Stocks Hang in With Harsh Losses but Well Off Lows

The worst of today's squall seems to have passed, but few on Wall Street are ready to say the overall correction is ending.
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An early-morning hurricane hit the market hard, but lost some steam. By midsession the selling felt more like a tropical storm.

That didn't mean there wasn't some damage to sort through though. The

Dow Jones Industrial Average

was down 158, or 1.5%, to 10,129, after a more-than-200-point drop bounced it dangerously close to 10,000, a key psychological support level. The technology-laden

Nasdaq Composite Index

was down 56, or 2%, to 2751 after trading as low as 2704.28.

Hawkish

comments from

Fed

head

Alan Greenspan

last night, on financial risk and risk-management models, stirred up some preopening clouds and wind. Then, at 8:30 a.m. EDT, a stronger-than-expected

Producer Price Index

report blew into town and whipped things into a squall. The September headline figure gained 1.1%, above the expected 0.5%, while the core rate, which excludes food and energy prices, rose 0.8%, compared with the expectation of 0.4%. It looked pretty bleak there for a while.

Not that anyone thinks stocks are out of the woods yet, but a bounce off the intraday low -- so far, anyway -- provided a little bit of relief. "It's just kind of settling down now," said Bill Schneider, head of U.S. equity block trading at

Warburg Dillon Read

. "The sellers had their feast and now you've got some buyers around kicking the tires."

Schneider said the morning volatility was further complicated by the monthly expiration of options, since many of the orders had accumulated on the buy side. Schneider said -- cautiously -- he believed the damage was done and that the worst was over for today.

Technology and financial stocks were hit particularly hard, though hardly any sector was spared the pain. The

Philadelphia Stock Exchange/KBW Bank Index

was off 2.7%, while the

American Stock Exchange Broker/Dealer Index

dropped 3.9%. Financial bellwether

American Express

(AXP) - Get Report

was down 3.4%, and among the biggest losers on the

New York Stock Exchange

.

TheStreet.com Internet Sector

index was also hit, lately down 23, or 3.4%, to 673, dragged by

America Online

(AOL)

and

Yahoo!

(YHOO)

, two stocks that normally can't be bothered with this downturn nonsense.

Sun Microsystems

(SUNW) - Get Report

was a rare bright -- uh, make that green -- spot in the tech sector, after last night beating earnings forecasts. Sun was rising 5%.

Asked whether today's sharp downturn was a sign of something ominous on the horizon, a few strategists and economists said they felt today's drop was simply part of a larger ongoing, and much-needed, correction but one that will eventually work itself out. "Coming into the third quarter, everyone expects 20% increases in earnings growth," said Dick Stein, chief technical analyst at

Noble Financial Group

in Boca Raton, Fla. "People are starting to realize they have been somewhat excessive. We need for it to go into a sidewards pattern and have multiples come back down."

John Eade, director of research at

Argus Research

, echoed the sentiment. "At 1250 on the

S&P 500

, we're still 30% to 35% ahead of fair value, particularly with bonds moving away," said Eade, who also said he could see the S&P 500 falling to 1150 in the next couple of months before resuming upward momentum.

"There is still a little more pain on the downside," said Stein. "We haven't seen a bottom yet."

Breadth was horrible on the Big Board, where decliners were trouncing advancers 2,280 to 639 on 513 million shares. On the

Nasdaq Stock Market

, laggards were beating leaders 2,785 to 878 on 630 million shares. New 52-week lows were beating new highs 386 to 5 on the NYSE, while on the Nasdaq, 177 new lows were ahead of 30 new highs.

The S&P 500 was down 22, or 1.7%, to 1262, while the small-cap

Russell 2000

was off 5, or 1.2%, to 414.

The benchmark 30-year Treasury bond was up 3/32 to 97 14/32, its yield at 6.32%. (For more on the fixed-income market, see today's early

Bond Focus.)

Friday's Midday Watchlist

By Tara Murphy
Staff Reporter

(

Earnings estimates from First Call/Thomson Financial; earnings reported on a diluted basis unless otherwise specified

.)

Sun Microsystems after yesterday's close

reported first-quarter earnings of 33 cents a share, beating the 19-analyst estimate of 31 cents and the year-ago 14 cents. Earlier today,

Banc of America Securities

upgraded the stock to buy from market perform, while

Lehman Brothers

and

Credit Suisse First Boston

boosted their 2000 earnings estimates. Sun Microsystems was jumping 4 1/2, or 5%, to 94.

