Stocks Set More Records as Blue-Chips Rally Late

Maybe all the traders weren't at the beach. Next week promises to be more action-packed in any case.
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With seemingly effortless grace, evoking a prima ballerina or perhaps a fine barber, major stock proxies sauntered into the weekend on an all-time high.

Traders (except shorts) were certainly not complaining about another triple play of records, but many seemed more distracted by the action than impressed. Some were preoccupied by a desire to get on with weekend plans, as reflected by uninspired trading volumes. More sober players pondered next week's heavier dose of earnings, plus key economic data -- namely

PPI

and retail sales on Wednesday, and

CPI

on Thursday.

As a result, Friday saw "some rotation out of highflying companies with questionable earnings or futures" and into safer names, said Charles Payne, president and chief strategist at

Wall Street Strategies

. "It's a summer Friday and people are looking to be positioned somewhere quasisafe. There's a lot of dough waiting to go back to work next week."

Because of their "incredible swings," savvy traders will wait for highfliers such as

EarthLink Network

(ELNK)

to get down to the lower end of their trading ranges, Payne said. But "if they pull back

to those levels you'll get some action in them."

Today, blue-chips such as

McDonald's

(MCD) - Get Report

and

DuPont

(DD) - Get Report

rallied sharply, he noted, while investors shunned holdings such as

Echostar Communications

(DISH) - Get Report

, which fell 5.2% after being downgraded by

Morgan Stanley Dean Witter

.

Along with

IBM

(IBM) - Get Report

, which set a 52-week high, McDonald's and DuPont paced the

Dow Jones Industrial Average

, which rose as high as 11,194.33 before closing up 66.81, or 0.6%, to a record 11,193.70.

While the Dow needed a late-day push to set a new standard, the

Nasdaq Composite Index

spent nearly the entire session in higher (and thus record-setting) territory, closing up 21.20, or 0.8%, to 2793.06. The tech-enflamed index notched its sixth record in the past seven sessions. Meanwhile, the

S&P 500

gained 8.86, or 0.6%, to 1403.28, also a record.

In addition to select big-cap tech names, cyclical stocks boosted the S&P. The

Morgan Stanley Cyclical Index

and

S&P Chemical Index

each gained 0.9% while the

Philadelphia Stock Exchange Forest & Paper Products Index

jumped 2.2%.

Ironically, the Comp got a huge boost from

Qualcomm

(QCOM) - Get Report

, which jumped 4.6% on word it will be added to the S&P 500.

In addition,

Dell

(DELL) - Get Report

leapt 7.2% after

Goldman Sachs

recommended the stock to its private client (i.e., superrich) list.

Most other Nasdaq-traded tech bellwethers were also higher, sporting modest gains; the

Nasdaq 100

rose 0.8%. In

New York Stock Exchange

trading, however, tech giants such as IBM,

Micron Technology

(MU) - Get Report

and

Motorola

(MOT)

were solid performers, helping the

Morgan Stanley High Tech 35

rise 1.2%.

Meanwhile, Internet stalwarts stumbled as

Yahoo!

(YHOO)

slid 2.7% and

MindSpring Enterprises

(MSPG)

gave back 4.1% of

yesterday's rumor-inspired gains.

TheStreet.com Internet Sector

index dipped 0.12 to 664.84.

"I find real intriguing this selloff in Yahoo!," Payne said. "The bias in the stock turned. It closed down yesterday and

was under pressure today."

With some debating its merit as a proxy for Net stocks in general, many market players are closely watching the action in Yahoo! (

TheStreet.com

reported on that one earlier).

"Remember, the peak last year occurred in the period of July 17-20. We suspect that the same period will be the testing period for this year's stock market," wrote Don Hays, director of investment strategy at

Wheat First Union

, who turned negative back in February. "We will be watching the action of Yahoo's stock in reaction to 'blow-away' numbers, to see what message the market is giving for this darling of just a few months ago."

