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

S&P 500

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 Report

, up 4.2%,

Sun Microsystems

(SUNW) - Get Report

, up 1.9%, and

Cisco

(CSCO) - Get 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 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

New York Stock Exchange

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 Report

was surging 9, or 16.1%, to 64 7/8 after Dow component

Alcoa

(AA) - Get 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 Report

is buying France's

Pechiney

(PY) - Get 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 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

(ONE) - Get Report

was moving up 15/16 to 52 1/2 after it said it is expanding its

Technology One Alliance

with

AT&T

(T) - Get Report

and

IBM

(IBM) - Get 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 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

(DPH)

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

(FD)

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

(MKG)

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 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

(CIN)

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

(CROS)

to buy from strong buy. Shares of Crossman were off 3/8 to 27.

PaineWebber

raised its price target on

Intel

(INTC) - Get Report

to 95 from 80. Shares of Intel shot up 2 15/16 to 74 5/8.

Shopko

(SKO)

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 Report

to outperform from neutral. The stock was up 5/16 to 58 11/16.

Merrill Lynch

named

Texas Instruments

(TXN) - Get 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

(UH)

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 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 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

(WCOM)

was sinking 1 1/16 to 76 1/16 amid the recent service disruptions plaguing its high-speed data network.

Southwest Airlines

(LUV) - Get 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.