Expiration. A high put/call ratio. A weakened yen. A short-term oversold condition.
Hardly the Age of Aquarius, but what do you want from this market? A lot of factors aligned to put stocks in pretty good shape at midday.
The major proxies were all positive. The
Dow Jones Industrial Average
was up 104.80, or 1%, to 10,842.26, led by recently beleaguered financials
Nasdaq Composite Index
was up 46.03, or 1.6%, to 2852.75, given lift by index heavyweights
was up 8.5% after its strong earnings report last night and the attendant analyst upgrades.
Net stocks were looking strong, with
TheStreet.com Internet Sector
index up 13.43, or 2.2%, at 621.28. Bucking that trend was
, lately off 4.6% on news that a group of companies -- including Microsoft,
-- will come together to form a competing online auction network.
was 3.33 higher at 433.58. The broad
was up 15.46, or 1.2%, to 1333.94.
Let's begin with the dollar. Its recent slide against the yen has been troubling some in the market with fears that foreign capital might start thinking about parking itself elsewhere in the world. A frightening bear case unfolds from that point, and we don't want to
go there now.
But growing expectations of a possible coordinated currency intervention are making currency traders a little less ready to take long positions on the yen. Yesterday the
Nihon Keizai Shimbun
cited an unnamed senior
International Monetary Fund
official as saying that currency intervention will probably be a topic at the G7's Sept. 25 meeting. Today's news that
Bank of Japan
Governor Masaru Hayami was talking with
New York Fed
President William McDonough fueled speculation that a coordinated intervention was coming, and the dollar went as high as 107.27 yen in London this morning.
The Benjamins were lately quoted at 106.88 yen.
"Last week's pessimism may have gotten a little overdone," said Pete Boockvar, equity strategist at
, who noted that the yen's declines, along with a dovish article by
The Washington Post's
John Berry, helped the bond market get off to a strong start today.
The 30-year Treasury was lately up 12/32 to 101, its yield falling to 6.052%.
The strength in bonds ratified stocks' quick jump out of the gates this morning, a jump that looked all the more emphatic because it was underpinned by the strong upside bias to today's triple-witching, which marks the quarterly expiration of stock options, index options and index futures.
The upside expiration bias was presaged by a large jump in the put/call ratio yesterday, according to Joe Barthel, chief investment strategist at
. The total put/call ratio, which includes both stock and index options, closed yesterday at 0.80. "That's one of the better readings we've had this year," he said.
Boockvar was expecting the bias to stay positive: "Right now, from what we see, it should carry through the afternoon." He was basing that forecast on the large
buy programs he saw this morning. In Boockvar's experience, those programs are often followed up by
buys later in the session.
Another good sign in the market is on the technical level, something that's been looking rather bleak lately. Barthel was impressed by the Dow's rally yesterday afternoon after it broke through its Aug. 10 low of 10,665.
"When you break key support but don't flush it out coming down, that usually means that level was successfully tested," he said. "That, coupled with an upside expiration bias, a high put/call ratio and the strength in the dollar, gives a little bit of credibility to a relief rally. Is it the start of something big? I think not, ahead of the
Fed's Oct. 5 meeting. It just gives us some bargain-hunting, which is what we've become accustomed to."
In other sector news, the
Philadelphia Stock Exchange/KBW Bank Index
was up 6.3%, as financials were taking the yen's weakness as reason enough to bounce from their recent protracted declines. Strengthened DRAM prices were lifting the
Philadelphia Stock Exchange Semiconductor Index
11.29, or 2%, to 563.22.
Dow Jones Transportation Average
was lately up just 0.2%, hardly a convincing rally after yesterday's 3.2% bloodletting.
Meanwhile, the oil sector continued to consolidate after its recent run-up. The
American Stock Exchange Oil & Gas Index
was off about 0.3%.
Volume was moderate, and breadth was positive. A moderate 479 million shares had traded on the
New York Stock Exchange
, while 543 million shares changed hands on the
Nasdaq Stock Market
. Advancers were topping decliners 1,536 to 1,170 on the NYSE, where there were 26 new 52-week highs against 93 new lows. In Nasdaq action, advancers were beating decliners 1,979 to 1,413, with 67 new highs and 38 new lows.
Friday's Midday Watchlist
Earnings estimates from First Call/Thomson Financial; earnings reported on a diluted basis unless otherwise specified
eBay can expect some serious competition in its online auction business. High-tech behemoths including Microsoft, Lycos and Excite@Home have agreed to get together to create a new auction network, according to published reports. The news was reported in
The New York Times
The Wall Street Journal
. Shares of Microsoft were up 1 7/8 to 95 7/8, while Lycos was climbing 1 1/4 to 44 1/4. Excite@Home shares were up 7/16 to 37 13/16 and eBay was falling 7 to 144 3/8.
Adobe Systems was popping 8 1/16, or 8.2%, to 105 7/8 after it set a 2-for-1 stock split last night. The company also posted third-quarter earnings of 80 cents a share, ahead of the 11-analyst estimate of 74 cents.
upgraded Adobe to strong buy from market perform, while
upped its rating to a buy from a long-term buy.
Mergers, Acquisitions and Joint Ventures
said that it has forged a pact with
to provide consulting services to the automotive retail channel in Europe. Shares of IBM were up 3/4 to 130 3/4.
Offerings and Stock Actions
was soaring 28, or 173%, to 44 3/16 in its trading debut.
Credit Suisse First Boston
priced the 3 million-share IPO above its $13 to $15 range at $16.