Enron

(ENE)

was slipping 15/16 to 38 1/8 after its energy-services division entered into a $1.5 billion total energy-management pact with

Simon Property Group's

(SPG) - Get Report

Simon Brand Ventures

business initiative. Shares of Simon were skidding 5/16 to 22 1/8.

Mergers, acquisitions and joint ventures

Asarco

(AR) - Get Report

was climbing 3/16 to 29 1/2 after saying it would ax its proposed $1.17 billion stock and cash merger agreement with

Phelps Dodge

(PD) - Get Report

to accept a revised $1.18 billion offer from

Grupo Mexico

. According to the deal between Phelps Dodge and Asarco, Phelps has five days to respond to Asarco's decision. Shares of Phelps were bouncing 1 1/8 to 58 3/8.

Autobytel.com

(ABTL)

was adding 15/16, or 5.8%, to 17 after it announced it is buying privately held

A.I.N.

, owner of

CarSmart.com

, for 1.8 million shares and $3 million in cash.

Proxicom

(PXCM)

was mounting 2 9/16 to 69 1/2 after it said

Intel

(INTC) - Get Report

bought an equity stake in the company. Intel bought the stake through a secondary offering of 3.6 million shares at $52.38 a share earlier in October. Intel was sinking 13/16 to 72 1/2.

Earnings/revenue reports and previews

Caterpillar

(CAT) - Get Report

was falling 3/8 to 55 5/16 after it posted third-quarter earnings of 61 cents a share, a penny ahead of the 20-analyst estimate but down from the year-ago 92 cents.

Colonial Properties

(CLP)

was declining 1/8 to 25 1/4 after it posted third-quarter funds from operations of 81 cents a share, in line with the 13-analyst estimate and up from the year-ago 73 cents.

Comsat

(CQ)

was sliding 1 1/4, or 5.1%, to 22 3/4 after it reported third-quarter earnings of 9 cents a share, in line with the single-analyst estimate but below the year-ago 12 cents.

Diamond Offshore Drilling

(DO) - Get Report

was losing 1 1/4 to 31 5/8 after the company reported third-quarter earnings of 27 cents a share, a penny above the nine-analyst estimate and up from the year-ago 75 cents.

Dominion Resources

(D) - Get Report

was falling 5/16 to 45 1/2 after it reported third-quarter earnings of $1.31 a share, above the 15-analyst estimate of $1.25 and up from $1.14 a year ago.

FPL Group

(FPL) - Get Report

was declining 3/8 to 49 9/16 after it posted third-quarter earnings of $1.70 a share, in line with the 17-analyst estimate and up from $1.66 a year ago.

Fifth Third Bancorp

(FITB) - Get Report

was stumbling 2 5/16 to 60 1/2 after it reported third-quarter earnings of 62 cents a share, in line with the 14-analyst estimate and up from a year-ago 53 cents.

Haverty Furniture

(HVT) - Get Report

was declining 11/16 to 14 9/16 after it posted third-quarter earnings of 31 cents a share, above the four-analyst estimate of 29 cents and better than a year-ago 20 cents.

Idexx

(IDXX) - Get Report

was sliding 3/8 to 15 3/16 after it posted third-quarter earnings of 21 cents a share, in line with the three-analyst estimate and up from 15 cents a year ago.

Knight-Ridder

(KRI)

was losing 3/4 to 57 1/2 after it posted third-quarter earnings of 78 cents a share, 4 cents ahead of the 13-analyst estimate and up from the year-ago 58 cents.

Legg Mason

(LM) - Get Report

was plummeting 4 11/16, or 12.3%, to 33 5/16 after it posted second-quarter earnings of 47 cents a share, below the four-analyst estimate of 52 cents but up from 37 cents a year ago.

New Century Energies

(NCE)

was tumbling 1/4 to 31 3/4 after it reported third-quarter earnings of 85 cents a share, beating the 9-analyst estimate of 83 cents and the year-ago 82 cents.

Pepco

(POM)

was sliding 9/16 to 25 7/8 after it reported third-quarter earnings of $1.28 a share, beating the 10-analyst estimate of $1.24 and the year-ago $1.27.

