SAN FRANCISCO -- Investors straddled the fine line between bravery and stupidity today, bidding up blue-chip stocks in the face of another big downturn for bonds.
The price of the 30-year Treasury bond fell 19/32 to 97 12/32 its yield rising to 6.32%, its highest level since Oct. 1997.
for September rose 0.1% vs. expectations they would be unchanged. Additionally, retail sales excluding autos rose 0.6%, twice the consensus estimate. Lower-than-expected jobless claims data further fueled concerns about inflation ahead of tomorrow's key
producer price index
Today's Market Roundup: Join the discussion on
Dow Jones Industrial Average
ended a volatile session up 54.45, or 0.5%, to 10,286.61. The blue-chip proxy fell as low as 10,133.69 shortly before lunchtime on Wall Street, then rose as high as 10,342.97 around 1:30 p.m. EDT. The index then dipped within 10 points of breakeven before rising as high as 10,324.29 and falling back to as low as 10,268.57 in the final hour.
The Dow was aided by strength in cyclical names such as
as well as monster gains by
. The average's biggest boost came from
, up 7.7% after posting better-than-expected third-quarter profits and making positive comments about forward demand.
Tech proxies stabilized from the harsh shelling of the past two days thanks -- in part -- to better-than-expected earnings from companies such as
Nasdaq Composite Index
closed up 5.57, or 0.2%, to 2806.84, well off its intraday low of 2766.46. The
rose 0.7% while the
Philadelphia Stock Exchange Semiconductor Index
gained 1.6% behind a rebound by
TheStreet.com Internet Sector Index
gained 3.88, or 0.6%, to 696.09. Additionally,
Red Hots index was up 1.06, or 0.5%, to 210.36. The 20-stock index tracks action in particularly volatile stocks and is meant to measure so-called hot money.
closed off 2.13, or 0.2%, to 1283.42 after trading as high as 1289.59 and as low as 1267.75. The
slid 0.01 to 419.31.
"We were due for a bounce given the velocity of the downturn in the past two days. I thought it would be a better up opening. It was up for about 30 seconds and then they slammed 'em," said Timothy Heekin, director of equity trading at
Thomas Weisel Partners
in San Francisco.
Heekin will "continue to sell rallies" until market action tells him the tide has turned.
However, the trader took some solace that both the Dow and S&P avoided declines which would have brought the averages over 10% from respective highs, or official "correction" levels. The Dow is down 9.2% from its all-time high while the S&P is off 9.5%.
He also was "semi-impressed" by the action in bond futures. The December bond futures contract fell as low as 110.31 but closed at 111.09, he noted, dubbing 111 a "critical level." Similarly, the S&P December futures contract bounced off its session low of 1275.80 which "could have been a retracement of the old low a couple weeks ago," Heekin said. "If that's the case, and bonds did find a significant hold, we could be OK. But I'm not convinced."
While skeptical, the trader did recount hearing "whispers" of a stronger-than-expected PPI report for tomorrow and suggested perhaps the bond market has already priced that in.
Strange Days, Indeed
To some, the Dow's advance in the face of continued rising interest rates seemed peculiar. Contributing to the irregular patterns was action in individual names such as
, which fell 10.3% although company officials denied published reports of accounting irregularities. The company's comments and supportive action by several analysts did little to aid options trading either, as reported in today's
declined 37% despite posting third-quarter earnings in excess of expectations. Still, the company's revenues and projections for future revenue growth disappointed investors.
reported on Unisys in a
story earlier today. Conversely,
gained 11.7% after its earnings bested expectations, but only after they had been lowered when the company warned last month.
But Hugh Johnson, chief investment officer at
, said there was more "consistency" in the market today than a surface glance indicates.
"Look at breadth -- it's fairly, clearly negative," Johnson said. "Even though the
Dow is up, it's probably a fair reflection of this market saying there's less there than meets the eye. It's not a good market and hasn't been all day long. The stock market is not fairing well and it's largely because the bond market is declining."
New York Stock Exchange
trading, 892.3 million shares were exchanged while declining stocks bested advancers 1,839 to 1,141. In
Nasdaq Stock Market
action 1.04 billion shares traded while losers led 2,053 to 1,758. New 52-week lows bested new highs 344 to 25 on the Big Board and by 122 to 58 in over-the-counter trading.
Still, the volatility and "directionless tone" of trading was "probably good," he said, because "the market doesn't have the downside momentum that it's had the last couple of days."
Johnson agreed the uncertainty about tomorrow's PPI report could have contributed to the relatively modest final moves for major averages today. However, "my work says stock prices need to correct lower," he said. "The stock market will have to fully adjust to the realization of rising inflation and interest rates."
The fund manager foresees the long bond yield rising as high as 6.50% near-term and said the Dow could decline to as low as 8500. But sticking in a trading range of between 9500 and 10,400 "would take care of all the adjusting that's necessary," he said.
Among other indices, the
Dow Jones Transportation Average
lost 7.02, or 0.2%, to 2914.49; the
Dow Jones Utility Average
rose 2.89, or 1%, to 299.38; and the
American Stock Exchange Composite Index
fell 3.46, or 0.4%, to 785.95.
Elsewhere in North American equities, the
Toronto Stock Exchange 300
slipped 67.31 to 6969.70 and the
Mexican Stock Exchange IPC Index
fell 45.53 to 5030.61.
Thursday's Company Report
Earnings estimates from First Call/Thomson Financial; earnings reported on a diluted basis unless otherwise specified. New highs and lows on a closing basis unless otherwise specified.
