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Stocks Fare Relatively Well as Bonds Skid -- but Only Relatively

Up volume led down volume on the NYSE, but that was about the only healthy market internal on this thin trading day.




Or not.

Investors hoping for much excitement on Wall Street today were likely disappointed as major averages largely wallowed near break-even before finishing modestly lower. However, those long took solace as equities proved resilient to another tumult in the bond market.

The price of the 30-year Treasury bond fell 1 1/32 to 86 25/32, its yield rising to 6.24%, its highest level since Nov. 5, 1997. Meanwhile, the yield on the five-year note rose above 6% for the first time since Oct. 22, 1997. News

Boris Yeltsin

fired his cabinet and renewed tensions between China and Taiwan (and India and Pakistan) helped the dollar in a flight-to-quality trade, but bonds continued to swoon. Fixed-income traders apparently focused more on tomorrow's


refunding and swelling fears of


tightening on Aug. 24 (and beyond?) vs. international developments.

Given that backdrop, the lethargy of equity proxies was somewhat impressive. The

Dow Jones Industrial Average

closed down 6.33, or 0.1%, to 10,707.70 after trading as high as 10,761.84 and as low as 10,683.32.


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General Motors

(GM) - Get Free Report



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and financials led Dow gainers. However, they were offset by weakness in




International Paper

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. Additionally,


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fell 3.6% after reporting its exchange offer for



shares was oversubscribed. Conoco gained 2.9%.


S&P 500

fell 2.49, or 0.2%, to 1297.80 as weakness in tech bellwethers overshadowed strength in financials. Meanwhile, the

Russell 2000

dipped 2.15, or 0.5%, to 425.89.

'I think the bloodletting is done for now,' said Charles Payne of Wall Street Strategies. 'Up to down volume is slightly positive, which tells you there's no mass selling aside from Internet stocks. The problem is, there's no urgency to jump in. Those with the money aren't leading the way on the upside, so you get feeble rally attempts.'


Nasdaq Composite Index

fell 28.99, or 1.1%, to 2518.98 after trading as high as 2563.72 and as low as 2517.46. The index was hampered all day by weakness in

MCI WorldCom


, which fell 4.8% amid reports it is cutting long-distance rates. Other long-distance providers tumbled as well, including



, down 4.5%.

The Comp avoided a bigger loss thanks largely to strength in


(DELL) - Get Free Report

, up 2.8% after

BancBoston Robertson Stephens

upped its recommendation, and


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, which gained 2.6%. Intel's advance came in the face of reports of yet another potential threat from

Advanced Micro Devices

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, which gained 10.8%.

Bottom line: The chip sector remains very much in favor as traders report institutional investors looking for exposure to technology are swapping their Internet stocks for the relative safety of chip and equipment names. The

Philadelphia Stock Exchange Semiconductor Index

gained 1.8% while the

Nasdaq 100

lost 1.1%.




fell 7.1% after agreeing to acquire

Data General


for $1.1 billion in stock. Data General rose 32.3%.

Meanwhile, Internet Sector

index rose as high as 504.44 early on but closed off 18.36, or 3.7%, to 480.03.

The DOT got an early lift from

America Online


, which rose as high as 89 1/16 after

The New York Times

reported the firm was negotiating to get "enhanced access" to


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cable systems. But AT&T denied the rumor, reiterating its commitment to


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, which nonetheless slid 10.9%. AOL closed up 0.9% to 85 1/2 while Ma Bell dipped 1.6%.

Big Money Takes a Holiday

The absence of so-called big money players is a key element in the Internet sector's continued woes, according to Charles Payne, president and chief analyst at

Wall Street Strategies


"A lot

of Net stocks are oversold but until major hedge funds and institutions are putting money into them, the little guys can't stem the tide," he said. "There was a time

retail investors had so much credit built up into margin accounts, 'buy the dip' became the mantra. Now, they don't have the money to try that strategy. They gap 'em up in the morning to try to seduce some big players but when it doesn't happen, the rally runs out of steam."

Payne said there is still money to be made in the sector but noted the need for incredible quickness and flexibility. On Thursday, Wall Street Strategies recommended

(STMP) - Get Free Report

at around 33, he said. Just today, the stock traded as high as 43 1/4 before closing off 12% at 31 11/16.

As for the bigger picture, "the fact we closed

virtually unchanged can be considered a victory," Payne said. "I think the bloodletting is done for now. Up to down volume is slightly positive, which tells you there's no mass selling aside from Internet stocks. The problem is, there's no urgency to jump in. Those with the money aren't leading the way on the upside, so you get feeble rally attempts."

