Stocks Maintain Gains but Stutter-Step a Bit
The market's brave attempt at a jump was a welcome move on Wall Street this morning. But by midday, major indices were giving up some of the gains and the rally looked more like baby steps than anything with real legs.
It ... just ... might ... stick
was the optimist mantra this morning and many thought a one-day move higher was a distinct possibility. But after climbing more than 80 points to 10,734.61 in early trading, the
Dow Jones Industrial Average
lost its footing and fell back amid unsubstantiated rumors that
Fed
Chairman
Alan Greenspan
might resign. Lately it had regained some of its lost ground and was up 54 to 10,709.
Other major indices, including the
Nasdaq Composite Index
, the
and the
Russell 2000
, were also keeping a grip on their gains. The Nasdaq was up 28 to 2518, the S&P 500 was up 8 to 1290 and the Russell 2000 was up 1 to 424.
"It's a collective sigh of relief, " said Bill Schneider, head of equity block trading at
Warburg Dillon Read
. "Bonds have stabilized for the time being, the Internet stocks came back yesterday and the Nasdaq feels firmer. Emotionally, the market got oversold and even a little stability
is taking some of the pressure off" selling, said Schneider.
Technology stocks were looking healthy in late morning trading. Contributing to the upswing were
Intel
(INTC) - Get Free Report
, up 4.2%,
Sun Microsystems
(SUNW) - Get Free Report
, up 1.9%, and
Cisco
(CSCO) - Get Free Report
, which was up 1.2% after the bellwether reported slightly better-than-expected earnings last night and calmed some frazzled tech-stock nerves.
Other Internet stocks were in more choppy water however, with
TheStreet.com Internet Sector
index down 3 to 485, struggling with the weight of
Yahoo!
(YHOO)
, down 1.2%, and
Amazon.com
(AMZN) - Get Free Report
, off 2.3%, among other Net laggards.
Of course, all the wobbling is starting to look familiar to market watchers, who for the past few trading days have watched stocks repeat the same pattern: coming out swinging early only to get knocked back by the one-two punch of strong economic data and the overhanging implications of what now seems like an inevitable interest-rate hike Aug. 24, when the
Federal Open Market Committee
meets again.
"The bond market has discounted a 25-basis-point hike," said Schneider. "The equity market is still wrestling with where it wants to be. The stock market has to catch up to the bond market and I'm not sure its quite there yet."
As for the rest of the day, Schneider said the market remains fragile. I'm "not sure that this is a terribly sustainable rally," he said. "It's August, a big order or a shift in sentiment could sway" the market.
On the
1,546 advancers were leading 1,296 decliners on 445 million shares, and on the
Nasdaq Stock Market
1,854 winners were beating 1,714 losers on 503 million shares. New 52-week lows were beating new highs 167 to 26 on the Big Board and 78 to 34 on the Nasdaq, however.
The benchmark 30-year Treasury bond was down 8/32 to 86 10/32, its yield rising to 6.27%. (For more on the fixed-income market, see today's early
Bond Focus.)
Wednesday's Midday Watchlist
By
Thomas Lepri and
Tara Murphy
Staff Reporters
(
Earnings estimates from First Call. Earnings reported on a diluted basis unless otherwise specified.
)
The equities markets are feeling the impact of today's big dealing in the aluminum industry.
Reynolds Metals
(RLM) - Get Free Report
was surging 9, or 16.1%, to 64 7/8 after Dow component
Alcoa
(AA) - Get Free Report
made an unsolicited offer to buy it for about $4.2 billion.
Alcoa's bid responds to the news that Canadian aluminum giant
Alcan
(AL) - Get Free Report
is buying France's
Pechiney
(PY) - Get Free Report
and Switzerland's
algroup
for about $9.2 billion in stock. Alcoa, which was lately up 1 1/16 to 67 1/2, is offering $65 a share for half of Reynolds' outstanding shares, and 0.9784 Alcoa shares for each of the remaining half.
Alcan
(AL) - Get Free Report
was lately up 13/16 to 34 7/16, while ADRs of Pechiney were up 15/16 to 29 3/16.
Mergers, acquisitions and joint ventures
Bank One
undefined
was moving up 15/16 to 52 1/2 after it said it is expanding its
Technology One Alliance
with
AT&T
(T) - Get Free Report
and
IBM
(IBM) - Get Free Report
-- under which those companies provide Bank One with networking and computing support services -- to include locations of the former
First Chicago NBD
, which Bank One bought last year. Bank One said the new contracts with AT&T and IBM are worth $465 million and $168 million, respectively. AT&T was unchanged at 48 15/16 at midday, while IBM was up 1 9/16 to 120 7/8.
Sun Microsystems was up 1 5/16 to 69 5/16 after signing a long-term deal with data storage maker
Storage Technology
(STK) - Get Free Report
allowing the companies to resell each other's storage systems. Storage Technologies was rising 1 1/8, or 5.9%, to 20 3/16 on news of the deal, whose financial terms weren't disclosed.
