Tech Darlings Continue to Shine, Overshadowing Dow Components

But the other sectors' dip downward may be opening a window of opportunity.
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By midday, there was just no stopping the tech giants from doing what they've been doing best: gaining. Wall Street investors continued to keep the spotlight on the


while casting a shadow on the





(MSFT) - Get Report

is up $4 -- that's a lot in a nutshell," said David Baker, managing director of portfolio trading at

Deutsche Banc

. "Continued momentum in tech, continuing to go with the highfliers, that's what's driving us higher."

But while the tech darlings are in flight, the "other" sectors are continuing to dip downward. Investors' undying love for tech has made for a market that is willing to pay the price for these stocks, no matter how high that may be. "The old valuation matrix has been literally kicked out the window," said Brian Gilmartin, portfolio manager at

Trinity Asset Management

. "Three years ago,


(CSCO) - Get Report

was overvalued at 40 times earnings and now it's at 100 times earnings."

Despite today's declining Dow, the market is looking good. But according to Tony Dwyer, chief market strategist at

Kirlin Holdings

, looks can be deceiving. "Basically, while the indices make it look like we're in a bull market, the average stock is in a bear market. Currently, 64% of the


stocks are down for the year, while 52% of Nasdaq stocks are down for the year."

However, Dwyer thinks that this downside may open a window for other staggering sectors. "I think this is creating a good opportunity for the broader market in the beginning of the year and throughout 2000. Portfolio managers are likely to take profits in some of their big winners, which have become fully valued, given the recent run-up after the end of the quarter," he said. "When that takes place, there should be a search for more attractively valued stocks, which is basically the rest of the market."

A record October trade deficit of $25.94 billion and a sharp drop in weekly

initial jobless claims

wasn't wreaking havoc on the stock market. According to Dwyer, the impact "is limited. The market direction is being driven by year-end portfolio adjustment."

Lately, the Dow was looking sluggish, down 82.35, or 0.7%, to 11,142.97, despite Microsoft's shares lifting 3 5/8, or 3.3%, to 112 1/8.

On the Big Board,


(STM) - Get Report

was bouncing up 9 11/16, or 7.6%, to 136 7/16, after

Morgan Stanley Dean Witter

upped its price target.

The Nasdaq remained in positive territory, up 50.87, or 1.4%, to 3672.82. In Nasdaq trading,



was soaring 24 1/4, or 12.2%, to 224 1/4 in the wake of better-than-expected first-quarter earnings and an announcement of a 2-for-1 stock split.

CMGI and



, which was climbing 8 1/4, or 2.5%, to 335 11/16, were doing their share for Internet Sector

index, which was up 14.38, or 1.3%, to 1109.28.

Other major indices were mixed as well, with the broad

S&P 500

edging down 3.55, or 0.3%, to 1409.64, while the small-cap

Russell 2000

was gaining 1.97, or 0.4%, to 463.29.

On the bond front, the benchmark 30-year Treasury was down 30/32 to 96 12/32, with its yield at 6.379%. (For more on the fixed-income market, see today's early

Bond Focus.)

Market Internals

The breath of the market remained negative and the volume was heavy.

New York Stock Exchange:

1,329 advancers, 1,631 decliners, 500 million shares. 49 new 52-week highs, 285 new lows.

Nasdaq Stock Market:

1,979 advancers, 1,918 decliners, 600 million shares. 120 new highs, 86 new lows.

Thursday's Midday Watchlist

By Eileen Kinsella
Staff Reporter



soared 23 1/2, or 11.8%, to 223 1/4 after it

posted a narrower-than-expected loss after yesterday's close and announced a 2-for-1 stock split. The stock was among the Nasdaq's top gainers at midday.

CMGI posted a first-quarter loss of $1.08 a share, smaller than the three-analyst estimate of a loss of $1.76 a share, but down from the year-ago profit of 38 cents a share. CMGI said, excluding items, the company lost 10 cents a share for the quarter. Revenue jumped to $123.7 million in the latest quarter, from $37.4 million a year ago.

The stock split will be distributed Jan. 11 to shareholders of record Dec. 28.


(WMT) - Get Report

inched up 0.3% to 66 3/16 and

America Online


lost 2 3/4 to 86 7/8 after the companies

said they will form a strategic pact to launch a jointly branded Internet access provider. The two companies said they would use cross-marketing efforts, which include Wal-Mart offering AOL software at its stores and joint advertising through print, television and radio.

Friedman Billings Ramsey

raised its 2000 earnings estimates for AOL to 34 cents a share from 32 cents, and raised its 2001 estimates to 50 cents from 49 cents. Analyst Ulric Weil said the deal with Wal-Mart "opens up a whole new set of customers with a different income and demographic profile".

Mergers, acquisitions and joint ventures

Best Buy

(BBY) - Get Report

climbed 2 3/4, or 5.8%, to 50, and


(MSFT) - Get Report

gained 3 to 111 3/8 after the companies said they have entered a deal that includes joint marketing and profit-sharing. Microsoft plans to buy $200 million worth of Best Buy common stock.

First BanCorp

(FBP) - Get Report

was unchanged at 19 15/16 after saying it would buy

First Savings Bancorp


in a stock swap worth $73.97 million. First Savings inched up 9/16 to 18 3/4.

Koninklijke Ahold


rose 1/8 to 27 1/2 after saying it has axed its $1.75 billion takeover plans for

US Pathmark

supermarkets because of opposition from the

Federal Trade Commission




gained 8 5/8 to 234 after it

said it has agreed to purchase closely held


in a stock deal valued at $1.86 billion. Ariba said it expects the transaction to be completed in the second quarter of 2000.



rose 4 13/16, or 29.7%, to 21 1/4 after it said it has agreed to a pact with

Liberty Media


involving direct marketing initiatives over cable. Cendant said Liberty Media would invest $400 million in Cendant, while Liberty's CEO John Malone will buy 1 million Cendant shares. Shares of Liberty Media climbed 3/4 to 47 3/8.

Cox Communications


added 1/16 to 49 1/16 after it said it has entered an agreement with


(ATHM) - Get Report

to jointly develop digital services. Excite@Home slipped 7/8 to 49 5/16.


(IBM) - Get Report

climbed 11/16 to 107 3/4 after saying yesterday afternoon that it has been awarded a deal with

Deutsche Telecom

(DT) - Get Report

to supply the biggest data system warehouse ever. The data system, known as


, which is set to begin development in the third quarter of 2000, will be able to handle 100 terabytes of information.



climbed 1 1/16 to 49 3/16 after it signed a deal with



to develop and market wireless technology and software for business. USWeb gained 3 1/16, or 8.6%, to 38 1/2. 3Com said it will contribute up to $100 million for use in funding the alliance as well as taking an equity stake in USWeb/CKS.

Vodafone AirTouch

(VOD) - Get Report

added 1 3/16 to 49 1/8 after it said it agreed to a pact with the


to equip mobile phones in Britain with text, audio and video services, including news.

Shorewood Packaging


climbed 1 9/16, or 9.5%, to 18 1/16 after it said it has rejected



$17.25-a-share offer, calling it inadequate. Chesapeake fell 1 3/4, or 5.8%, to 28 5/8.

Earnings/revenue reports and previews


Earnings estimates from First Call/Thomson Financial; earnings reported on a diluted basis unless otherwise specified.



(AIR) - Get Report

climbed 1/8 to 21 after it reported second-quarter earnings of 40 cents a share, missing the seven-analyst estimate of 42 cents but up from the year-ago 36 cents a share.

American Greetings

(AM) - Get Report

rose 1 13/16, or 7.8%, to 25 after it posted third-quarter earnings of 81 cents a share, a penny better than the four-analyst estimate but down from the year-ago $1.04. The company said it expects earnings to grow by 35% in 2001 and by 20% in 2002.

Bed Bath & Beyond

(BBBY) - Get Report

slipped 1 5/8, or 5.1%, to 30 7/16 after it reported, after yesterday's close, third-quarter earnings of 22 cents a share, in line with the 19-analyst estimate and up from the year-ago 17 cents. The company said it plans to open five superstores in the fourth quarter and 60 new superstores in fiscal 2000.


(CTAS) - Get Report

slipped 1/8 to 47 3/4 after it posted second-quarter earnings of 43 cents a share, a penny shy of the 12-analyst estimate but up from the year-ago 39 cents. Cintas said 1998 results were restated to reflect the company's acquisition of


in March 1999, accounted for as a pooling of interests.


(FDX) - Get Report

climbed about 1, or 4.1%, to 40 7/16 after it

reported second-quarter earnings of 57 cents a share, beating the 12-analyst estimate of 55 cents but down from the year-ago 61 cents.

GTECH Holdings


was unchanged at 19 15/16 after it posted third-quarter earnings of 65 cents a share, beating the single-analyst estimate of 63 cents a share and up from the year-ago 64 cents.

Offerings and stock actions



rose 3/4 to 17 7/8 after it said it plans to buy back up to 5% of its outstanding stock.

Vitra Technology


gained 22 3/8, or 13.9%, to 184 after it set a 2-for-1 stock split.

Analyst actions

Bear Stearns

rolled out coverage of

American National Can


with a neutral rating. Shares slipped 3/16 to 12 1/2.


said it raised its price target on


(CSCO) - Get Report

to 140 from 90. Cisco gained 2 1/4 to 98 3/16.

Warburg Dillon Read

upped its price target on



to 61 from 44. Shares gained 3 1/2, or 7.9%, to 47 21/32.


raised its price target on



to 75 from 55 and upped its 2001 earnings estimates to $1.50 from $1.40 a share. Shares lost 1/2 to 57 15/16 despite the news.

Goldman Sachs

sliced its rating on

General Mills

(GIS) - Get Report

to market performer from recommended list. General Mills dropped 1 3/16 to 33 1/2.

Warburg Dillon Read began coverage of



as a buy and set a price target of 65. Shares rose 7/8 to 50 7/16.

Merrill Lynch

upped its intermediate rating on



to a buy from accumulate. Kmart inched up 3/8 to 11 3/8.

Bear Stearns began coverage of



with a neutral rating. Shares slipped 1/4 to 9 3/16.


began coverage of

Level 8


as an intermediate, long-term outperform. Shares rose 1 1/2 to 31 3/4.

SG Cowen

initiated coverage of


(MPLX) - Get Report

with a buy rating and a price target of 78. Shares gained 4 1/16, or 8.1%, to 54 1/8.

Goldman Sachs rolled out coverage of

Pinnacle Holdings


with a market outperformer rating. Pinnacle added 3/8 to 36 13/16.

Morgan Stanley Dean Witter

upped its price target on


(STM) - Get Report

to 175 euros from 120 euros and maintained a strong buy rating. STM popped 9 11/16, or 7.6%, to 136 7/16.


Standard Pacific


was unchanged at 11 1/8 after it said it has tapped Stephen Scarborough to become its CEO.

As originally published, this story contained an error. Please see

Corrections and Clarifications.