Intel recovered 1 1/4 to 73 after it agreed to buy
for around $1.5 billion in cash. Intel is paying $36 a share for DSP, a hefty premium over DSP's closing price of 28 yesterday. DSP racked up 6 15/16, or 24.7%, to 34 15/16.
Earnings/revenue reports and previews
shined up 9 1/8, or 14%, to 73 3/16 after posting fourth-quarter earnings last night of 51 cents, beating the downwardly revised 17-analyst estimate of 45 cents, but down from the year-ago 68 cents.
Donaldson Lufkin & Jenrette
upped Apple to top pick from buy, while
Credit Suisse First Boston
raised its 2000 earnings estimates to $3.20 from $3.15 per share.
mounted 1 1/16 to 59 3/8 after posting third-quarter operating earnings of 68 cents a share, in line with the 14-analyst estimate and up from the year-ago 58 cents.
Bausch & Lomb
lost 4 1/4, or 6.4%, to 61 7/8 despite reporting third-quarter earnings of 78 cents a share, well above the 10-analyst estimate of 63 cents and up from the year-ago 64 cents.
edged up 13/16 to 36 9/16 after posting third-quarter earnings of 74 cents a share, beating the 11-analyst estimate of 70 cents and up from the year-ago operating earnings of 14 cents.
dwindled 1/8 to 65 after posting third-quarter earnings of $1.33 a share, beating the 13-analyst estimate of $1.24.
chalked up 3 1/4, or 6%, to 57 1/8 after it posted third-quarter earnings of 80 cents a share, which excludes a charge of 2 cents, well above the 13-analyst estimate of 63 cents and up from the year-ago 32 cents.
slid 2 1/8, or 6.1%, to 32 9/16 after posting third-quarter earnings of 65 cents a share, in line with the four-analyst estimate.
stumbled 5/8 to 25 3/4 after posting third-quarter earnings of 63 cents a share, above the 14-analyst estimate of 58 cents and up from the year-ago 57 cents.
climbed 5/8, or 6.7%, to 10 after reporting third-quarter earnings of 29 cents a share, a penny better than the six-analyst estimate, but down from the year-ago 36 cents.
declined 1 13/16, or 9.7%, to 17 after posting first-quarter earnings of 29 cents a share, below the three-analyst estimate of 32 cents and the year-ago 31 cents.
dwindled 1 1/4 to 72 5/8 after posting first-quarter earnings of 38 cents a share, better than the 19-analyst estimate of 33 cents, and up from a year ago 11 cents.
bounced 2 1/16 to 53 5/16 after it posted third-quarter earnings of 96 cents a share, beating the 10-analyst estimate of 92 cents.
slipped 3 3/16, or 12.5%, to 22 3/16 after reporting third-quarter operating earnings of 50 cents a share, in line with the nine-analyst estimate and up from the year-ago 40 cents.
mounted 1 7/8, or 6.6%, to 29 15/16 after it posted third-quarter earnings of 15 cents a share, in line with the 10-analyst estimate and up from the year-ago 12 cents.
plummeted 15 5/8, or 36.9%, to 26 5/8 despite reporting third-quarter earnings of 40 cents a share, above the 11-analyst estimate of 36 cents and up from 25 cents a year ago.
downgraded Unisys to neutral from attractive.
skidded 1 1/4 to 42 5/8 after reporting third-quarter earnings of $1.07 a share, well above the nine-analyst estimate of $1 and up from a year-ago 74 cents.
Westinghouse Air Brake
fell 5/16 to 16 5/8 after posting third-quarter earnings of 48 cents a share, in line with the five-analyst estimate and up from 42 cents a year ago.
lost 3/8 to 22 after reporting third-quarter earnings of 67 cents a share, in line with the 11-analyst estimate and up from a year-ago 57 cents. The company said weather problems reduced income by about $700,000, or 1 cent a share.
Offerings and stock actions
declined 2 3/8, or 12%, to 17 1/4 after it announced that it set a 4-for-3 stock split.
Starwood Hotels & Resorts Worldwide
faltered 9/16 to 20 7/16 after PaineWebber downgraded it to neutral from buy.
skidded 9, or 9.2%, to 88 after
Credit Suisse First Boston
restated its strong buy opinion. Earlier today, Tyco management refuted rumors of accounting problems, which caused the stock to plummet 6% during yesterday's trading session.
climbed 7/8 to 54 1/16 after PaineWebber initiated coverage with an attractive rating.
advanced 1/4 to 10 1/2 after unveiling plans to add 400 new store to the retail chain over the next five years, with plans to open 70 stores in metropolitan areas by 2000.
hopped 1/8 to 49 3/8 after chairman and CEO Terrence Lanni said he was stepping down from his roles at the end of the year to spend more time with his family. CFO Jim Murren said that Lanni would continue to serve as a board member and will have a hand in selecting a successor.
fell 2 3/8 to 70 after it filed suit in federal court against
unit, claiming that
recently introduced hotel service infringes on priceline.com's patent. Shares of Microsoft slipped 3/8 to 90 11/16.
Separately, Microsoft formed an alliance with
, which bounced 3 1/16 to 163 5/16, to combine resources to develop handheld wireless devices using
as the operating system.
leaped 3 7/16 to 156 13/16 after saying it was planning a $150 million holiday marketing budget for its Playstation including tie-ins with
, a unit of
Tricon Global Restaurants
, a unit of
added 1 1/2, or 6.1%, to 25 7/8 after it said it has tapped its President and COO John Tucker to replace the retiring Robert Pokelwaldt as CEO.