Yahoo!'s "message" may not have pleased those long stocks, but advance/decline action did improve. Furthermore, the

Russell 2000

rose 3.23, or 0.7%, to 457.98 and the

American Stock Exchange Composite Index

added 4.04, or 0.5%, to a record 812.73.

In NYSE trading, 703.1 million shares were exchanged while advancers led declining stocks 1,804 to 1,127. In

Nasdaq Stock Market

action 921.4 million shares traded while gainers led 2,173 to 1,759. New 52-week highs bested new lows by 113 to 52 on the Big Board and by 181 to 33 in over-the-counter trading.

When It's OK to Be Wrong

In the aftermath of this week's action, the bullish take is that stocks have performed impressively after hitting the first set of new highs last week, while earnings prospects are solid. The bearish angle says major averages are more overvalued than ever, especially given expectations for a continued rise in inflation and interest rates.

Bonds aided neither side today; the price of the 30-year Treasury bond slid 5/32 to 89 17/32, its yield rising to 6.01%.

"The truth is, both arguments are reasonably good and the market is reflecting it," said Hugh Johnson, chief investment officer at

First Albany

. "We've got big pluses and big minuses and they add up to a big neutral, but with a slightly upward bias."

Johnson, who chalked up today's session to typical summer Friday-type action, is "neutral with a slightly positive bias" heading into next week, which he expects will be much more volatile.

The slight optimism has budded "primarily because conditions that signal the end of a bull market -- the end of a cycle -- do not exist," he said. "We have further to go. But it isn't going to be fireworks on the upside anymore. At least, I don't think so."

But unlike many others, Johnson acknowledges he's underestimated the strength of the stock market for several years running.

"Let's not forget, guys like me have been talking about 8%-to-10% returns for the last four years," he said. "If I'm going to be wrong, that's the way I'd like to be wrong."

Among other indices, the

Dow Jones Transportation Average

fell 24.07, or 0.7%, to 3427.32 and the

Dow Jones Utility Average

added 1.02, or 0.3%, to 321.71.

For the week, the Dow industrials rose 54.46, or 0.5%; the S&P 500 advanced 12.06, or 0.9%; the Nasdaq Comp jumped 52.04, or 1.9%; the Russell 2000 added 1.47, or 0.3%; and the DOT inched ahead by 0.52, or 0.07%. Additionally, the Dow transports shed 88.67, or 2.5%; the Dow utilities added 1.38, or 0.4%; and the Amex Composite rose 10.31, or 1.3%.

Elsewhere in North American equities, the

Toronto Stock Exchange 300

climbed 59.34, or 0.8%, to 7198.17 while the

Mexican Stock Exchange IPC Index

fell 1.61, or 0.03%, to 5888.87. For the week, the TSE rose 0.8% and the IPC added 0.02%.

Friday's Company Report

By Heather Moore
Staff Reporter

(

Earnings estimates from First Call; new highs and lows on a closing basis unless otherwise specified. Earnings reported on a diluted basis unless otherwise specified.

)

Abbott Laboratories

lowered 11/16 to 42 3/16 after

last night agreeing to buy

Perclose

(PERC)

in a stock swap valued at $680 million. Perclose shot up 10 7/16, or 26.9%, to 49 1/4.

Today, Abbott reported second-quarter earnings of 42 cents a share, in line with the 14-analyst estimate and up from the year-ago 38 cents.

Mergers, acquisitions and joint ventures

AlliedSignal

(ALD)

added 11/16 to 65 13/16 on news it is acquiring U.K.-based

Johnson Mattley Electronics

for $655 million. Separately, AlliedSignal sold its Laminate Systems business to privately held plastics and chemicals maker

Rutgers

for about $425 million.

Allstate

(ALL) - Get Report

picked up 1/2 to 37 5/16 on word it's acquiring

American Heritage Life Investment

(AHL)

for $32.25 a share in stock or cash. American Heritage rose 4 1/8, or 15.3%, to an all-time high of 31 1/16.

