Stocks Surge to Fresh Highs on Widespread Optimism
This market's got legs to exhilarate the laid-back fellas of
ZZ Top
.
The momentum that has carried the
Nasdaq Composite Index
to new highs the last three trading days is paying some respect today to the market's blue-blooded public face, the
Dow Jones Industrial Average
. Bursting through another century mark, the Dow lately was up 147 to 9458 -- above its all-time closing high of 9374.27, set Nov. 23, and its all-time intraday high of 9380.20.
And it's not just the gilded 30. The entire stock market -- boosted by seasonal factors, overseas
strength, a robust merger market, low inflation and lots and lots of money -- was in solid rally mode as lunchtime approached, giving those market players recently worried about poor breadth a little less to worry about. Financials, technology, telecommunications, airlines, autos and Internets were all benefiting from today's push skyward.
Tomorrow's start of the
Senate
impeachment trial of
President Clinton
, ongoing troubles in Iraq and a looming earnings season aren't weighing too heavily, it seems, on investors' shoulders.
"Oh my God, the market has been expanding and broadening over the last three months," beamed the Uber-bullish Philip Tasho, CEO of
TheStreet Recommends
Riggs Investment Management
in Washington. "The good breadth is almost imperceptible. But the
S&P
500
and the
Russell
2000
have been moving at a similar rate for three months -- that's gotta say something."
The broad S&P 500 recently was up 20 to 1264, on pace for another high, and the small-cap Russell 2000 was up 5 to 427.
The Dow's vigor was fueled by, among others,
American Express
(AXP) - Get American Express Company Report
,
General Motors
(GM) - Get General Motors Company Report
and
IBM
(IBM) - Get International Business Machines Corporation Report
.
AT&T
was up 2 1/8 to 81 5/8 after
The Wall Street Journal
reported the company is considering taking public 10% of a new tracking stock it will create as part of its purchase of
TCI
(TCOMA)
.
Elsewhere in telecom,
Bell Atlantic
(BEL)
and
Vodafone
(VOD) - Get Vodafone Group Plc Report
were continuing to see strength as they duke it out for
AirTouch
(ATI) - Get Allegheny Technologies Incorporated Report
.
The Nasdaq was up 56 to 2308, headed for another new top.
Intel
(INTC) - Get Intel Corporation Report
and
Cisco
(CSCO) - Get Cisco Systems Inc. Report
proceeded higher, and
Applied Materials
(AMAT) - Get Applied Materials Inc. Report
was up 10.2% after
BT Alex. Brown
upgraded seven semiconductor companies.
TheStreet.com Internet Sector
index was climbing higher by 27 to 439 as
Yahoo!
(YHOO)
and a split
Amazon.com
(AMZN) - Get Amazon.com Inc. Report
persevered in their struggle to become numbingly expensive. Elsewhere, the
Morgan Stanley High-Tech 35
was up 2.5% and the
Philadelphia Stock Exchange Semiconductor Index
was up 3.5%.
Among other indices, the
Dow Jones Transportation Average
was up 2.8%, the
American Stock Exchange Airline Index
was up 3.3% and the
American Stock Exchange Broker/Dealer Index
was up 4.4%.
Market internals were heartier than an Eskimo's soup. On the
New York Stock Exchange
, advancers were beating decliners 1,868 to 1,056 on 538 million shares. The ups had the downs 2,322 to 1,465 on 704 million shares in
Nasdaq Stock Market
activity.
Bond prices were on the short end of equity strength. The 30-year Treasury was up 7/32 to 100 27/32, sending its yield down to 5.19%. (For more on the fixed-income market, see today's early
Bond Focus.)
"This market will continue and accelerate in the next 12 months," said Tasho, who's calling for Dow 10,000 by the end of the first quarter and 11,000 by the end of the year. He also expects techs to continue as the "war horse of the market" and is bullish on
McKesson
(MCK) - Get McKesson Corporation Report
,
MCI WorldCom
(WCOM)
and
Philips Electronics
(PHG) - Get Koninklijke Philips N.V. NY Registry Shares Report
.
