SAN FRANCISCO --
: In an inside-out (and smaller) version of
yesterday's action, stocks overcame early weakness to end higher, with the big three market averages each setting a record.
(for those long): The bond market improved from session lows (clearing the way for a final-hour surge by stocks), but the price of the 30-year Treasury bond still fell 4/32 to 89 2/32, its yield rising to 6.05%. Meanwhile, souring market internals belied gains registered by blue-chip gauges. Moreover, some market players note transportation and utility averages faltered again and still have failed to "confirm" the records set by better-known proxies. (A postclose profit warning by
isn't likely to help the former, either.)
: After posting a profit warning,
slid 36.6%. Also,
New Era of Networks
tumbled 52.6% following an earnings shortfall and red flag about future quarters.
The profit warnings sparked worries about the quality of second-quarter earnings arriving in the coming days and weeks. Much of today's earnings focus centered on
, which fell 4.5% ahead of its profit report. After the bell, the Internet bellwether posted second-quarter earnings of 11 cents per share, up from a penny a share a year ago and vs. the consensus estimate of 8 cents.
Weakness in Yahoo! and other components such as
TheStreet.com Internet Sector
index's loss of 11.45, or 1.7%, to 653.85.
Weakness in Net stalwarts weighed on the
Nasdaq Composite Index
, which traded as low as 2724.37. But afternoon strength in traditional bellwethers such as
helped the tech-bundled index closed up 6.31, or 0.2%, to an all-time high of 2743.09. The
Elsewhere in earnings news,
shed 3.7%, despite posting second-quarter profits of 64 cents a share, a penny ahead of consensus.
were the biggest drags on the Dow, but the blue-chip index closed up 52.24, or 0.5%, to a record 11,187.36 after trading as low as 11,080.35. Similarly, the
rose 7.74, or 0.6%, to a record 1395.86, overcoming an early decline to as low as 1384.99.
Dow gainers were led by
, which rose 3.5% to an all-time best of 117 15/16.
"I think it's encouraging that GE is acting the way it's acting," said John Roque, senior analyst at
Arnhold & S. Bleichroeder
, a New York-based firm that caters to international institutional investors. "GE moving substantially higher says the market has another of its best players on the field" after the stock lagged the averages' run to new highs last week.
The majority of Dow stocks closed with gains -- only nine of 30 finished in arrears, Roque noted, which "tells me the market is more than firm. It's going to take more than rates at these levels to push it lower. It's hard to say things aren't attractive when the markets are at all-time highs."
Blue-chip averages were also aided by
, which jumped 4.7% after
-- once purveyors of the global deflation scenario -- named the industrial giant as potential beneficiary of what it sees as an improving global economic picture.
"A combination of better economic performance in both Asia and Europe suggests increasing portfolio exposure to so-called multinational companies," Charles Clough, chief equity strategist at the firm, wrote in a note today.
Clough recommended a handful of other multinationals in addition to Caterpillar, which posted a mixed performance.
rose 2.4% and
gained 0.9%. But
dipped 0.1% and
In New York Stock Exchange trading, 781.6 million shares traded while declining stocks led advancers 1,686 to 1,275. In Nasdaq Stock Market activity, 1.03 billion shares were exchanged while losers led 2,126 to 1,849. Net 52-week highs led new lows 87 to 53 in NYSE trading and by 133 to 26 in over-the-counter action.
Reflecting the lackluster performance of the advance/decline, broader market averages stumbled. The
fell 3.86, or 0.9%, to 452.69; the
American Stock Exchange Composite Index
fell 2.75, or 0.3%, to 802.14 from yesterday's record-setting close; and the
Value Line New Arithmetic Index
shed 4.32, or 0.4%, to 1052.94.
Yes Virginia, There Are Risks
Despite his short-term bullishness, Roque foresees risks for the stock market, and they are interest rate-based.
"Odds tell us interest rates should move higher. Clearly it's a risk you and I and everybody else are living with," he said. "Short-term, the
stock market is fine. I don't want to paint a picture that's not there.
But often it's not the first break in bonds, it's the break thereafter when stocks get hit. If bonds break down again, I think stocks will have trouble."
The analyst expects the long bond's yield to rise to 6.50% by the end of the third quarter, owing to the fact the prices of oil and other commodities continue to rise, recoveries in Asia and Japan continue and there's no sign of slowdown in the U.S. economy.
As to whether that suggests the
erred last week when it reverted to a neutral bias, Roque replied in a diplomatic (if not somewhat un-PC) fashion.