KN Energy

(KNE)

rocketed 6 11/16, or 54.9%, to 18 7/8 on word it is buying

Kinder Morgan

, the lone stockholder and general partner of

Kinder Morgan Energy Partners

(ENP)

, for $506 million in stock. KN Energy will issue about 41.5 million shares in return for all the outstanding shares of Kinder Morgan, which added 1/4 to 38 5/8. KN Energy also was lifted to hold from sell by

Prudential

.

Programmer's Paradise

(PROG)

climbed 1 1/8, or 9.4%, to 13 1/4 after saying it was chosen to be the exclusive reseller co-sponsor for an upcoming

Microsoft

(MSFT) - Get Report

event.

Visible Genetics

(VGIN)

vaulted 2 1/4, or 22%, to 12 1/2 after saying

E.M. Warburg Pincus

agreed to invest $30 million in the company.

Sweden's

Volvo

(VOLVY)

expanded 2 3/8, or 8.2%, to 31 1/2 after the Swedish newspaper

Dagens Industri

reported the truck maker rejected as too low an unofficial $17 billion takeover bid by

DaimlerChrysler

(DCX)

. Volvo sold its car division to

Ford

(F) - Get Report

in January. Daimler Chrysler rose 1 3/8 to 90 3/16; Ford lost 1/2 to 56.

Earnings/revenue reports and previews

Anesta

(NSTA)

sliced off 1 1/8, or 7.4%, to 14 1/16 after reporting a second-quarter loss of 19 cents a share, 3 cents wider than the four-analyst view but narrower than the year-ago loss of 33 cents.

Cerner

(CERN) - Get Report

skidded 3/4 to 17 1/2 after forecasting second-quarter earnings of between break-even and 2 cents a share vs. the 20-analyst estimate for profits of a dime.

Consolidated Papers

(CDP)

tacked on 1 to 28 1/8 after posting second-quarter profits of 12 cents a share, down from 26 cents a year ago but a penny ahead of the 11-analyst consensus.

Jones Lang LaSalle

(JLL) - Get Report

tanked 5 1/16, or 23%, to an all-time low of 17 after last night saying it sees a second-quarter loss, blaming in part the performance of its U.S. management services businesses. The two-analyst estimate called for earnings of 19 cents a share vs. the year-ago 45 cents.

Parametric

(PMTC)

gained 15/16 to 14 1/4 after forecasting third-quarter earnings of 13 to 15 cents a share, including charges. The 12-analyst estimate calls for operating earnings of 18 cents vs. the year-ago 16 cents.

Periphonics

(PERI) - Get Report

swelled 1 3/4, or 10.3%, to an annual high of 18 3/4 after recording fourth-quarter earnings of 36 cents a share, topping the three-analyst estimate by 12 cents and blasting past the year-ago 8 cents.

Picturetel

(PCTL)

declined 19/32, or 8.1%, to 6 3/4 after forecasting a second-quarter loss of 60 cents to 62 cents a share vs. the four-analyst estimate of a 46-cent deficit and profits of 3 cents a share last year.

Pioneer Hi-Bred

(PHB) - Get Report

added 3/16 to 38 13/16 after posting third-quarter earnings of $1.50 a share, repeating the year-ago figure and missing the five-analyst prediction of $1.65.

A. Schulman

(SHLM) - Get Report

grew 5/8 to 18 5/8 after reporting third-quarter earnings of 36 cents a share, a penny ahead of the five-analyst view but behind the year-ago 38 cents.

Visio

(VSIO)

sank 8 3/8, or 22.1%, to 29 9/16 after warning its third-quarter earnings will be 29 cents to 30 cents a share vs. the nine-analyst estimate of 35 cents and year-ago results of 29 cents.

