Like the song, the situation on Wall Street remains the same as on
Friday: Tech stocks are pushing higher, led by
and Internet favorites, while the rest of the market (save small-caps) is somewhat sloth-like.
Nasdaq Composite Index
lately was up 47, or 1.8%, to 2638, on track to eclipse its previous high of 2598.81 just one week after
suffering one of its worst days ever. The tech-egenic index was being led by
was up 1.8%.
Friday's much-discussed rumor about a takeover of
was apparently unfounded, but U.K.-based
has offered $35 a share to acquire
, thus keeping the focus on networking-equipment makers. Fore was up 36.7%, 3Com was up 4.9%, and
higher by 10.2%.
Internet giants such as
were also gaining, helping
TheStreet.com Internet Sector
index rise 24, or 3.6%, to 705.
Elsewhere in Netland,
was up 13.5% after announcing it has reached one million customer accounts. Meanwhile,
was higher by 27.2% after
Morgan Stanley Dean Witter's
influential Internet analyst Mary Meeker initiated coverage with an outperform recommendation.
Warburg Dillon Read
also started coverage on priceline.com with favorable recommendations.
Blue-chip proxies struggled early and then moved into positive turf about an hour into the session, but they've recently fallen back once again. The
Dow Jones Industrial Average
was down 18 to 10,672 after falling as low as 10,649.86 early on and then rising as high as 10,729.19. The
was up half a point to 1357 following an early decline as low as 1353.76 and subsequent rise as high as 1363.58.
Among Dow components, IBM was adding a further 3.4% to last week's astonishing gains. Dow laggards were being led by
was off 2.4%. The company reported better-than-expected earnings on Friday but analysts expressed concern about sales in its core drug business;
said Merck's earnings growth rate may struggle to stay in double-digits in 2000.
Elswhere in the sector,
was down 2.6% despite posting first-quarter earnings of 45 cents, which beat the 26-analyst estimate by a penny and topped year-ago results of 33 cents. Analyst expressed concern about declining sales of Rezulin and
cut its 2000 earnings estimate by 2 cents to $2.30.
Other drug-makers were holding up relatively well; the
American Stock Exchange Pharmaceutical Index
was down 0.6%.
Energy was the main focus of selling thus far, as traders believe the recent rise in oil prices above $18 a barrel is unsustainable and stocks in the group have become similarly overzealous. The
American Stock Exchange Oil & Gas Index
was down 1.4% while the
Philadelphia Stock Exchange Oil Service Index
was off 4.2%.
lately was up 3 to 435.
"There some profit-taking in the oil stocks because the price of oil is coming down, but I think mostly the market is looking for a catalyst," said Barry Berman, head of stock trading at
Robert W. Baird
. "The market had a big run last week, and a big recovery in tech stocks. They're up today, but the market is not flying, the volume is not pouring through. There's a lot of good news out in tech stocks, that's certainly helping. But to bring the volume in, the market would like to see some positive news."
New York Stock Exchange
trading, advancers were edging declining stocks 1,417 to 1,415 on 383 million shares. In
Nasdaq Stock Market
activity, gainers were leading 2,045 to 1,735 on 582 million shares. New 52-week highs were outpacing new lows 56 to 9 on the Big Board and 76 to 28 on the Nasdaq.
Specifically, Berman said the market is looking for "some confirmation there is no inflation" from economic data due this week, specifically Thursday's
Employment Cost Index
report and Friday's advance
"As long as
the long bond yield stays under 6%, people are comfortable, but it gets a little uneasy as it moves up," he said.
As for how the rest of the day unfolds, the trader noted a trend of days with a stronger opening for "the market to sell off, then rally late," he said. "If that trend holds, it'll be great. You don't want to see the market sell off late."
Yields Rise, but Anxiety Doesn't
Berman's concerns notwithstanding, most equity market participants have been unmoved by the bond market's reversal. This morning's gains, like much of last week's advance, came despite growing weakness in the bond market. The price of the 30-year Treasury bond lately was down 13/32 to 94 18/32, its yield rising to 5.63%. (For more on the fixed-income market, see today's early
"I think if you look at inflation-adjusted interest rates, they're extremely high, almost at record highs," said Paul Rabbitt, president of
in Los Angeles. "There's a discounting mechanism that shows a tremendous amount of fear of inflation coming forward."
But Rabbitt does not believe inflation is in the offing, noting economists are cutting their expectations for 1999 GDP growth to 3% from 4%. "Additionally, the trade gap widened above expectations. Typically, this has slowed the U.S. economy," he said.
European Central Bank's
rate cut earlier this month "puts a lid on the
ability to raise rates," Rabbitt argued. "A higher U.S. rate would strengthen the dollar, already at record highs vs. the euro, which would completely evaporate a source of demand for export products and slow our economic growth."
The market strategist believes the Dow will soon hit his target of 11,000 and the S&P will hit 1400, although he is not upping the targets yet. "Technically the Dow got very extended and the S&P is not, and we saw a little catch-up last week," he said. "Regardless, S&P 500 components are pretty extended technically. It's hard for me to get too excited and expand targets right now."
Monday's Midday Movers
Dow component Union Carbide was down 2 3/8 to 49 3/8 after recording first-quarter earnings of 52 cents a share, 7 cents ahead of the 13-analyst
view but behind the year-ago $1.01.
In other news:
was flying up 3 7/16, or 59.8%, to 9 1/4 after agreeing to be acquired by privately held
Goldman Industrial Group
for $10 a share.
was up 8 5/16 to 208 1/8 following news it's acquiring auction house
Butterfield & Butterfield
for $260 million. Elsewhere in Net strength, E*Trade was up 14, or 13.5%, to 118 after saying it's surpassed 1 million customer accounts.
was up 4 5/16, or 17.9%, to 28 7/16 after
agreed to buy the company in a deal valued at roughly $1.1 billion. First Union was down 1 1/2 to 53 1/2.
was up 2 3/8, or 6.8%, to 37 3/8 on word it's selling its packaging business to
for $830 million. Fort James also announced a buyback program for up to $500 million in stock over the next 18 months. ACX was down 1 5/8, or 11.9%, to 12.
was up 3 5/8, or 6.9%, to 56 3/4 after agreeing to buy
, a unit of Britain's
Cable & Wireless
, in a deal valued at about $885 million. Cable & Wireless was up 2 5/8, or 6.3%, to 44 5/16.
was down 2 1/8 to 52 1/2 after
Credit Suisse First Boston
cut it to hold from buy.
was down 1 5/8, or 8.8%, to 16 3/4 after
Donaldson Lufkin & Jenrette
downgraded the stock to market perform from buy.
priceline.com was soaring 23 15/16, or 27.2%, to 111 7/8 after, as noted above, Morgan Stanley Dean Witter initiated coverage with an outperform. Goldman Sachs started coverage of the stock by placing it on the firm's recommended list -- news of which leaked Friday.
was up 9/16 to 90 5/8 after reporting first-quarter earnings of $1.30 a share, beating the six-analyst estimate of $1.08 but falling below the year-ago $2.01.
was up 3 11/16, or 23.6%, to 19 5/16 after the company told
it's comfortable with 1999 earnings estimates for $1.13 a share, up from the year-ago 94 cents.
was up 1/8 to 70 5/8 after posting first-quarter earnings of $1.02 a share, topping the nine-analyst estimate by 3 cents and moving ahead of the year-ago 88 cents.
Warner-Lambert was off 1 3/4 to 66 1/8 after announcing first-quarter earnings of 45 cents, a penny above the 26-analyst estimate and ahead of the year-ago 33 cents.