"It's hard enough to figure out what my wife is going to do, never mind central bankers," he said. "I just think if the belief in the 'New Era' was real, they wouldn't have moved at all. Why bother to tighten? Them tightening tells me they are concerned."
Among other U.S. indices, the
Dow Jones Transportation Average
shed 3.05, or 0.1%, to 3474.90 and the
Dow Jones Utility Average
dipped 0.24, or 0.1%, to 321.14.
Wednesday's Company Report
Earnings estimates from First Call; new highs and lows on a closing basis unless otherwise specified. Earnings reported on a diluted basis unless otherwise specified.
Aluminum manufacturer and Dow component Alcoa sliced off 2 3/8 to 61 3/8 after posting second-quarter earnings of 64 cents a share, a penny above the 16-analyst consensus and up from last year's 62 cents. The stock has been rising in recent sessions ahead of the news.
Yahoo! scratched off 7 15/16 to 167 1/16 ahead of its second-quarter earnings report, due after the close today. Yahoo! also inked a broad marketing deal with U.K. pay-TV broadcaster
British Sky Broadcasting
. The deal covers Yahoo!'s U.K. and Ireland properties. British Sky Broadcasting lost 1 1/4 to 56.
Mergers, acquisitions and joint ventures
picked up 1 7/8, or 5.1%, to 38 7/16 after it said it will exchange its $2.85 billion in
stock -- 50.3 million shares -- for AT&T cable TV networks with 495,000 customers. Cox said that it will also get $750 million in "other consideration, including cash" under the deal. Telephone added 1 5/8 to 58 1/4.
tumbled 3 15/16, or 12.8%, to 26 15/16 after its board yesterday unanimously rejected the
takeover offer from rival
-- this one worth about $637 million, or $37.50 a share. Oneida issued a rather spooky statement calling the bid "illusory," and said that Libbey's desire to negotiate amounts to "nothing more than efforts to obtain access to Oneida's confidential and proprietary business information."
U.S. fund-management firm
sizzled up 4 5/16, or 14.6%, to 33 7/8 on a
Wall Street Journal Europe
report that German insurance colossus
is in talks to buy all or part of the company in a deal worth as much as $5 billion.
grew 1 15/16 to 45 15/16 after setting an alliance with
to collaborate on a number of Internet-based initiatives, including the development of high-speed content to be deployed over RCN's fiber optic network. Lycos surged 3 7/16 to 107 1/4.
Earnings/revenue reports and previews
added 1/16 to 7 after reporting fourth-quarter earnings of 25 cents a share, 4 cents higher than the five-analyst view but below the year-ago 36 cents.
collapsed 3 1/16, or 16.3%, to 15 3/4 after saying it sees second-quarter earnings of 37 cents a share, which would meet the two-analyst forecast and beat the year-earlier 33 cents. The company said its revenue has been hurt by a shift in the timing of product expansions at certain retailers.
Discount Auto Parts
sloughed off 9/16 to 22 5/8 after reporting fourth-quarter earnings of 47 cents a share, in line with the five-analyst forecast and a penny above the year-ago figure.
HCR Manor Care
plunged 4 1/8, or 16.8%, to an annual low of 20 3/8 after last night saying it expects to earn only 30 cents to 35 cents a share in its second quarter, well below the 14-analyst call for 44 cents and close to last year's 32 cents. The company said the shortfall was partly due to delays in a January agreement to sell 28 assisted living residences to
for $200 million. The company said that it had yet to sell seven of those facilities.
slipped 1 1/8 to 43 1/4 after saying its third-quarter earnings will come in around $1.15 to $1.20 a share due to a shortage of transmissions and unexpected personnel costs. The six-analyst estimate called for earnings of $1.25 vs. the year-ago 72 cents.
NCI Building Systems
dropped 3 3/4, or 16.4%, to 19 3/16 after it warned yesterday that its third-quarter earnings will be 68 cents to 70 cents a share, below the seven-analyst consensus of 82 cents but up from last year's 58 cents.
New Era of Networks split in half, losing 21 9/16, or 52.6%, to 19 7/16, after warning last night it will report a second-quarter loss of 12 cents to 22 cents share, significantly below the nine-analyst prediction for a repeat of the year-ago profit of 12 cents. Today,
Credit Suisse First Boston
downgraded the stock to buy from strong buy and decreased its price target to 26 from 70. Both
Warburg Dillon Read
slashed the stock to hold from strong buy, and
deflated it to market performer from outperform.
declined 3 3/8, or 23.1%, to 11 5/16 after last night saying it expects to report fourth-quarter earnings of 18 cents a share, which would be a dime below the 10-analyst estimate of 28 cents but above the year-ago 17 cents. The company also said it will cut its worldwide workforce by 10% as part of a restructuring to focus on research and development. Today,
Deutsche Banc Alex. Brown
downgraded the stock to market perform from buy and
cut it to hold from buy.
plummeted 9, or 25.2%, to 26 3/4 after it warned that its third-quarter earnings will be 38 cents to 39 cents a share, below the 22-analyst view of 41 cents.