Visual Networks

(VNWK)

excelled 10 3/4, or 31.7%, to 44 1/2 after posting second-quarter earnings of 16 cents a share, 2 cents ahead of the eight-analyst estimate. Today, Goldman Sachs moved the firm to its recommended list from a market outperform while

BancBoston Robertson Stephens

upped its recommendation to buy from long-term accumulate.

Offerings and stock actions

DuPont advanced 3 3/16 to 71 1/16 after the Dow component announced it will exchange one DuPont share for each 2.95 shares of

Conoco

(COC)

DuPont holders still own. The exchange will complete DuPont's spinoff of Conoco, begun last October with the largest-ever IPO in U.S. history. Conoco gave up 11/16 to 26 11/16.

Liquid Audio

(LQID)

stormed up 21 9/16, or 143.7%, to 36 9/16 on its first day of trading. Lead underwriter

Lehman Brothers

priced 4.2 million shares of the software company at $15 a share, above the expected range of $10 to $12.

Analyst actions

Calpine

(CPN)

flew 3 5/8, or 5.8%, to an all-time high of 65 7/8 after

PaineWebber

raised its 1999 earnings estimate to $2.60 from $2.50 a share and its 2000 view to $3.25 from $2.90. The firm also raised the stock's price target to 75 from 64.

Cymer

(CYMI)

rose 2, or 8%, to 27 1/8 after

ING Barings

initiated coverage with a strong buy.

Dell surged 2 7/8, or 7.2%, to 42 13/16 after Goldman added the stock to its private client list.

Echostar Communications slid 8 1/4, or 5.2%, to 151 1/8 after Morgan Stanley Dean Witter cut its recommendation to outperform from strong buy.

Helix Technology

(HELX)

flourished 3 11/16, or 16.1%, to an annual high of 26 5/8 after

CIBC World Markets

started coverage with a strong buy.

Human Genome Sciences

(HGSI)

collapsed 8 9/16, or 15.2%, to 47 15/16 after

Salomon Smith Barney

cut the stock to neutral from outperform, saying the stock was fully valued. Yesterday, the stock popped 38.7% after saying it identified an immune stimulant that could help treat infectious diseases.

Level 3 Communications

(LVLT)

added 2 3/16 to 67 1/2 after Morgan Stanley Dean Witter initiated coverage with an outperform and a price target of 85.

Marriott

(MAR) - Get Report

grew 3 3/16, or 9.2%, to 37 11/16 after Morgan Stanley Dean Witter raised it to strong buy from outperform and

Schroder

upped it to outperform from in line.

McDonald's hopped up 3 15/16, or 9.7%, to 44 9/16 after Schroder upped its recommendation to outperform from perform in line.

Miscellany

Amgen

(AMGN) - Get Report

jumped 3 5/8, or 5.5%, to 69 5/16 after moving the date it plans to post its second-quarter earnings to Monday from July 22, responding to recent weakness in its stock. "The volume in trading has been higher than normal" and the stock has "been running contrary to market trends, so management decided it was better to get (the results) out there sooner rather than later," a spokesman said.

Cabletron

(CS) - Get Report

climbed 11/16, or 5.3%, to 13 3/4 after

Business Week's

Inside Wall Street column talked up the firm as a potential takeover target, with a global telecom giant playing the role of acquirer. Gene Marcial's rumor mill also has

24/7 Media

(TFSM)

ripe for

DoubleClick's

(DCLK)

taking. 24/7 picked up 4 9/16, or 11%, to 45 7/8 while DoubleClick picked up 2 9/16 to 102 15/16.

Qualcomm flew 6 1/2 to 148 3/4 on word it will replace

Transamerica

(TA) - Get Report

in the

S&P 500

on a date yet to be announced. Dutch firm

Aegon

(AEG) - Get Report

is acquiring Transamerica.

Compass Bancshares

(CBSS)

rose 1 11/16, or 6.5%, to 27 13/16 after S&P said it will replace Qualcomm in the

S&P MidCap 400 Index

.