The strategist recommended investors raise cash and wait to see how the market responds to the Fed's Aug. 24 meeting.

"Instead of bottom-fishing, go fishing for real," he said.

Judging by the volume today, it seems many market players are taking that advice.


New York Stock Exchange

trading, 684.4 million shares were exchanged while declining stocks led advancers 1,802 to 1,190. In

Nasdaq Stock Market

action 753.3 million shares traded while losers led 2,212 to 1,657. New 52-week lows bested new highs 213 to 58 on the Big Board and by in 98 to 42 over-the-counter trading.

As Payne noted, up volume bested down 330 million to 324 million in NYSE action. However, down volume led 435.6 million to 272.7 million in OTC action.

Among other indices, the

Dow Jones Transportation Average

gained 0.42 to 3220.45; the

Dow Jones Utility Average

rose 0.57, or 0.2%, to 318.95; and the

American Stock Exchange Composite Index

dipped 0.05 to 777.87.

Elsewhere in North American equities, the

Toronto Stock Exchange 300

was down 15.06, to 6863.74 and the

Mexican Stock Exchange IPC Index

was up 42.04, or 0.8% to 5071.700.

Tuesday's Company Report

By Eileen Kinsella
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.


Data General gained 4 1/4, or 32.3%, to 17 7/16 after EMC, which was down 3, or 5%, to 57, agreed to buy it for $1.1 billion in stock. EMC said the acquisition would boost earnings in the next few years. But that didn't sway

Donaldson Lufkin & Jenrette

, which sliced the company's rating to buy from top pick.

DLJ also said it would put


(GLW) - Get Free Report

on its focus list as a replacement for

Merrill Lynch


, ousting EMC from contention. Corning rose 1/2 to 70 3/16.

Mergers, acquisitions and joint ventures

AT&T slipped 13/16, to 50 7/8 after it reiterated its commitment to Excite@Home following a report in

The New York Times

which said AT&T and America Online were considering an arrangement that would diminish the role of Excite by giving AOL and possibly other Internet providers enhanced access to AT&T's systems. Shares of ATHM lost 4 5/8, or 10.9%, to 38, while shares of AOL lifted 13/16 to 85 9/16.

AOL also announced a strategic alliance with



which will provide AOL's corporate customers with Internet, extranet and intranet development services. Proxicom slipped 5/16 to 32 1/2.

And AOL wasn't done, inking an instant-messaging deal with

Juno Online Services


that had Juno adding 1/4 to 14 15/16.

American Tower

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slipped 7/16 to 21 5/16 after it said it is acquiring the rights to 2,100 communications towers from

AirTouch Communications

, a unit of

Vodafone AirTouch

(VOD) - Get Free Report

. Vodafone AirTouch gained 1 15/16 to 187 7/8.


(ASH) - Get Free Report

lost 1/8 to 39 5/16 after it made a tender offer to shareholders of


, a Danish construction company, at $21 a share.


(CSCO) - Get Free Report

lost 2 7/16 to 59 13/16 after it announced plans to invest $1 billion into


, the U.S. division of

KPMG International

. Separately, Cisco is expected to post its fourth-quarter earnings tomorrow. The 30-analyst estimate calls for the company to earn 20 cents a share



climbed 13/16 to 96 5/8 after saying it would join with

Western Oil Sands

to help

Royal Dutch



Shell Canada

in developing its Alberta oil sands project.

Clear Channel Communications

(CCU) - Get Free Report

lost 1/4 to 65 11/16 after the company said it would make a $15 million investment in soon-to-be public

, an Internet music network. Clear Channel said it will also get three-year warrants to purchase up to $22.5 million of's stock.

General Electric

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slipped 1 15/16 to 105 1/16 after its unit,

GE Medical Systems

, said it was buying

OEC Medical Systems


for $36 a share in stock. OEC Medical gained 9/16 to 34 3/16.


(TAN) - Get Free Report

shed 3 7/8, or 8.7%, to 40 13/16 after the company said it expects to seal an alliance this year with a major Internet service provider to sell high-speed Internet connections through its

Radio Shack

retail chain.

Earnings/revenue reports and previews

May Department Stores


fell 13/16 to 38 1/8 despite reporting second-quarter earnings of 43 cents a share, 2 cents ahead of the 18-analyst estimate and up from the year-ago 35 cents.


