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Sun's Shining but the Stock Market's Not Looking So Hot

Though a down day in light volume isn't necessarily a bad sign, a technical analyst says.
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No news is good news, but that can make you snooze. Recent small-cap outperformance and growth-stock weakness continued today amid a general malaise on Wall Street.

Owing to today's expiration of stock and index options, traders' desire to await further confirmation the economy isn't overheating, and the fact it's a sunny Friday in New York, market players again find themselves adrift in a sea of tepidity. As lunchtime beckoned on Wall Street, major proxies lollygagged about with a somewhat worrisome negative bent.

"It's the beginning of the first Friday of summer doldrums," said Jay Meagrow, vice president of trading at


. "We're trading like the futures did

this morning, fairly flat. There's nothing really shocking to the upside or the downside."


Russell 2000

continues to outshine (show me the power, child) its blue-chip counterparts. The small-cap proxy was up 0.26 to 448.26, down from its early high of 450.74. Meanwhile, the

Dow Jones Utility Average

continues to drive further into record territory, up 1.17 to 325.78.

At the other end of the value spectrum, big-cap tech bellwethers such as

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MCI WorldCom

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(DELL) - Get Dell Technologies Inc. Class C Report


Sun Microsystems

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continue to struggle. This despite a healthy rally in the bond market, which -- theoretically -- should aid stocks with outstretched valuations.

The price of the 30-year Treasury bond was lately up 18/32 to 92 12/32, its yield falling to 5.79%.

Nonetheless, the

Nasdaq Composite Index

was down 20.17, or 0.8%, to 2522.06. The

Nasdaq 100

was down 0.9%, while the

Philadelphia Stock Exchange Semiconductor Index

was off 1.6%. Internet Sector

index was off 4.63 to 620.16.

While the best-known Net names were on the decline again, there was joy elsewhere in the online sphere.



, up another 7%, continues to bask in yesterday's merger announcement with


. Also,

Hauppauge Digital


was up 37.2% after

Business Week

reported the company will soon announce a joint venture with a leading Internet company to increase use of its technology, which allows television to be broadcast via PCs.

Among blue-chip averages, the Dow Jones Industrial Average was lately down 46.89 to 10,820.14 after rising as high as 10,888.86 early on. The

S&P 500

was down 6.93 to 1332.01.


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American Express

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Johnson & Johnson

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Eastman Kodak


were the biggest losers among Dow components.


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was as high as 73 11/16 early on after receiving

Food & Drug Administration

approval to market its "super aspirin," Vioxx, but lately was down 1.2% at 71 3/8.

Dow gainers were led by

General Motors

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, up 3.4% on news its (still) 80%-owned

Delphi Automotive Systems


will be added to the

S&P 500

after the close on May 27. Delphi was up 6.4%.

As for what the afternoon shall hold, on expiration sessions "people tend to get involved at the opening, then wait for the end of the day," Meagrow said, unable to gauge which direction the tide will turn. "We'll see what happens in the last hour. Whether you participate in the imbalances or not, they move the stocks."


New York Stock Exchange

trading, advancers were leading declining stocks 1,464 to 1,251 on 357.3 million shares. In

Nasdaq Stock Market

activity, decliners led advancers 1,735 to 1,728 on 453.8 million shares.

Not Worrisome, Save Net Stocks

"I think a lull on light volume means an absence of buyers right now; they're pooped out," said Gary Kaltbaum, chief technical analyst at

J.W. Genesis Securities

. "There's not a lot vicious selling, which is a good sign. I'd hate to see a big drop on big volume. I'm not so worried here. But there are places that look real good and ones that look real bad -- bull and bear markets sitting next to each other at the same time."

Specifically, Kaltbaum said small-caps, cyclicals and energy stocks look best, while big-cap technology is "very suspect," airlines have "broken down" and many Internet stocks "have broken support."

Regarding the last, the technician has identified more than 50 Net names down 50% or more from highs of just eight weeks ago. Starting with, many names in the group "went up big, dropped, tried to rally and couldn't, and have dropped below support," he observed. "Big tops are being put in. I think a lot aren't going to come back."

The technician admitted reports of Internet stocks' demise have been exaggerated in the past. But "there are so many new stocks in the sector, you get to a saturation point," he said. "Remember, valuations are ridiculous. Earnings have to back these things up. If not, eventually they'll have to give."

As for what's working, the Russell 2000 is "definitely in a period of outperfomance," Kaltbaum said. "I wish I could define which stocks that means."

