With earnings behind and the
meeting still ahead, Wall Street subjected itself to consternation about the dollar for a second straight day. A bigger-than-expected trade deficit report further exacerbated investors' concerns about such recently tertiary worries.
Of course, a weakening dollar should help narrow the trade deficit, because it makes U.S. products more attractive in overseas markets and foreign goods less competitive here. But with traders already somewhat unnerved ahead of the
meeting next week, the dollar-deficit combo was enough to send stocks lower in another sparsely attended session.
Stocks opened lower as the dollar resumed its recent swoon vs. the yen overnight; in late New York trading, the greenback was quoted down 0.36 to 111.56 yen. At 8:30 a.m. EDT, the
reported the trade deficit widened to a record $26.4 billion in June, further dampening preopening spirits.
Unlike yesterday, the bond market was unable to avoid the dollar-inspired concern, although it did avoid a big decline. The price of the 30-year Treasury bond fell 18/32 to 101 8/32, its yield rising to 6.04%.
Against that unfavorable backdrop, the
Dow Jones Industrial Average
closed down 27.54, or 0.3%, to 10,963.84, but well off its session low of 10,873.29. However, the index could not sustain a midafternoon rise which took it as high as 10,995.50. The
followed a similar pattern, closing off 9.25, or 0.7%, to 1323.59 after trading as high as 1331.57 and as low as 1315.35.
slid 2.5% as its "reward" for acquiring
with a bid of $5.8 billion in stock and debt assumption. Reynolds fell 3.9%.
Nasdaq Composite Index
declined 36.30, or 1.4%, to 2621.43 amid broad, but not necessarily deep, softness in the biggest tech bellwethers. A notch (or two) below the
of the world, weakness in names such as
pressured the Comp and the
, which fell 1.7%.
Among tech issues in the news,
fell 2.3% after agreeing to acquire
for $6.25 a share in cash. Metrowerks rose 19.1%. The
Morgan Stanley High-Tech 35
slid 1.5% and the
Philadelphia Stock Exchange Semiconductor Index
dipped 0.5%; Motorola is a component of both proxies.
TheStreet.com Internet Sector
index shed 17.29, or 3.1%, to 549.14 as Internet favorites such as
suspended the recent comeback efforts.
declined 9.2% after
cut its earning estimate. The cut came a day after
guided analysts to pare down its estimates; E*Trade fell 9.6%.
Among DOT components,
rose 8.5% after forecasting its second-half earnings to improve markedly.
fell 0.39, or 0.1%, to 432.71.
Many traders dismissed today's action, noting the absence of many players due to vacations and the hesitancy of those in attendance because of the upcoming Fed meeting. However, negative market internals drew concern from even some recently optimistic market watchers.
"During the last couple of weeks, we've been able to put a happy face on the negative breadth by pointing out other underlying measures of strength," Charles Payne, president and chief analyst at
Wall Street Strategies
, said in a midday email to clients. "However, today we have to put away the rose-colored glasses because it's just plain ugly. Unfortunately, this is the way it will probably be until Tuesday's FOMC gathering."
However, internals were not so harrowing by day's end.
New York Stock Exchange
trading, 680.5 million shares were exchanged while declining stocks led advancers 1,610 to 1,377. In
Nasdaq Stock Market
action 870.8 million shares traded while losers led 2,134 to 1,690. New 52-week lows bested new highs 82 to 40 on the Big Board while new highs led 54 to 53 in over-the-counter trading.
The "best-case scenario" is the Dow holding at 10,800 before the Fed meets, setting the stage for "a nice mini-rally" thereafter, Payne said. "Having said that, we want everyone to have cash on hand going into next week."
Who's in Charge?
Other observers foresee more peril in the market's tea leaves.
"The dollar has been under scrutiny now for a month and a half -- it's a big concern," said Bruce Bittles, market strategist at
in Nashville, Tenn.
But Bittles offered a somewhat novel view, declaring the dollar is dependent on the stock market and not vice versa.
"The stock market is leading everything -- the economy, bonds" and the currency, he said. "That's why the risk is so high. When the stock market turns down, everything will turn down against it. If the stock market comes unraveled, the dollar will also."
Bittles believes that is exactly what is going to happen later in the year and recommends investors raise cash on any near-term advance.
"I suspect the market will react favorably when the Fed raises rates. That's the time to do some selling," he said. "It's a high-risk market environment."
The strategist turned "negative" on the market July 21 and currently recommends an asset allocation of 45% stocks, 50% bonds, and 5% cash.
Among other indices, the
Dow Jones Transportation Average
slid 20.06, or 0.6%, to 3166.30; the
Dow Jones Utility Average
rose 3.53, or 1.1%, to 314.86; and the
American Stock Exchange Composite Index
gained 1.51, or 0.2%, to 785.07.
