Everybody limbo! No, not the embarrassing-wedding-activity kind of limbo, but the state-of-flux/indecision kind. Major proxies were mixed and heading lower as lunchtime, beckoned following a morning demarcated by a lack of a discernible trend.
The weekend brought no Chinese devaluation and financial publications contained -- frankly -- little stock-shattering news, notwithstanding worries about
, (now rote) concerns about Internet stocks, as well as ongoing skittishness over China and Brazil. But those issues were offset by the lack of debilitating bad news plus a stock-split announcement by
. Still, there wasn't an avalanche of good news either; no blowout earnings news, no major merger announcements, no salutary comments from some market guru.
Market gauges were evincing the countervailing forces, as were trading volumes, which were modest compared with
Dow Jones Industrial Average
rose as high as 9160.06 in its initial upswing, fell as low as 9063.26 and lately was off 29 to 9092 after briefly trading in positive ground once more.
Merck was the biggest drag on the index, as expected, following its announcement Friday of a setback in the testing of a new antidepressant. The stock was down 2.6%.
, once as high as 1232.43 and then as low as 1219.46, lately was off 2 to 1224. The
, the Little Orphan Annie of the stock market, was recently down 2 to 421.
Nasdaq Composite Index
was lately up 8 to 2347 after an initial splurge to as high as 2363.90 and a subsequent decline to as low as 2328.74. Beyond Mister Softee,
was one of the few tech bellwethers showing much life this morning; the
was lately up fractionally while the
Philadelphia Stock Exchange Semiconductor Index
was down 1.3%.
TheStreet.com Internet Sector
index was lately up 3 to 493, spurred by components such as
. Outside the index,
was recently up 13.4%.
On the flip side,
was down 5.7% following a negative piece in the current issue of
continues to feel the recriminations of last week's forecast of disappointing profit margins, lately down 6.4%.
"In the Internet stocks, you're starting to see an emergence between higher quality franchise names vs. some of the weaklings in the group," said Jim Herrick, managing director of trading at
Robert W. Baird
in Milwaukee. "You're not seeing the insanity you saw before driving these stocks to valuations they had no business trading at. It's a little more settled down."
Reflecting on the action in Amazon.com, "you're seeing these companies under the microscope," Herrick said. "The more the analysts follow the industry, the more they're going to scrutinize and dissect and value it differently than in the past, rather than just based on revenues."
It isn't surprising the overall market hasn't shuddered as this process unfolds in Netland, the trader said, noting the broader market didn't rally as dramatically as the Net stocks and describing that group as "a separate bubble."
As far as today is concerned, "we might have a drag on the Dow with Merck and
but I think we'll finish stronger," the trader said.
New York Stock Exchange
trading, 389 million shares have traded while declining stocks were leading advancers 1,596 to 1,194. In
Nasdaq Stock Market
activity, 500 million shares have changed hands while losers lead 2,002 to 1,725.
Some market watchers viewed the recent action with a jaundiced eye.
"The pattern of the market is changing a little bit here," said Roy Blumberg, chief investment strategist at
Chestnut Investment Group/First Allied Securities
. "What's happening is you're starting to get to the latter stage of the advance. We've gone from straight-up rallies in the market with barely any pullback to larger pullbacks and not as good of recoveries. That happens as you get further along in an advance."
What's happening today (and the last few weeks) is a "prelude to an intermediate correction" of between 7% and 15%, Blumberg said. The strategist expects major indices to make new highs in the coming weeks, but believes it will come in amid an increasingly narrow advance/decline line.
"We've blown a lot of January money already, have got valuation problems and earnings worries," he continued. "I find it hard to believe Brazil is going to cause a big market selloff when Brazil is already discounted, same with impeachment. But you've got to be concerned about earnings and future earnings, especially at these levels of valuation."
Valuation "tells you how much risk you have," but is not an indicator of when a correction occurs, Blumberg observed. With the S&P 500 trading at over 30 times 1998 earnings, "you don't need much of a surprise to scare people," he said.
The strategist claims not to be scared, but is getting a bit more defensive and suspects other portfolio managers are doing the same. "I'm raising a little cash, getting rid of my dogs -- the ones that didn't work," he said, declining to specify. "My best advice is to let the horses that are running run, but the horses that aren't, it's a good excuse to raise a little cash. The risk/reward equation is definitely shifting more toward risk."
Among other indices, the
Dow Jones Transportation Average
was lately up 0.8%, the
Dow Jones Utility Average
was off 0.3% and the
American Stock Exchange Composite Index
The price of the 30-year Treasury bond was lately down 15/32 to 102 3/32, its yield rising to 5.11%. (For more on the fixed-income market, see today's early
investor sentiment poll show our readers probably aren't too surprised by the market's somewhat lackluster behavior today. Of the 471 people who voted last night, 30% were somewhat bullish, 29% were neutral and 27% were somewhat bearish. Only 6% were very bullish and 7% very bearish. The poll is taken from 6 p.m. to 9 p.m. EST every Sunday here on
, if you'd like to participate.
Monday's Midday Movers
Microsoft was up 5 9/16 to 161 13/16 after its board approved a 2-for-1 stock split, effective March 12. Meanwhile, Microsoft and
of Britain agreed to jointly develop broadband services for delivery to customers in the U.K. and Ireland. Microsoft will make a $500 million investment in NTL to accelerate deployment of high-speed voice, video and data services over its national fiber-optic telecommunications networks and to continue the company's introduction of advanced Internet, telephone and cable television services over its broadband facilities. NTL was up 13 1/2, or 20%, to 81 1/8.
In other news:
was up 2 7/8, or 5.7%, to 53 7/16 after announcing a 2-for-1 split. The stock has climbed more than 300% in the past year, closing at 50 on Friday. It reached a closing high of 59 on Jan. 12. The split is intended to increase the shareholder base and provide more liquidity for the stock, according to Chairman and Chief Executive Joe Ricketts. He said the rise in the stock reflects the strength of the company's financial performance and business model. The stock will begin trading at the post-split value on Feb. 23 when Ameritrade said it will have approximately 58 million shares outstanding.
Broadcast.com was up 18 1/2, or 13.7%, to 153 7/8 after joining up with Japan's
to launch a Japanese language-based Internet audio and video programming concern.
was up 3 13/16, or 6.4%, to 63 13/16 after
Morgan Stanley Dean Witter
upgraded it to strong buy from outperform.
was up 7/8, or 5%, to 18 3/8 after the firm upped it to outperform from neutral.
was up 1 3/4, or 8.3%, to 22 15/16 after
raised the stock to strong buy from hold.
was up 6 3/8, or 17.6%, to 42 5/8 after
The Sunday Times
of London reported that
is poised to offer $6 billion for the company. FMO was down 13/16 to 62 7/16.
was up 1 7/8, or 12.6%, to 16 13/16 after saying preliminary results from a Phase II trial of its T-20 showed the drug was well tolerated at all doses and cut the viral load in HIV patients.
Yahoo! was up 12 5/8 to 298 9/16 after entering a national media and marketing promotional program intended to span national network and cable television properties and the Internet with
. News Corp. was up 5/16 to 26 3/4.
was down 1 3/8, or 11.3%, to 10 3/4 after warning it expects 1998 earnings to come in at 95 cents a share, below the single-analyst forecast for $1.15. The company blamed unseasonably warm weather and reduced footwear reorders.
In other earnings news: