Stocks Tumble Back into Negative Territory

The Treasury market has taken off, posting strong gains.

Author:: Brian Louis
Publish date:: Mar 9, 1999 2:55 PM EST

The major stock market averages bade farewell to their earlier gains and were down slightly heading into the final hour of trading, while the 30-year Treasury bond took wing and was enjoying some nice gains.

The

Dow Jones Industrial Average

was down 49 to 9679.

The

S&P 500

was down 4 to 1278.

The

Nasdaq Composite Index

was down 8 to 2390. After opening on the downside, the Nasdaq Comp surged as much as 35.75 to 2433.37, or a gain of nearly 1.5%, around 11:40 a.m. EST, before fading.

The small-cap

Russell 2000

was down 2 to 398.

The 30-year bond was up 24/32 to 95 26/32, yielding 5.54%.

TheStreet.com Internet Sector

index was down 5 to 566.

TheStreet.com E-Commerce Index

was up fractionally at 103.

Going forward, with earnings growth slowing, the outlook for stocks is somewhat dubious, said Dave Mead, chief investment officer at

Harris Bank

. In the end, he said he doesn't expect the market to do much this year.

"There's no fundamental reason for the market to be going up at this point," said Mead.

Mead said the rally late last week, particularly on Friday, was due in part to short-covering.

On the

New York Stock Exchange

, decliners were beating advancers 1,743 to 1,217 on 630 million shares. On the

Nasdaq Stock Market

, losers were beating winners 2,249 to 1,585 on 828 million shares.

On the NYSE, 68 issues had set new 52-week highs while 78 had touched new lows. On the Nasdaq, 82 issues had set new lows while new highs totaled 71.

On the Big Board,

Compaq

(CPQ)

was most active, with 17 million shares changing hands. It was down 1 7/16 to 32 15/16.

On the Nasdaq,

Dell

(DELL) - Get Report

was most active, with 36 million shares changing hands. It was down 1 3/8 to 44.

1:58 p.m.: Stocks Fall from Session Highs

Stocks have lost a lot of their earlier steam, with the market's major barometers only slightly higher this afternoon, well off their intraday highs.

The

Dow Jones Industrial Average

was up 27 to 9755. The

S&P 500

was up 4 to 1287. The tech-heavy

Nasdaq Composite Index

was up 7 to 2404.

The

Russell 2000

was up fractionally at 400.

The 30-year Treasury bond was up 6/32 to 95 8/32, yielding 5.58%.

TheStreet.com Internet Sector

was up 4 to 576.

TheStreet.com E-Commerce Index

was up 2 to 105.

Financials were sharply higher, led by brokerage stocks. The

American Stock Exchange Broker/Dealer Index

was up 2%, while the

Philadelphia Stock Exchange/KBW Bank Index

jumped 1%.

Although the market's major indices are all higher, market breadth is negative.

On the

New York Stock Exchange

, decliners were beating advancers 1,588 to 1,289 on 527 million shares. On the Nasdaq, losers were beating winners 2,077 to 1,666 on 703 million shares.

On the NYSE, 67 issues had set new 52-week highs while 67 had touched new lows. On the Nasdaq, 75 issues had set new lows while new highs totaled 70.

On the Big Board,

Compaq

(CPQ)

was most active, with 16 million shares changing hands. It was down 1 1/4 to 33 1/8.

On the Nasdaq,

Dell

(DELL) - Get Report

was most active, with 31 million shares changing hands. It was down 1 to 44 7/16.

SG Cowen

downgraded Dell to buy from strong buy.

Focus: Pink Slips

Announcements of corporate restructurings (which almost always include massive job cuts) have been relatively prominent in the news the last couple of days. Particularly notable was

Sony

(SNE) - Get Report

, which said it will cut 17,000 jobs over four years as part of a major restructuring. Investors greeted the news with glee and shares of Sony jumped 5 5/16, or 6%, to 91 1/8.

Elsewhere, today

Fluor

(FLR) - Get Report

said it is cutting 5,000 positions. The company has about 61,000 employees. Fluor was down 1 3/8 to 34 11/16.