Elsewhere in North American equities, the
Toronto Stock Exchange 300
gained 55.54 to 7098.00 and the
Mexican Stock Exchange IPC Index
slid 19.30 to 5148.42.
Thursday's Company Report
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.
Surrendering after a brief game of cat-and-mouse,
agreed to be acquired by
in a stock swap valued at $4.4 billion. Reynolds shareholders will get 1.06 Alcoa shares for each Reynolds shares. Based on yesterday's closing prices, Alcoa will pay $70.89 a share for Reynolds, up from the $65 a share it bid when it began its $4.1 billion bearhug on Reynolds last week. The parties expect the deal to close by year-end.
According to the deal, Reynolds is permitted to solicit or entertain bids from third parties for 30 days.
Highfield Capital Management
, which holds 6.7% of Reynolds' shares, expressed outrage for the proposed acquisition and urged the company to seek other offers. In a letter to Reynolds, Highfield's managing director Richard Grubman noted the company's unwillingness to accept Alcoa's offer in March, to exchange 1.42 of its shares for each share of Reynolds, beating Alcoa's current exchange ratio of 1.06 shares. Grubman called Reynolds' behavior "reprehensible." The proposed transaction is a subject to a $100 million breakup fee. Shares of Reynolds slid 2 11/16 to 65 9/16, while Alcoa declined 1 11/16 to 65 3/16.
Mergers, acquisitions and joint ventures
, a provider of profile-driven Internet marketing solutions and a majority-owned subsidiary of
, set a pact under which
made an investment in Engage. Shares of Engage skidded 1 1/4 to 30 1/8, while CMGI was off plunged 6 5/8, or 7.7%, to 78 3/4. Compaq shares were up 1/2 to 24.
Separately, CMGI completed its acquisition of a majority stake in
, making Compaq the largest outside shareholder in CMGI, effective yesterday.
declined 3/4 to 81 13/16 after it announced a partnership with
Enterprise Product Partners
to control a new propylene concentration facility being built in Louisiana. The new unit will produce chemical grade propylene, an essential ingredient for plastic and other synthetic fibers. According to the agreement, Enterprise will oversee the unit's construction and operation. Exxon Chemical will own 70% of the production capacity, while Enterprise will own the remaining interest. The facility is expected to be ready to produce 1.5 billion pounds of the propylene by the middle of 2000. Shares of Enterprise were unchanged at 19 1/8.
slipped 3/16 to 25 1/4 after it announced plans to triple its previously authorized share buyback to $15 million from $5 million. The company said the stock could be used for a possible acquisition or other business venture. Medical Assurance said that it has been in ongoing talks with other medical professional liability insurers for potential business combinations.
fell 2 1/16 to 86 5/8 after it said its Semiconductor Products division forged a deal to buy software tool maker
for $95 million in cash, or $6.25 a share. Metrowerks' board gave the acquisition its stamp of approval and will recommend that shareholders tender their shares to Motorola. The companies expect the offer, which is subject to the tender of at least 77% of Metrowerks' common shares, to proceed within the next two weeks. Shares of Metrowerks were hopped 19% to 6.
declined 1 3/4 to 96 1/2 after it agreed to buy
of the U.K. for about $129 million in cash.
increased 5/16, or 6%, to 5 1/2 after it inked an deal with
to market the catalog and Internet retailer's online catalogs. Sportsman's Guide said its catalogs will advertise in the new
online shopping Web sites.
advanced 1/16 to 22 after it announced plans to buy back about 6 million shares from corporate marauder Victor Posner in a two-year $127 million cash deal. Posner had acquired the nonvoting shares, which represent about a 24% interest, with the sale of his controlling involvement in Triarc's predecessor company to Triarc executives in 1993.
Earnings/revenue reports and previews
Barnes & Noble
slipped 5/8 to 24 1/8 after it reported second-quarter earnings of 34 cents a share including gains. No per-share figures from operating income were provided. The 12-analyst estimate was for 7 cents a share, and the year-ago loss was 8 cents.
was up 9/16 to 38 15/16 after it posted third-quarter earnings of 40 cents a share, beating both the six-analyst estimate of 36 cents and the year-ago 28 cents.
jumped 3 1/2, or 6.9%, to 53 5/8 despite posting an operating loss of 32 cents a share, narrower than the seven-analyst estimate of a 42-cent loss but wider than the year-ago loss of 3 cents.
fell 1/8 to 15 7/8 despite reporting third-quarter earnings of 8 cents a share, 2 cents ahead of the three-analyst estimate and up from the year-ago 4 cents.
Offerings and stock actions
climbed 1/8 to 103/16 in its trading debut.
First Union Capital Markets
priced 3 million shares at $10 each, below the expected range of $12 to $14.
advanced 1/2 to 14 1/2 in its trading debut.