Rogers

(ROG) - Get Report

was advancing 1 to 38 5/8 after it posted third-quarter earnings of 58 cents a share, above the single-analyst estimate of 45 cents and up from the year-ago 34 cents.

Tower Automotive

(TWR)

was slipping 7/16 to 18 1/4 after it reported third-quarter earnings of 44 cents a share, in line with the 12-analyst estimate and up from 36 cents a year ago.

UniSource Energy

(UNS)

was gaining 5/16 to 11 7/8 after it posted third-quarter earnings of 96 cents a share, missing the single-analyst estimate of $1.05 but above the year-ago 87 cents a share.

Analyst actions

Boeing

(BA) - Get Report

was losing 3/4 to 42 7/8 after

Merrill Lynch

upgraded the stock to near-term accumulate from near-term neutral.

Coca-Cola Femsa

(KOF) - Get Report

was falling 15/16, or 6.3%, to 13 3/4 after

Morgan Stanley Dean Witter

added it to its fresh-money buy list and removed

Petrobras

.

KLA-Tencor

(KLAC) - Get Report

was climbing 1 5/8 to 74 5/16 after Credit Suisse First Boston raised its fiscal 2000 EPS to $1.90 from $1.80 and fiscal 2001 EPS to $2.65 from $2.50.

Microchip Technology

(MCHP) - Get Report

was leaping 5 1/4, or 10.2%, to 56 1/2 after Merrill Lynch raised its rating to long-term buy from accumulate. In addition, Warburg Dillon Read upped its price target on Microchip Technology to 70 from 65.

Microsoft

(MSFT) - Get Report

was declining 2 5/8 to 88 1/8 after Credit Suisse First Boston said the company was on target to post first-quarter earnings above the consensus estimate of 36 cents a share.

Powerwave Technologies

(PWAV)

was soaring 8 1/8, or 15.8%, to 59 3/8 after Warburg Dillon Read upped its estimates 1999 estimate to 90 cents a share from 74 cents and fiscal 2000 estimates to $1.28 from $1.07.

Quantum-DLT

(DSS) - Get Report

was climbing 1 9/16, or 11.1%, to 15 9/16 after Morgan Stanley upped its shares to outperform from neutral.

Tenfold

(TENF)

was mounting 2, or 9.2%, to 23 5/8 after

Goldman Sachs

added the stock to its recommended list.

Theglobe.com

(TGLO)

was stumbling 2 1/2, or 18.6%, to 10 15/16 after

Bear Stearns

cut the stock to neutral from attractive. The company late yesterday warned of a third-quarter revenue shortfall.

Offerings and stock actions

Veritas

(VRTS) - Get Report

was bouncing 6 7/8, or 7.9%, to 88 after it set a 3-for-2 stock split, payable on Nov. 19 to shareholders of record Nov. 2. Veritas posted third-quarter earnings after yesterday's close of 21 cents a share, beating the 20-analyst estimate of 17 cents and the year-ago 12 cents.

Women.com Networks

(WOMN) - Get Report

hadn't begun trading at midday. Morgan Stanley late yesterday priced the 3.75 million-share IPO at $10 a share, the high end of its recently lowered range. Morgan Stanley had said it expected to price the offering at the low end of the $8-to-$10 range, which had been reduced from $10 to $12.

Miscellany

American Home Products

(AHP)

was losing 1 3/16 to 45 3/8 after its

Wyeth Lederle Vaccines

unit pulled its

RotaShield

rotavirus vaccine from the market, based on its contribution to an intestinal disorder called intussusception.

Raytheon

(RTN.B)

was climbing 2 5/8, or 10.8%, to 26 3/4 despite getting hit with four separate class-action lawsuits from investors, alleging that they were misled by the company. The law firms representing the investors said that Raytheon hid information regarding its operation and finances.

The Heard on the Street column in

The Wall Street Journal

reports that

Neuberger Berman

(NEU) - Get Report

suspended money manager Jack Ferraro. It is conducting an internal investigation of payments he received from

Showscan Entertainment

(SHOW)

and three small companies. In 1995, Ferraro lined up $7 million for Showscan through a Swiss bank, in return for warrants for 100,000 shares of Showscan, but did not disclose his payment to his clients or to Neuberger, the story says.