Nortel Networks
(NT)
was up 1 5/16, or 1.6%, to 83 1/2 after it said that
U S West
(USW)
-- which
Qwest Communications
(QWST)
is buying -- has chosen it to help the regional Bell improve its network capacity by providing it high-speed data and telephony services. U S West was down 3/16 to 52 7/8.
Earnings/revenue reports and previews
Cisco is riding high on yesterday's earnings report, lately up 2 7/16, or 4.2%, to 61 3/16. The company posted fourth-quarter earnings of 21 cents a share, excluding extraordinary items. That's a penny above the 30-analyst First Call estimate and up from the year-ago 16 cents. Cisco also received a boot up from
Wachovia Securities
tech analyst George Hunt, who upped the stock to strong buy from long-term buy.
Delphi Automotive
undefined
is riding smoothly after CEO J.T. Battenberg said he feels comfortable with third quarter and full-year earning-per-share estimates of 23 cents and $1.88, respectively. Delphi, which debuted at 17 back in February, was up 5/16 to 17 7/8.
Federated Department Stores
undefined
was off 1/8 to 48 7/8 after it posted second-quarter earnings of 61 cents a share, 4 cents ahead of the 17-analyst estimate and up from last year's 47 cents.
FPIC Insurance
(FPIC)
said it has no idea why its stock was lately plunging 11, or 29.6%, to 26 3/8 after the company last night reported what would appear to be solid second-quarter earnings. The company said it earned 71 cents a share, a penny ahead of the three-analyst prediction and up from the previous year's 52 cents. The weakest portion of the report was the company's admission that claims in a health plan offered to
Florida Dental Association
members came in $1 million above expectations. FPIC also set plans yesterday to buy two small providers of administration services for about $1 million.
Medical device manufacturer
Mallinckrodt
undefined
was bouncing 3/4 to 32 3/4 after reporting fourth-quarter earnings from continuing operations of 73 cents a share, surpassing the five-analyst prediction and beating the 59 cents it made last year.
Lighting products maker
SLI
(SLI)
was surging 2 3/4, or 12.5%, to 24 3/4 after it posted second-quarter earnings of 39 cents a share, a penny above the seven-analyst call and up from last year's 26 cents.
Offerings and stock actions
Blockbuster
(BBI) - Get Free Report
was up 1/16 to 15 1/16 in its trading debut, after
Salomon Smith Barney
priced the 31 million-share IPO at $15 a share, below the anticipated price range of $16 to $18.
Red Hat
(RHAT:Nasdaq) is proving to be red hot in its first day of trading. The stock was lately up 32, or 230%, to 46 after pricing top- range at $14.
Goldman Sachs
, the lead underwriter for the six million share IPO, raised the pricing range to $12 to 14 from $10 to 12, bucking recent Internet-stock pessimism.
Analyst actions
ABN AMRO's
bang to
Cinergy's
undefined
estimates hasn't made much of a dent. The brokerage cut estimates for the company's 1999 earnings to $2.25 a share from $2.61, citing the industry's "July power crunch." Cinergy shares were trading up 5/16 to 28 1/4.
Warburg Dillon Reed
downgraded
Crossman
undefined
to buy from strong buy. Shares of Crossman were off 3/8 to 27.
PaineWebber
raised its price target on
Intel
(INTC) - Get Free Report
to 95 from 80. Shares of Intel shot up 2 15/16 to 74 5/8.
Shopko
undefined
was up 3/8 to 34 1/8 after
Lehman Brothers
started coverage on the retail store, tagging it with a market outperform rating.
Lehman Brothers upgraded
SmithKline Beecham
(SBH) - Get Free Report
to outperform from neutral. The stock was up 5/16 to 58 11/16.
Merrill Lynch
named
Texas Instruments
(TXN) - Get Free Report
its Focus One stock of the week. Shares of Texas Instruments were up 4 3/8 to 142 7/8 on the news.
U.S. Home
undefined
was off 1/4 to 33 1/16 after Warburg Dillon Reed downgraded the stock from strong buy to buy.
Miscellany
China Airlines gave Boeing a liftoff today when it placed the largest aircraft order in the history of Taiwan, valued at $3.8 billion. The airline said its order includes 13 Boeing 747-400F cargo jets, with options for 11 more cargo and passenger jets.
General Electric
(GE) - Get Free Report
unit
GE Aircraft
will supply the jets with its CF6-80C2 engines. Boeing was lately up 3/16 to 46 1/16.
Oak Industries
(OAK) - Get Free Report
was getting hammered down 6 3/4, or 16.5%, to 34 on no particular news whatsoever. Trading was halted on the stock this morning, and has since resumed, but the reason for its sharp decline is yet unclear.
MCI WorldCom
undefined
was sinking 1 1/16 to 76 1/16 amid the recent service disruptions plaguing its high-speed data network.
Southwest Airlines
(LUV) - Get Free Report
was falling 3/8 to 16 1/8 after it said Herb Kelleher, its chairman, president and CEO, will begin radiation treatment today for prostate cancer. Kelleher will receive brief treatments each weekday for about eight weeks, the company said.