Yesterday after the close, in its latest tiding of bad news to Wall Street,

Advanced Micro Devices

(AMD) - Get Report

warned of a "significant" first-quarter loss and that it will take charges during the second and third quarters to cut 300 positions.

TheStreet.com

wrote about AMD

this morning.

AMD's stock is getting hammered today. It was down 1 13/16, or 9.6%, to 17 1/8.

12:59 p.m.: Midday Musings: Technology Retains Its Appeal as Investors Try to Believe

11:53 a.m.: Stocks Post Comfortable Gains

Yesterday many market players seemed to wait for a selloff that never came and put money to work late in the session, helping the

S&P 500

set a record. Today, investors aren't waiting as long.

After an initial bout of weakness failed to materialize into something meaningful, stock proxies have since recovered and were lately all solidly in positive territory and moving higher. Both the S&P and

Dow Jones Industrial Average

are on pace to set new standards.

The Dow was lately up 60 to 9787, having overcome an initial decline to as low as 9680.99. The S&P 500 was lately up 10 to 1293 after trading as low as 1274.76 early on. The

Russell 2000

was up 2 to 402.

While not in record territory, the

Nasdaq Composite Index

continued to set the pace for other major proxies. The tech-fueled index was lately up 35 to 2433. Still, the index remains well below its all-time high of 2510.20; before its recent turnaround, the index had lost over 10% from its record close, set

Feb. 1.

Microsoft

(MSFT) - Get Report

has been leading the Nasdaq throughout, and lately was up 3%. The software giant is considering a settlement with the

Department of Justice

in its antitrust trial,

The Seattle Times

reported.

Initially, Microsoft was the lone tech bellwether in positive ground. Recently, it has been joined by several others, notably

Cisco

(CSCO) - Get Report

and

Sun Microsystems

(SUNW) - Get Report

. The

Nasdaq 100

was lately up 2%.

Internet names were looking to recapture the heady days of late 1998. Several names in the group were rising sharply, including

Amazon.com

(AMZN) - Get Report

and

CNET

(CNET) - Get Report

Throughout the morning, the sector has been led by

Lycos

(LCOS)

, lately up 17%. David Wetherell , chief executive of

CMGI

(CMGI)

, resigned from Lycos' board of directors to protest terms of the merger agreement announced last month with

USA Networks

(USAI) - Get Report

. Wetherell has hired

Morgan Stanley Dean Witter

to canvas other shareholders and help him press for better merger terms,

Reuters

reported. CMGI, which owns 18.5% of Lycos, was lately up 8% at 216 3/4 after trading as low as 185 1/8 in early trading.

TheStreet.com Internet Sector Index

, of which Lycos and CMGI are components, was lately up 19 to 590 and on pace to eclipse its record best of 588.19 set

Jan. 11.

TheStreet.com E-Commerce Index

was higher by 4 to 107.

"Unless they sell 'em off late, this is the day we officially break out," said one market strategist, who requested anonymity. "So much bearishness had built up because we were stuck in a vicious trading range for so long. But it looks like we'll finally hit the magic 10,000."

The market watcher said equities could run into trouble soon after the psychological barrier is breached, particularly the resurgent Internet names. But for now, the tide is definitely rising and those who have been holding out for a big correction are beginning to capitulate, he said.

Among other indices, the

Dow Jones Transportation Average

was up 23 to 3311; the

Dow Jones Utility Average

was off 1 to 299; and, the

American Stock Exchange Composite Index

was up fractionally at 713.

The price of the 30-year Treasury bond was lately up 2/32 to 95 3/32.

Aaron L. Task

11:01 a.m.: Dow Cuts Losses

Stocks drifted lower in the first hour of trading this morning, largely fulfilling pre-opening expectations. But declines have been of limited magnitude for blue-chip proxies, leading traders to presume recent records were not of the mirage variety. Moreover, the

Nasdaq Composite Index

has overcome some early weakness to push into positive turf.