The technician is looking for "$10 to $15 stocks" that have "busted out," citing

Computer Network Technology





, and



as examples.

Of late, Computer Network was up 1% and K-Swiss higher by 5%, but QLogic was down 3.3% on news of Chairman Gary Liebl's retirement.

Friday's Midday Movers

By Heather Moore
Staff Reporter



was up 3 15/16, or 37.1%, to 14 9/16 after


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agreed to buy it in an all-stock deal valued at $75 million. Tandy was up 1 7/16 to 77 7/16.


(APLN:Nasdaq) had not yet begun trading at midday. Last night,

Hambrecht & Quist

priced its 2.5 million-share IPO top-range at $14 a share.

Elsewhere in new issues,

David's Bridal

(DABR:Nasdaq) was flat at 13 on volume of 4.2 million shares after

Donaldson Lufkin & Jenrette

priced its 8 million-share IPO below-range at $13 a share. And

Newgen Results

(NWGN:Nasdaq) was down 1 1/4, or 9.6%, to 11 7/8 after H&Q priced its 3.73 million-share IPO mid-range at $13 a share. The company provides customized, outsourced database management, direct marketing and related services for service departments of car dealerships and manufacturers.

In other news:


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, an agricultural equipment maker, was up 1 5/8, or 15.3%, to 12 1/4 after

Business Week's

Inside Wall Street column said some analysts and money pros think the company could be a takeover target. Elsewhere, Hauppauge Digital was rising 4 5/8, or 37.2%, to 17 1/16 after the column said the company plans to announce a joint venture with a large Internet company that broadcasts streaming media programming on the Web. Citing a New York money manager, the column also said the company is forming a marketing alliance with a major e-commerce company. Finally,

Modem Media.Poppe Tyson


was up 2 11/16, or 11%, to 27 1/8 after a bullish mention in the column.



was up 13/16, or 14.4%, to 6 7/16 after

AK Steel

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agreed to buy it for $7.50 a share in stock, or $842 million. AK Steel was up 3/8 to 23 15/16.

Atlantic Coast Airlines


was down 5 7/16, or 24%, to 17 1/4 after

BT Alex. Brown

said the regional airline is seeing yields erode and downgraded the stock to buy from strong buy. The firm also sliced its 1999 earnings estimate for the company to $1.70 from $1.98 a share.

Delphi Automotive Systems was up 1 5/16, or 6.4%, to 21 5/8 on last night's news it will replace



(no relation to this reporter) in the S&P 500 after the close May 27. Moore was down 1 3/16 to 8 1/2. General Motors will complete the spinoff of Delphi May 28.

Grupo Radio Centro

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was up 11/16, or 12%, to 6 7/16 after last night saying its controlling shareholders, the Aguirre family, are considering launching a tender offer for the company's outstanding shares.


was up 4 5/16 to 138 5/8 after DLJ initiated coverage with a buy and a price target of 190.

Rental Service


was up 1 9/16, or 7%, to 23 7/8 after last night dropping plans to acquire



for $430 million. NationsRent, which was down 1/2, or 8.3%, to 5 9/16, said the merger terms restricted its growth potential. Separately, Rental Service said it hired financial advisers to review strategic alternatives and that it still recommends that its shareholders reject a takeover bid from

United Rentals

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, which was up 1 1/4 to 29 7/8.


(REV) - Get Revlon Inc. Report

was up 1 13/16, or 6.2%, to 31 1/16 after

The New York Times



, a seller of fragrances and cosmetics, is in talks to acquire part or all of debt-ridden cosmetics company. Coty is a unit of



, a Dutch consumer products company.

Roper Industries

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was up 1 9/16, or 5.1%, to 32 7/16 after

Salomon Smith Barney

raised it to outperform from neutral with a price target of 37.

Earnings/revenue movers

ADC Telecommunications

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was up 1 5/8 to 49 9/16 after posting second-quarter earnings of 32 cents a share, 2 cents higher than the 21-analyst

First Call

estimate and above the year-ago 25 cents.


(CIEN) - Get Ciena Corporation Report

was up 1 to 27 7/16 after last night recording second-quarter earnings of 1 cent share, including costs for the acquisition of

Lightera Networks

. A Ciena official said the company earned 2 cents after removing the charge. The 11-analyst outlook called for an operating loss of 3 cents vs. the year-ago net profit of 14 cents, which also included charges.