"Fundamentals are extremely positive for financial assets," Tasho said. "It's about low inflation, not corporate earnings. At the end of 1998, we had the lowest inflation in 40 years. And that's not going anywhere anytime soon. The world has gone away from communism and toward capitalism, so competition is only going up. ... There are still a lot of problems overseas -- it's not going to be smooth, it'll be choppy. But Asia and Japan are starting to make some positive movements ahead, and the euro is going to across the board make it easier to do business on that continent and to compete worldwide."
As for fourth-quarter earnings reports, beginning in about two weeks, the strategist said he expects a strong quarter after a "relatively subdued" preannouncement season.
Tim Morris, chief investment officer at
Bessemer Trust
, also sees Dow 10,000 on the horizon, but not until the turning of the millennium.
"Near-term, we're very positive," Morris said. "Money is flowing in from profit-sharing, 401(k)s, post-December mutual-fund avoidance, that phenomenon. And we have a decent fourth-quarter earnings picture. Some companies have seen pricing weakness, but the strong economy has held up. For our large-cap portfolio, we see a 15%-16% increase in earnings."
Morris sees strength in health care, technology and consumer names such as
Time Warner
(TWX)
. "You can probably make money everywhere with the exception of cyclicals," he said. "Better, broader breadth is a very positive signal for the market. We're not moving the other way until a real turn in economic fundamentals."
Wednesday's Midday Movers
By Aaron L. Task
Senior Writer
Even as the blue-chip technology rally saunters on, a trio of tech names are facing some harsh music this morning after posting separate profit warnings
last night. Not surprisingly (and without a moment to spare) Wall Street analysts followed through with downgrades of the threesome.
Aspect Telecommunications
(ASPT)
was down 4 9/16, or 26.8%, to 12 7/16 after warning its fourth-quarter results will be lower than expected, coming in around 12 cents a share. The 10-analyst prediction called for 21 cents vs. the year-ago 25 cents.
Morgan Stanley Dean Witter
cut its rating to outperform from strong buy and
CIBC Oppenheimer
lowered its recommendation to hold from strong buy.
Information Management
(IMAA)
was off 1 15/32, or 28%, to 3 25/32 after saying its fourth-quarter and annual results might fall below expectations because of a delay in purchasing orders. The four-analyst outlook called for earnings of 16 cents a share vs. the year-ago 15 cents.
BT Alex Brown
cut its rating to market perform from buy.
JDA Software Group
(JDAS)
was lower by 2 17/32, or 26.6%, to 7 after saying it expects to record a fourth-quarter loss of 8 cents to 11 cents a share due to weakness in software licenses. The nine-analyst view called for earnings of 16 cents vs. the year-ago 22 cents. JDA Software said it plans to restate its second-quarter and third-quarter results in response to a new guidance from the
Securities and Exchange Commission
to revise current methods regarding in-process research and development write-offs. The company also announced its CEO, Brent Lippman, resigned. James Armstrong and Frederick Pakis, co-founder and co-chairmen, will return to the company full-time as co-chief executives.
Prudential Securities
cut its recommendation to hold from accumulate.
The announced settlement of the
National Basketball Association
lockout, meaning there'll be a season this year after all, lit up several basketball-related issues. The largest beneficiary in percentage terms was
Boston Celtics
(
(BOS) - Get DB Base Metals Short ETN Report
BOS:NYSE), up 3 5/16, or 31.6%, to 13 13/16. Also rallying were
Converse
(
(CVE) - Get Cenovus Energy Inc Report
CVE:NYSE), up 1/2, or 22.2%, to 2 3/4;
Nike
(
NKE:NYSE), up 1 11/16 to 42 3/8; and
Reebok
(
(RBK)
RBK:NYSE), up 9/16 to 16 1/4.
Earnings movers
Mentor Graphics
(MENT)
was up 2 1/2, or 31%, to 10 9/16 after announcing its fourth-quarter earnings will surpass the 11-analyst estimate of 17 cents a share. In the year-ago period, the company earned 3 cents.