Earnings/Revenue Reports and Previews
was sliding 7 13/16, or 22.2%, to 27 5/16 after it said earnings per share could be up to 20% below year-ago levels in the second half and 25% lower in the third quarter. Fort James attributed the earnings drop to significant systems and workflow changes as it merged two predecessor companies, and increased costs for distribution and warehousing.
was advancing 3/4, or 5.5%, to 14 3/8 after it posted second-quarter earnings of 28 cents a share, beating both the two-analyst estimate of 25 cents and the year-ago 13 cents.
was slipping 3 5/16, or 6%, to 51 7/16 despite posting first-quarter earnings of 70 cents a share, better than the 15-analyst estimate, and up from 56 cents a year ago. The company said a cost-cutting plan improved its bottom line despite flat revenue. Earlier today,
raised its fiscal 2000 earnings estimate to $2.05 a share from $2.
wrote about Nike's earnings in a
was declining 7 15/16, or 40.7%, to 11 9/16 after it said it plans to "pursue the sale or other dispositions" of its aviation and entertainment concerns and warned that it expects earnings for the third quarter will be "substantially below" expectations. The two-analyst estimate calls for the company to earn 64 cents a share.
was skidding 1 1/14, or 16%, to 6 5/8 after it said that it expects to report a third-quarter loss and miss the four-analyst earnings estimate of 4 cents a share. The company will post results by Oct. 19.
Universal Health Services
was falling 4 7/8, or 15.8%, to 25 7/8 after it warned investors that that third-quarter results could be weak due to slowness in its Las Vegas and Amarillo, Texas, hospital businesses. The company said results could be off as much as 40% from the year-ago profit of 51 cents a share, greatly missing the consensus estimate of 58 cents a share.
was up 1 13/16 to 43 15/16 after
upgraded its shares to buy from attractive.
was jumping 3 7/8, or 7%, to 59 1/8 after
Deutsche Banc Alex. Brown
rolled out coverage of the stock with a buy rating.
was off 11/16 to 45 1/8 after
cut its rating to neutral.
was unchanged at 15 after Lehman Brothers cut the stock's rating to neutral from buy, citing flat sales in a tough economic climate.
was climbing 1 to 43 1/8 after
upgraded it to hold from sell, following its annual profit report.
Warburg Dillon Read sliced its ratings on
Pharmaceutical Product Developement
, to hold from buy,
, to hold from strong buy, and on
, to buy from strong buy. Shares of Pharmaceutical Product were off 3/4, or 5.9%, to 13, while Mylan was down 1/4 to 19 1/2. ICN shares were off 1/8 to 18 11/16.
was hopping 4 1/16, or 8.1%, to 52 15/16 after Warburg Dillon Read raised its rating to strong buy from buy.
First Industrial Realty
was slipping 1/8 to 25 5/16 after Warburg Dillon Read upgraded it to strong buy from buy.
was advancing 2 7/8, or 6.1%, to 49 3/4 after PaineWebber upgraded it to buy from attractive.
KLM Royal Dutch Airlines
was down 3/16 to 25 5/16 after Credit Suisse First Boston started coverage with a hold rating, saying the airline cycle had peaked and North American yields remain depressed, while fuel and operating costs have risen.
was sliding 3/8 to 32 5/8 after Morgan Stanley rolled out coverage with a neutral rating.
was skidding 3/16 to 31 after
upped its rating to intermediate-term buy from accumulate.
was declining 1/4 to 28 3/4 after Merrill Lynch raised its rating to near-term buy from accumulate.
was off 1/2 to 53 1/8 after CSFB sliced the shares rating to buy from strong buy.
Research in Motion
was unchanged at 34 after CSFB began coverage with a hold rating.
was bouncing 2 7/8, or 7.2%, to 26 3/16 after
U.S. Bancorp Piper Jaffray
boosted its third-quarter earnings estimates to 31 cents a share from 29 cents a share and set a price target of 46.
was up 5/16 to 37 1/4 after it said it discovered a sizable natural gas pool in its
exploratory well outside of Midland, Texas. CMS said it is set to start oil production immediately and that a development well program for the reservoir has begun.
International Petroleum Exchange
tapped Richard Ward to serve as its CEO.
In a 9-2 vote, an
advisory committee, questioning the effectiveness of
breast-cancer treatment, suggested that the FDA deny the drug marketing approval. Shares of Liposome were plummeting 8, or 49%, to 8.
Investors who bought stocks 18 months ago in companies that fix Y2K problems have gotten pounded and would've been better off shorting those stocks, the Heard on the Street column in
The Wall Street Journal
said. The column mentions a bunch of stocks that money managers and analysts like as Y2K plays, among them:
Clear Channel Communications
Shares of Whittman-Hart were down 1 3/4, or 5.4%, to 30 7/8 and Oracle was up 1 1/4 to 43 3/8, while Siebel shares were advancing 2 to 72 5/16. EMC was hopping 2 1/2 to 70 1/4 and shares of Infinity were jumping 1 1/8 to 28 5/16, while Clear Channel was up 2 5/8 to 79 1/2. Micron shares were off 2 1/16 to 75 1/2.
Separately, Taiwan said it would slap a 61.85% antidumping tax on Micron for selling what it said were poor-quality DRAM computer chips that had hurt the local semiconductor industry.
The Inside Wall Street column in
, penned by Gene Marcial, is all about takeover talk. Companies mentioned as buyout targets in the column this week are
. Shares of ZDNet were jumping 3 5/8, or 23%, to 17 3/8, while Chiron was advancing 1 15/16, or 5.8%, to 35 1/4. RiteAid shares were up 3/4 to 18.