The

Dow Jones Industrial Average

was lately down 12 to 9716, up from its initial decline to as low as 9680.99. The

S&P 500

, once as low as 1274.76, was lately up fractionally at 1283 after

yesterday's record close.

The big story among blue-chips is the announcement

RJR Nabisco

(RN)

will sell its tobacco business to

Japan Tobacco

for $8 billion. RJR, long under pressure to separate its food and tobacco units, was lately up 6%.

In broader market averages, the Nasdaq Comp was up 15 to 2412 while the

Russell 2000

was higher by 1 to 401.

The Nasdaq Comp was taking the high ground, thanks largely to

Microsoft

(MSFT) - Get Report

, lately up 2%. The software giant is considering a settlement with the

Department of Justice

in its antitrust trial,

The Seattle Times

reported.

The story was overshadowing a rare brokerage downgrade of Microsoft --

Cowen & Co.

lowered its recommendation on Mr. Softee to buy from strong buy and did the same to

Dell

(DELL) - Get Report

. Dell was lately off a fraction.

The potential for a Microsoft-DOJ detente was helping take some of the sting out of

last night's profit warning from

Advanced Micro Devices

(AMD) - Get Report

, lately down 9%. The impact was also muted, perhaps, because AMD has repeatedly warned of profit shortfalls in recent years. (

TheStreet.com

delved further into the latest AMD disappointment in a

story this morning.)

Internet stocks, meanwhile, were on the rise behind strength in

Lycos

(LCOS)

, lately up 18%. David Wetherell, chief executive of

CMGI

(CMGI)

, resigned from Lycos' board of directors to protest terms of the merger agreement announced last month with

USA Networks

(USAI) - Get Report

. Wetherell has hired

Morgan Stanley Dean Witter

to canvas other shareholders and help him press for better merger terms,

Reuters

reported. CMGI, which owns 18.5% of Lycos, was lately up 9% at 216 7/8 after trading as low as 185 1/8 in early trading.

TheStreet.com Internet Sector Index

, of which Lycos and CMGI are components, was lately up 12 to 584.

TheStreet.com E-Commerce Index

was higher by 2 to 105.

Among other indices, the

Dow Jones Transportation Average

was up 8 to 3297; the

Dow Jones Utility Average

was down 2 to 298; and the

American Stock Exchange Composite Index

was off 1 to 711.

The price of the 30-year Treasury bond was lately up 5/32 to 95 7/32.

Aaron L. Task

9:59 a.m.: Stocks Falter at Open

Stocks and Treasuries slipped slightly in the early going.

The

Dow Jones Industrial Average

was down 41 to 9587. The

S&P 500

was down 6 to 1277. The

Nasdaq Composite Index

was down 1 to 2397. The

Russell 2000

was down 1 to 399.

TheStreet.com Internet Sector

was down 4 to 567.

TheStreet.com E-Commerce Index

was down 2 to 101.

The 30-year Treasury bond was down 9/32 to 94 25/32, yielding 5.61%.

Most Up at Open -- NYSE

Sony (SNE) - Get Report, up 2 11/16 to 88 1/2

: Sony announced a major restructuring, including job cuts totaling 17,000 over four years. The company will also slice the number of its manufacturing facilities worldwide to 55 from 70.

Most Up at Open -- Nasdaq

Lycos (LCOS) , up 9 3/4 to 93 5/8

CMGI

(CMGI)

Chairman and Chief Executive Officer David S. Wetherell has resigned from Lycos' board of directors. CMGI is the largest Lycos shareholder. Lycos has agreed -- subject to shareholder approval -- to merge with parts of

USA Networks

(USAI) - Get Report

. The newly formed entity is to be called

USA/Lycos Interactive Networks

. Wetherell said in a news release that "it is my opinion that the terms of the USA/Lycos transaction are inadequate for Lycos shareholders. As such, I am resigning from the Lycos board in order to be free to explore the best options available to Lycos shareholders, including the possibility of Lycos remaining independent."

For its part, Lycos said this morning it "remains fully committed to the USA/Lycos Interactive Networks transaction."