(RPM) - Get Free Report

lost 1/4 to 14 1/2 after it reported fourth-quarter earnings of 32 cents a share, a penny shy of the 10-analyst estimate but up from 30 cents a year ago. RPM released a rapid-fire stream of news, saying it would close 23 facilities; eliminate 730 jobs, or 10% of its work force; and sell off $100 million worth of noncore product lines. The company also said it planned to take a $45 million pretax restructuring charge in the first quarter of 2000. Lastly, CEO Thomas Sullivan gave the standard two-year notice that he plans to retire at the end of 2002.

Offerings and stock actions


, a business information company, said it canceled its planned $175 million to $231 million IPO, citing adverse market conditions.

cut the number of shares and the price-per-share of its upcoming IPO. The company said it will now offer 3 million shares in a $9 to $11 range, down from the original 4.75 million shares in a $12 to $14 range.

Analyst actions

Boston Scientific

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didn't know which end was up after it received contradictory ratings moves.

Prudential Securities

upped its rating to strong buy from accumulate, while

ING Baring Furman Selz

was busy lowering its estimates on the company due to a systems recall. The stock was looking healthy anyway rising 3 1/4, or 10.8%, to 33 1/4.

Capital One Financial

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gained 1/8 to 40 11/16 after


raised its rating to attractive from neutral.

Dell added 1 1/8 to 41 after BancBoston Robertson Stephens upgraded shares to long-term attractive from market performer and set a price target of 48.

Efficient Networks


lost 2 1/2, or 6.1%, to 38 1/4 after

Credit Suisse First Boston

started coverage with a buy recommendation.

Electronic Data Systems


slipped 1, to 57 7/16 after PaineWebber raised its rating to buy from attractive.


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gained 1 1/4 to 59 5/8 after

Merrill Lynch

raised its rating to near-term accumulate from neutral.

Household International

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edged up 5/8 to 40 7/8 after PaineWebber lifted its rating to buy from attractive.

Impac Commercial Holdings


fell 5/8, or 10.6%, to 5 1/4 after PaineWebber cut its rating to neutral from attractive.



added 1/16 to 8 3/4 after it received a near and long-term buy and

ProVantage Health Services


slipped 1/4 to 15 15/16 after it received a near and long term accumulate rating. Merrill Lynch initiated coverage of both companies today.

Micron Technology

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rose 1 15/16 to 67 13/16 after ING raised its rating to buy from hold based on rising earnings estimates and a strong DRAM market.

Priority Health


lost 3 7/8, or 11.4%, to 30 1/4 after

Lehman Brothers

cut its rating to neutral from buy.


Advanced Micro Devices added 1 7/8, or 10.8%, to 19 1/4 after it introduced the 650-megahertz AMD Athlon processor, which it said is "the world's fastest and highest-performance microprocessor for x86 computer systems." BancBoston Robertson Stephens raised its rating to buy from long-term accumulate.

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lost 4 1/8 to 85 1/2 after it settled a dispute with

New York Times

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and agreed to use

The New York Times'

bestseller list on its site. In return, the


will continue to use Amazon's sales data. New York Times lost 5/16 to 37.


(BA) - Get Free Report

gained 1/8 to 46 11/16 despite an announcement by the


that it grounded all 466 of its CH-47 troop-transport helicopters made by Boeing for safety checks after a crack was found in an engine transmission gear of a British military CH-47.



down 1/8 to 3 13/16 after it named Philip Husby chief financial officer. Husby held the same position at




MCI WorldCom lost 3 7/8 to 77 7/16 after setting some new calling plans. Under the MCI 5 Cents Everyday program, callers who pay $1.95 a month would be charged 5 cents a minute on all residential state-to-state long-distance calls during specified evening hours and weekday daytime calling for 25 cents a minute. Separately, MCI said it would spend $100 million to expand it's Internet hosting centers.


(JWN) - Get Free Report


Cutter & Buck






J. Crew

agreed to settled a lawsuit alleging they ignored sweatshop conditions on a U.S. Pacific island, agreeing to set up independent monitoring and provide overtime pay. Nordstrom lost 5/8 to 28 3/8, Cutter & Buck added 9/16 to 14 15/16 and Gymboree lost 1/16 to 5 7/8 on news the companies would set up a $1.25 million fund to monitor conditions at foreign-owned factories on the island of Saipan.

Philip Morris

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gained 1 to 36 5/8 after the company said it would increase cigarette prices in Mexico by 7% to 11%.