Blue-chips spent the day underwater while a tech-stock rally fell apart right near the close.
Relief over inflation was overshadowed by fears about weaker corporate profits, sending the
Dow Jones Industrial Average tumbling 94.71, or 0.9%, to 11,087.47. The
Nasdaq Composite Index, which rode higher for most of the session on optimism over
first-quarter results, lost steam at the end of the session.
The Comp ended the day up 19.9, or 0.5%, to 3913.79, not that bad until you consider it was up about 90 points in morning trading and steadily lost ground throughout the session.
Software heavyweight Oracle could take credit for much of the early power as investors and analysts alike waxed optimistic about the stock and its first-quarter earnings which were released after the close of regular trading.
Morgan Stanley Dean Witter
analyst Chuck Phillips infused even more energy into sector with an upgrade on Oracle this morning to strong buy from outperform. Oracle rose 3.13 to $84.94.
After the bell, Oracle beat the Street by four cents by earning 17 cents in its fiscal first quarter. The software company also announced a 2-for-1 stock split.
Meanwhile, investors couldn't breathe any life into the blue chips, the latest round of tame economic data indicating that economic growth continues to run at more moderate levels.
Retail sales rose 0.2% compared to an average forecast for a 0.3% gain. Excluding autos, sales rose 0.3%, in line with expectations. However, July's results were revised upward, making the August results appear somewhat weaker than they actually are.
The PPI fell 0.2%, vs. an average forecast that it would rise by that amount. The core PPI, which excludes food and energy prices, rose 0.1%, a tenth less-than-expected. The August PPI does not capture the recent rise in oil prices, which is expected to show up in the September report. Energy prices fell 0.2% in the August PPI, while food prices fell 0.7%, their largest drop in at least a year.
"On the inflation front, it's good news as far as a slowing economy and a soft landing. But, it spells out concern for the economically sensitive companies," said Dan Ament, associate vice president and investment executive
at Dain Rauscher
Fed chairman "Greenspan has got to love the data, the Fed is not in the picture anymore. Investors have to come to grips with a slowing economy. We've gone from 20% earnings growth in the
S&P 500, to the mid-teens," he added.
Indeed, investors were having a tough time swallowing that notion, when it came to cautious comments on a number of Old Economy stocks today. Consumer product stocks were a noticeable red spot in that respect with
getting hit. McDonald's fell 0.9% to end at $26.94 after warning yesterday that the weakening euro
cut into its 2000 earnings by as much as 7 cents a share.
Banc of America
cut its rating on the shares to market perform from buy. The stock hit a 52-week low of $26.38 in trading today.
Colgate endured similar tough talk with
Deutsche Banc Alex. Brown
cutting its rating to market perform from buy and slicing the price target to 55 from 62, citing concern about the company's third-quarter earnings.
also had its rating shaved to hold from buy at
and cut the stock from its model portfolio. Colgate lost 15.7%, Gillette gave up 4.7% and the
Morgan Stanley Consumer Index
Out of Focus
"The focus is no longer on the Fed, the focus going into the end of the year will be on earnings, said Jim Maguire Jr., managing director at
"I think there are investors out there who might be looking for a rerun
of last year, but the determining factor is going to be the third quarter. If they get some positive news there, we could see a rally carry us to the end of the year."
In other company news,
, a modem chip maker, bounced 42%, after it set a spinoff of its Internet infrastructure unit. The company is slated to hold an IPO in January 2001 for the business.
Elsewhere in tech,
TheStreet.com Internet Index
, unlike the Comp, held on tight to its gains, ending up 20.59, or 2.6%, to 819.84.
participated in the rise. Amazon rose 5.7% while Yahoo! edged up 0.5%.
Breadth was mixed on improved volume.
New York Stock Exchange: 1,442 advancers, 1,355 decliners, 1.006 billion shares. 130 new 52-week highs, 47 new lows.
Nasdaq Stock Market: 2,222 advancers, 1,725 decliners, 1.67 billion shares. 113 new highs, 66 new lows.
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Most Active Stocks
NYSE Most Actives
- Lucent (LU) : 27.9 million shares.
AT&T (T) - Get Report: 27.5 million shares.
Nortel Networks (NT) : 23.5 million shares.
Nasdaq Most Actives
: 46.8 million shares.
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American Stock Exchange Oil Service Index
was fell 1.1% as the group falls back slightly after the higher price of crude oil sent the index soaring this month.
Philadelphia Stock Exchange Oil Services Index
was also off fractionally, with
heading 0.8% lower.
Financials were mixed after a few days of frenzied activity. Banks leaned to the downside with the
Philadelphia Stock Exchange KBW/Bank Index
falling 0.5% while the
American Stock Exchange Broker/Dealer Index
Telecom stocks were rang up a small gain after a dismal week. The
Nasdaq Telecommunications Index
edged up 3%. Through yesterday, the index was down 8% for the month-to-date.
were higher, and among the most actively traded issues.
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Bonds initially rallied on today's reports on inflation at the wholesale level and retail sales, but the benchmark issue gave back the gains, as closer examination of the reports revealed them to be less than completely favorable.
The 0.2% drop in the August
Producer Price Index
, its largest drop in a year and a half, was largely attributable to a 0.2% drop in energy prices and an extraordinary 0.7% drop in food prices. With the more recent rise in oil prices, the drop in energy prices almost certainly won't be repeated in the next PPI report.
rose just 0.2% (0.3% excluding autos) in August, but the July results were revised up, making August appear weaker than it otherwise would have.
The benchmark 10-year Treasury note, up as much as 10/32 earlier, fell back to end down 15/32 to 99 23/32, its yield at 5.78%.
Meanwhile the 30-year Treasury bond is rather sharply lower, as traders pile onto a development that emerged yesterday -- the 30-year bond once again yielding more than the 10-year note. By pairing short positions in 30-year bonds with long positions in 10-year notes, traders will be able to profit from additional so-called steepening in that portion of the Treasury yield curve.
Elizabeth Roy Stanton wrote about the steepening in
a separate story earlier today.
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European markets raced higher during their sessions.
was turning around a week-long losing streak on gains in tech, media and telecom stocks. It closed 77.30 higher to 6555.50.
Across the channel, the
in Paris finished up 69.02 to 6637.91, and the
in Frankfurt was 57.42 higher to 7063.68.
The embattled euro was lately trading higher at $0.8636.
Asian markets were mixed overnight.
Traders were busy closing out positions before a long weekend in Tokyo, but the mood was upbeat as the market started to focus on the expected jump in fiscal first-half profits of many large technology firms.
index rose 22.76 to close at 16,213.28,
The greenback edged higher against the yen to buy 107.13. in Tokyo trading. The dollar was lately trading at 107.10 yen.
index edged 234.35 points lower, or 1.4%, to close at 16,395.43. Action was largely profit-taking in property shares.
was flat at HK$96.75 ($12.41), while
New World Development
slid 0.15, or 1.2%, to 12.05.
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