Northrop Grumman
(NOC) - Get Northrop Grumman Corporation Report
was down 5, or 6.8%, to 68 1/4 after saying it will take pretax charges totaling about $125 million in the fourth quarter, reducing earnings for the year by roughly $1.18 a share; the same issue will also mean 1999 results will not meet expectations. These charges are in addition to previously announced consolidation expenses that will be charged in the fourth quarter. The nine-analyst consensus is currently for fourth-quarter earnings of $1.98, full-year 1998 results of $6.66, and 1999 earnings of $7.81.
In other news
Anchor BanCorp Wisconsin
(ABCW)
was down 2 15/16, or 12.2%, to 21 1/8 after agreeing to acquire and
FCB Financial
(FCBF)
is a stock swap valued at $167 million. FCB Financial was up 9 3/4, or 36.1%, to 36 3/4.
Best Buy's
(BBY) - Get Best Buy Co. Inc. Report
was up 5 5/8, or 8.5%, to 71 1/2 after announcing December same-store sales rose 10.5%.
Dollar Tree Stores
(DLTR) - Get Dollar Tree Inc. Report
was higher by 5 5/8, or 13.1%, to 48 7/8 after reporting its fourth-quarter same-store sales rose 5.2%.
Gregg Manning Auctions
(GMAI)
was up 3 1/16, or 35.3%, to 11 7/8 after announcing 40% of its sales in its fiscal second-quarter came from Internet-related auctions. The company expects to report record sales and profits for the quarter.
LTV
(LTV)
was up 1 3/8, or 21.4%, to 7 13/16 thanks to an upgrade to near-term buy from accumulate by
Merrill Lynch
. The brokerage firm upgraded a handful of other steel makers, including
USX-U.S. Steel Group
(X) - Get United States Steel Corporation Report
, lately higher by 2 3/16, or 8.9%, to 26 11/16;
Bethlehem Steel
(BS)
, higher by 1 1/8, or 12.2%, to 10 3/8; and
Rouge Industries
(ROU)
, up 5/8, or 6.7%, to 9 15/16.
LVMH Moet Hennessy Louis Vuitton
(LVMHY)
was up 2 1/8 to 46 1/2 after announcing it owns more than 5% of
Gucci
(GUC)
, sparking speculation it will take over the couture house. Gucci was up 12 15/16, or 23.4%, to 68 3/4.
Lycos
(LCOS)
was up 7 13/16, or 15%, to 60 after
Credit Suisse First Boston
initiated coverage with a buy rating.
Premisys
(PRMS)
was up 1 3/4, or 18%, to 11 9/16 following an upgrade to buy from hold at
SoundView Financial Group
.
Successories
(SCES)
was higher by 7/16, or 14%, to 3 11/16 after announcing its Internet sales rose more than 300% during the holiday season while its overall sales climbed 4.1% for the five weeks ended Jan. 2.
Tel-Save.com
(TALK)
was down 2, or 10.1%, to 17 7/8 despite announcing an extension of its existing marketing pact with
America Online
(AOL)
. Tel-Save.com said the firm could double its long-distance customers over the next 18 months after extending its pact to sell services over AOL by two years to 2003. As reported earlier, the stock climbed 17.4% yesterday in anticipation of the extension.
TheStreet.com's
Herb Greenberg
wondered in a column
yesterday how
Salomon Smith Barney
analyst Jack Grubman knew about the extension before Tel-Save issued a release.
TSC
wrote about the departure of former Tel-Save.com CEO Daniel Borislow in a
Nov. 16 story. Borislow's resignation took effect today; he was replaced by Gabriel Battista, who was most recently CEO of
Network Solutions
(NSOL)
.
ViroPharma
(VPHM)
was up 2 1/4, or 22.5%, to 12 3/8 after announcing positive results in a preliminary study for the treatment of headaches in patients with viral meningitis.
YPF
(YPF) - Get YPF Sociedad Anonima Report
was up 2 3/8, or 8.2%, to 31 1/2 after Argentina set a $38 base price for the sale of nearly 15% of the oil concern.
