of shares in its Internet unit,

iTurf

. The offering is expected to be completed in the spring by

BT Alex. Brown

,

CIBC Oppenheimer

and

Hambrecht & Quist

. iTurf provides online community and electronic commerce services for the 10-to-24 age bracket.

LucasVarity

(LVA)

was up 6 37/128, or 14.8%, to 47 9/16 after

The Wall Street Journal

reported that

TRW

(TRW)

is in advanced talks to buy the British auto-parts concern. Yesterday, LucasVarity rejected a takeover offer from

Federal-Mogul

(FMO) - Get Report

, up 5/8 to 62 7/16.

Earnings/revenue movers

Cytec Industries

(CYT)

was up 1 9/16, or 7.7%, to 21 3/4 after last night beating fourth-quarter earnings estimates by 8 cents a share.

International Network Services

(INSS)

was down 3 9/16, or 5.8%, to 58 1/4 even after last night recording second-quarter earnings a penny higher than expected.

McKesson HBOC

(MCK) - Get Report

was down 6 1/2, or 7.9%, to 75 1/2 even after last night reporting third-quarter earnings of 56 cents a share, in line with the two-analyst forecast and up from the year-ago 43 cents. The company said it is on course to meet its fiscal 2000 profit target of $3 a share; the four-analyst estimate calls for $3.01.

Progressive

(PGR) - Get Report

was down 27 7/16, or 17.9%, to 126 3/16 after late yesterday missing fourth-quarter earnings estimates by 16 cents a share. Today,

Goldman Sachs

slashed the stock to market perform from outperform.

Ralston Purina

(RAL)

was up 2 5/16, or 8.9%, to 28 5/16 even after missing first-quarter earnings estimates by 3 cents a share last night.

Remedy

(RMDY)

was up 5 9/16, or 33.2%, to 22 3/8 after late yesterday posting fourth-quarter earnings 2 cents a share above estimates. Today, Goldman Sachs raised the stock to market outperform from market perform and CIBC Oppenheimer upped it to strong buy from hold.

Uniphase

(UNPH)

was up 9 1/4, or 13.3%, to 79 5/16 after late yesterday announcing second-quarter earnings 1 cent ahead of forecasts.

Ventana Medical Systems

(VMSI)

was down 1 13/16, or 9.3%, to 17 11/16 after last night warning its fourth-quarter earnings will fall slightly below the four-analyst view of 13 cents a share because of increased sales expense accruals, higher costs related to integrating acquisitions and increasing reserves for doubtful accounts. The company made 5 cents in the year-ago period.

Whitman

(WH) - Get Report

was down 3 1/2, or 14.9%, to 20 despite reporting fourth-quarter earnings in line with estimates last night. Also,

PepsiCo

(PEP) - Get Report

said it will transfer several bottling operations to Whitman for around $300 million to realign bottling territories and create a new Pepsi-Cola bottler in which Pepsi will hold a 35% stake. Pepsi was off 7/16 to 39 13/16.

Xerox

(XRX) - Get Report

was up 10 1/8, or 9.6%, to 115 1/2 after last night reporting (ahead of schedule) fourth-quarter earnings of $1.69 a share, 2 cents ahead of the 13-analyst outlook and above the year-ago $1.46. The company also set a 2-for-1 stock split, approved a 11% dividend increase and said it sees stronger European and Japanese currencies helping its 1999 earnings. Xerox said it expects earnings growth in the mid to high teens for the next few years and that 2,200 employees left the company under a fourth-quarter restructuring plan.

In other earnings news: