Tech Rebound Pulls Major Indices Further From Session Lows

Volume remains thin ahead of Tuesday's FOMC meeting.

Author:: Justin Lahart
Publish date:: May 17, 1999 3:03 PM EDT

While most stocks were still down a lot, midafternoon buying in tech stocks took the market off its lows.

The move in tech looks like its mostly about a rebound in the

Nasdaq 100

futures -- maybe with a little basket buying in the

Morgan Stanley Dean Witter High Tech

index. There's also been some strength in

Dell

(DELL) - Get Report

and

Applied Materials

(AMAT) - Get Report

ahead of their earnings announcements.

Index buying can have an inordinate amount of influence on days like this, when volume is slim.

"It's been a very quiet day," said one narcoleptic tech trader. "Extremely." Yet the trader suspected that the market might be able to muster a late-day move, as some investors bet that tomorrow's

Federal Open Market Committee

meeting won't be as bad as expected.

The

Dow Jones Industrial Average

was down 95 to 10,818 while the

S&P 500

was off 5 to 1333. The tech-heavy

Nasdaq Composite

was up 5 to 2533 and the

Nasdaq 100

was up 16 to 2141.

TheStreet.com Internet Sector Index

was down 5 to 625, while the

Russell 2000

was down 4 to 439.

2:03 p.m.: Stocks Off Session Lows but Still Down Solidly

To paraphrase

Yogi Berra

, stock markets are efficient, but they take longer.

By midafternoon, the equity short bus seemed to have finally caught up with the bond market's reaction to Friday's greater-than-expected

Consumer Price Index. On very light volume, the major proxies had stabilized, solidly in the red but off their session lows.

The

Nasdaq Composite Index

was off 14 to 2514. Flat Net performance had

TheStreet.com Internet Sector

down 12 to 618, with

Inktomi

(INKT)

putting the most downward pressure on the index.

The

Dow Jones Industrial Average

was down 138 to 10,775. There was plenty of pain to go around on the Dow, but

United Technologies

(UTX) - Get Report

was going back for second helpings, lately down 5 15/16, or 4%, to 135 9/16. The relatively broad

S&P 500

was down 11 to 1327.

Smallish-cap issues were extending their losses, with the

Russell 2000

off 5. The truer-measure

S&P SmallCap 600

had slimmed down 2 to 175.

The bond market, on the other hand, was just waiting for tomorrow's

Federal Open Market Committee

meeting, having gotten all this selling out of its system

Friday. The benchmark 30-year Treasury was lately up 5/32 to 90 27/32, its yield dropping to 5.91%.

Market internals were still very unattractive.

New York Stock Exchange

decliners were out in front of advancers 2,098 to 830 on 424 million shares. On the

Nasdaq Stock Market

, 2,344 decliners were leading 1,486 advancers on 487 million shares.

Most active on the NYSE was

AOL

(AOL)

, up 4 3/4 to 130 on 16 million shares.

Microsoft

(MSFT) - Get Report

was the Nasdaq's most active issue, with 18 million shares changing hands. It was up 1 7/16 to 78 3/8.

Thomas Lepri

12:52 p.m.: Midday Musings: A New Week Brings the Same Old Light-Volume Selloff

12:01 p.m.: Stocks Test Session Lows in Light Trading

It was a morning session reminiscent of Hal Ashby's

Being There

: dominated by Sellers, with most investors, like

Chauncy Gardner

, preferring to watch.

The major proxies were deep in the weeds on very light volume. At midday the

Dow Jones Industrial Average

was testing its session lows, down 147 to 10,766.

IBM

(IBM) - Get Report

and

United Technologies

(UTX) - Get Report

were the biggest drags on the Dow, down 5 5/8 to 233 5/8 and 5 13/16 to 135 11/16, respectively. The relatively broad

S&P 500

was down 15 to 1322.

A technology slump had the

Nasdaq Composite Index

down 31 to 2497. Internet stocks were looking generally lifeless, with

TheStreet.com Internet Sector

down 17 to 613.

Amazon.com

(AMZN) - Get Report

weighed most heavily on the index (see below).

Smallish-cap issues were getting even smaller, with the

Russell 2000

off 6. The truer-measure

S&P SmallCap 600

lost 2.

Rebounding a bit from its huge slide on Friday, the benchmark 30-year Treasury was lately up 9/32 to 90 31/32, its yield dropping to 5.90%.

Market internals were unequivocally ugly.

New York Stock Exchange

decliners were trouncing advancers 2,054 to 769 on 280 million shares. On the

Nasdaq Stock Market

, 2,192 decliners were harassing 1,334 advancers on 328 million shares.

Most active on the NYSE was

AOL

(AOL)

, up 2 5/16 to 127 9/16 on 11 million shares.

Microsoft

(MSFT) - Get Report

was the Nasdaq's most active issue, with 11 million shares changing hands. It was up 9/16 to 77 7/16.

Tech Focus

Among major tech indices, the

Philadelphia Box Maker Index

was down 4 to 242, the

Morgan Stanley High-Tech

was off 18 to 1011, and the

Philadelphia Stock Exchange Semiconductor Index

had fallen 7 to 390.

Investors aren't pleased with

Amazon.com's

(AMZN) - Get Report

announcement today that it will discount every book on

The New York Times

bestseller list by 50%. Amazon was lately down 10 11/16, or 8%, to 121 3/4 on the news.

RealNetworks

(RNWK) - Get Report

was slumping 7 1/4 to 81 1/8 after setting plans for a 4 million-share secondary offering. CEO

Robert Glaser

is selling 475,000 of those shares, while the remainder of the offering's proceeds will go to the company.

TheStreet.com Inc.

(TSCM)

, publisher of this Web site, was lately down 6 5/8, or 14%, to 39 7/16.

Thomas Lepri

10:59 a.m.: Stocks Lower in Light, Volatile Trading

With investors tense ahead of tomorrow's

Federal Open Market Committee

meeting, the market at midmorning was exactly what you'd expect it to be: Light, volatile and down.

"It's just an absence of buyers," said Doug Myers, vice president of equity at

Wachovia Securities

. "After

Friday's CPI numbers came out, a lot of stock managers and portfolio managers and the like had to sit down and reassess."

It looks like a lot of them are still reassessing -- or at least staying out of the market until tomorrow's meeting is done with. At this point, the market expects that the Fed will announce a change in bias toward tightening -- basically telling the market they expect they may have to raise rates and preparing investors for that possibility. It's a far cry from this fall, when people were talking about how many more times the Fed was going to

cut

rates this year, and this winter, when everyone was saying the Fed's on hold forever. That makes the outlook for stocks look a little dangerous.

"The market is not a pleasant place to be right now," said Myers. "I guess this is why the call it work."

The

Dow Jones Industrial Average

was down 78 to 10,835 while the

S&P 500

was down 8 to 1329. The tech-tuffed

Nasdaq Composite

was down 15 to 2513 and

TheStreet.com Internet Sector Index

was off 8 to 622. The

Russell 2000

was down 3 to 440.

Trading in the bond market was light and volatile. The 30-year was lately down 2/32 to 90 22/32.

Justin Lahart

Schwab Trades Increase

Charles Schwab

(SCH)

today said it put through 34% more trades in April than in March. Average daily revenue trades jumped to 207,700 from March's 155,200 and from 101,100 in April of 1998. The company's president and co-chief executive officer, David Pottruck, warned, however, that April's extreme activity isn't being duplicated so far this month. Customers trading habits in May, he said, are closer to that of March.

Caroline Humer