Donaldson Lufkin & Jenrette
dropped it to market perform from buy and
dropped it to neutral from buy.
Waste Management dwindled 19 5/8, or 36.6%, to an annual low of 33 15/16 after last night warning its second-quarter earnings would be a malodorous 67 cents to 70 cents a share, missing the 14-analyst forecast of 78 cents but rising above the year-ago 41 cents. The company blamed lower-than-expected North American revenue, and said the revenue shortfall will hurt future quarters. Today, Merrill Lynch cut the stock to near-term neutral from buy, Deutsche Banc Alex. Brown cut it to market perform from strong buy, Credit Suisse First Boston cut it to hold from strong buy, Goldman Sachs cut it to market perform from the firm's recommended list.
joined Waste Management in the dumps, losing 4 3/16, or 22.3%, to 14 5/8, after yesterday posting third-quarter earnings of 30 cents a share, 2 cents under the 12-analyst view but up from last year's 20 cents.
Offerings and stock actions
, an online music retailer, sung up 9 15/16, or 71%, to 23 15/16 after
Ferris Baker Watts
priced its 8.4 million-share IPO top-range at $14.
tacked on 9/16 to an annual high of 10 after DLJ pushed it up to buy from market perform.
Caterpillar inched up 2 13/16 to 62 1/8 after
analyst David Raso reiterated his buy rating for the stock, praising the company's recent cost-cutting initiatives.
swelled 7 13/16, or 23.5%, to 41 1/16 after
BancBoston Robertson Stephens
raised it to strong buy from buy. The firm also set a 12-month price target of 60.
climbed 1 7/16, or 6.6%, to 23 3/8 after DLJ started coverage with a buy and Goldman Sachs placed the stock on its recommended list.
Shop at Home
jumped 2 3/16, or 27.3%, to 10 1/4 after Prudential started coverage with a strong buy.
skidded 1 1/2, or 5.7%, to 25 after
Morgan Stanley Dean Witter
lowered it to neutral from outperform. Uh, a little late, guys -- the warning was last week.
chopped off 3 1/2, or 11.5%, to 26 7/8 after Merrill Lynch cut the stock to near-term neutral from accumulate. Yesterday, the company said it expected its production of platinum group metals to drop 8,000 ounces from the first quarter.
picked up 1 1/4 to 42 3/16 after
upped it to buy from neutral.
tacked on 5/8 to 17 11/16 on news that it opened its online music store today, celebrating the launch with -- ooh! ooh! -- a free download of
slipped 1 1/4 to 28 1/2 on a
Wall Street Journal
report that the
Securities and Exchange Commission
sent the Irish drug firm a comment letter in January raising questions about its accounting procedures. Elan, lowered by SG Cowen to buy from strong buy, said it expected the SEC inquiry to be resolved in the next couple weeks.
explored the accounting issues at Elan.
shaved off 3 1/8, or 9.3%, to 30 7/16 on news that President and CEO Sven-Christer Nilsson resigned in the face of the board's criticism over the company's slow restructuring process.
, owner and licenser of the
name, rocketed 7 15/16, or 107.6%, to an all-time high of 15 3/8 after announcing yesterday it will soon unveil "the official portal site for comedy on the Internet." Investor Daniel Laikin told
Dow Jones Business News
, "If you look at this company as an Internet play, it should be a $120 to $150 stock." Along with a partner, Laikin holds a 21.9% stake in the company, which has a float of less than a million shares.
fell 1/2, or 5.7%, to 8 1/4 after its Kaiser Aluminum & Chemical unit declared force majeure at its Gramercy, La., alumina refinery following a explosion Monday that shut down the plant. Kaiser Aluminum said it is working with customers to help them find alumina from alternate sources.
Several defense stocks benefited from remarks by the
, saying Europe's efforts to produce new weapons at lower costs will spark a number of mergers among U.S. and European defense firms within months.
gained 5 1/2, or 8%, to 74 5/16 and
vaulted 3 15/16, or 5.6%, to an all-time high of 74 15/16, to name a couple.