Salomon Smith Barney
priced the 10.5 million-share IPO below-range at $14 a share. LaBranche is a New York Stock Exchange specialist firm, the first specialist firm to go public. The estimated price range was $15 to $17.
(LOOK:Nasdaq) slashed its IPO's size to 9 million shares from 12 million shares, maintaining the expected price range of $11 to $13 a share. The stock is tentatively scheduled to make its trading debut tomorrow.
Telecom services firm
(ORS:NYSE) and Internet firm
(BAMB:Nasdaq) decided to wait out stormy market conditions and postpone their upcoming IPOs. Orius' 10.9 million-share IPO is expected to price at $13 to $15 a share through lead underwriter
Deutsche Banc Alex. Brown
. Bamboo.com, which provides virtual real estate tours via the Internet, cut its offering's size earlier to 4 million shares from 5 million shares, while reducing its expected price to $8 a share from $10 to $12.
is serving as the deal's lead underwriter.
soared 19 5/8, or 122.6%, to 35 11/16 in its first day of trading, while
leapt 15 3/8, or 192.1%, to 23 1/2 after pricing at $8 a share.
popped 5 11/16, or 9.9%, to 63 after it announced plans to buy
Drax power station for $3 billion.
upgraded the stock to its recommended list from market outperform.
Ameritrade slid 2 3/16, or 9.2%, to 21 5/8 after
cut its fourth-quarter estimates to a loss of 6 cents a share from a profit of 2 cents based on its "declining sequential revenues and higher-than-anticipated marketing costs."
Goldman Sachs upgraded
to market outperform from market perform. Shares of Birmingham Steel advanced 7/16, or 5.7%, to 8.
hopped 1 1/2, or 10.3%, to 16 1/16 after
started coverage at buy with a price target of 21.
Morgan Stanley Dean Witter
initiated coverage of natural gas and oil companies
with outperform ratings. Shares of Equitable Resources increased 5/16 to 37 13/16, while Energen was up 3/4 to 19.
jumped 2, or 15.3%, to 15 after Goldman Sachs upped its rating to its recommended list from market outperform.
was up 1/16 to 19 9/16 after
began coverage with initial near-term accumulate and long-term buy ratings.
climbed 2 5/8 to 57 3/4 after Deutsche Banc Alex. Brown upped its fiscal 2000 EPS estimate to 73 cents a share from 67 cents and set a new price target of $66. Lehman Brothers also raised its 2000 estimate to 71 cents a share from 68 cents.
increased 1/16 to 18 13/16 after Morgan Stanley analyst Dennis Higgins initiated coverage with an outperform rating and a price target of 23.
was off 1 7/16 to 46 1/8 despite
initiating coverage of the stock with a buy rating.
Banc of America Securities
also praised Safeway, raising its price target to $80 from $75.
hopped 2 1/8 to 47 1/8 after Merrill Lynch retail analyst Peter Caruso placed the
parent on its focus list.
rocketed 5 1/8, or 58.9%, to 13 13/16 after late yesterday reporting encouraging results from a Phase III trial of a heart drug.
Donaldson Lufkin & Jenrette
analyst Craig Parker upped its rating to a top pick from a buy.
has suspended drilling in Russia amid an environmental and legal dispute with the government,
The Wall Street Journal
reported. Exxon said it stopped its drilling after the State Ecological Committee failed to endorse the company's drilling plan for an oil well at its $15 billion Sakhalin project in the Russian Far East, the newspaper reported. Shares of Exxon slipped 3/4 to 81 13/16.
said it was increasing steps toward phosphate-free fertilizer products. The company, which is a joint venture between
Phosphate Resource Partners
said it will immediately halt triple superphosphate production at its New Wales, Fla., plant. The plant produces 400,000 short tons of TSP annually. IMC-Agrico also announced a temporary closure of a facility in Nichols, Fla., that produces sulfuric acid, an essential ingredient for phosphate fertilizer production. Shares of IMC Global were up 1/4 to 19 1/16, while Phosphate Resource Partners was unchanged at 10 1/16.
A superior court judge in Wake County, N.C., gave its stamp of approval to the
National Tobacco Grower Settlement Trust
, a fund which will direct money from the tobacco companies to U.S tobacco growers.
R.J. Reynolds Tobacco
Brown & Williamson Tobacco
said the trust's payment schedule could total as much as $5.15 billion over a 12-year period. Shares of Philip Morris declined 1/16 to 36 7/8, while R.J. Reynolds was up 1/8 to 26 13/16 and Loews added 3/16 to 80 1/4.
dropped 1 9/16 to 42 despite announcing plans to launch a new wireless trading service that would allow customers to use pagers, mobile phones and handheld computers to trade stocks. Schwab, the largest U.S. discount and online brokerage, expects the service to be ready for trading by the end of the year. The service will be available through its "Signature Services" program for frequent traders.