Traders Fiddle While Techs Burn

Maybe it's the hot Net IPOs, but market players are taking a big morning decline in stride.
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Sure, the market's getting shredded here early this afternoon, with gargantuan techs pacing the tumble. But it seems traders and other assorted market players are taking the whole thing in stride. No big whoop. (Really.)

While stocks were getting hammered, the steep downdraft hasn't hampered some market newcomers, namely

Gadzoox Networks




(DNA:NYSE), which were making their trading debuts today. Gadzoox was up 238.3%, while Genentech was up 24%.

Big tech stocks were leading the way lower. The tech-beefy

Nasdaq Composite Index

was down 89, or 3.1%, to 1380. And if there's a major market index that was due for a break, it would be the Nasdaq Comp, which as of yesterday's close was up 29% year-to-date. Meanwhile, other tech sector gauges were taking a pounding. The

Nasdaq 100

was down 3%; the

Philadelphia Stock Exchange Semiconductor Index

was down 3.5%; and the

Morgan Stanley High-Tech 35

was off 4%.


(MSFT) - Get Report

, which bested estimates when it reported earnings

last night, was off 4.7%. The software titan also warned of a revenue slowdown for fiscal 2000. Microsoft was also most active on the

Nasdaq Stock Market

with 29.6 million shares changing hands.


(IBM) - Get Report

, which also beat estimates yesterday, was off 4.2%. Big Blue was the biggest drag on the

Dow Jones Industrial Average

, accounting for over 30 points of the Dow's decline. As of yesterday's close, IBM was up 46%, year-to-date.

The Dow was down 142, or 1.3%, to 11,045. Meanwhile, the

S&P 500

was down 27, or 1.9%, to 1380.



, also exceeded estimates when it reported earnings this morning. Lucent posted third-quarter earnings of 26 cents a share, four cents better than the 27-analyst prediction and up from 17 cents a year ago. Still, the stock was down 7.3% and most active on the

New York Stock Exchange

with 17.9 million shares changing hands. Going into today's session, Lucent was sporting a year-to-date advance of 39.8%.

Jay Suskind, head of institutional equity trading at

Ryan Beck

, said stocks had run up so nicely in anticipation of positive earnings it was simply a matter of 'buy on the rumor and sell on the news.' Suskind sees today's selloff as a short-term setback.

"You need an excuse to take some profits," he said. "I don't sense anyone throwing the towel in."

Others cited concern over earnings prospects going forward as another reason for the market's tumble.

Like yesterday, a slew of companies reported better-than-expected earnings today. Among this morning's earnings-estimate beaters (to name just a few):

General Motors

(GM) - Get Report


Johnson & Johnson

(JNJ) - Get Report


Texas Instruments

(TXN) - Get Report

, and

Donaldson Lufkin & Jenrette


. JNJ and DLJ (something in the Js?) were each up a fraction but GM was down 1.1% and Texas Instruments off 4.3%.

Peter Boockvar, equity strategist at

Miller Tabak Hirsch

, said around midmorning before stocks bottomed, that the market was just taking a breather.

"We're back to where we were early last week," he said. "I don't think it's anything to worry about."

"We're just see profit-taking" on the earnings numbers, Boockvar said. "That's really it."

While earnings have been a focus for the market this week, looking ahead,

Federal Reserve


Alan Greenspan's

is slated to give congressional testimony on Thursday on the economy and monetary policy.

Boockvar said going back to 1993, bonds have moved, on average, up or down approximately a full point on


testimony and the following week the move up or down has been double that.

The 30-year bond was lately up 2/32 to 91 2/32, yielding 5.90%. (For more on the fixed-income market, see today's early

Bond Focus.)

In the Internet arena, Internet Sector

index was down 19, or 3.1%, to 597.62.

(AMZN) - Get Report

was off 6%, and was the biggest loser in the index.

Small-caps were also getting hurt. The

Russell 2000

was down over 7, or 1.6%, to 454.

Breadth, as one would expect on a day of a rather steep selloff, was negative.

On the NYSE, decliners were leading advancers 1,938 to 844 on 427.6 million shares. On the Nasdaq, losers were beating winners 2,639 to 1,048 on 644.5 million shares.

On the NYSE, 30 issues were trading at new 52-week highs while 29 had touched new lows. On the Nasdaq, 61 issues were at new 52-week highs while new lows totaled 30.

Meanwhile, among other indices, the

Dow Jones Transportation Average

was down 0.8%, the

Dow Jones Utility Average

was up fractionally and the

American Stock Exchange Composite Index

was down 1.4%.

Tuesday's Midday Watchlist

By Heather Moore
Staff Reporter

On a day otherwise starved of good news, it's nice to know that investors can still look at initial public offerings -- especially of the Internet food group -- as a nice slice of chocolate cake.


was popping up 23 1/4, or 24%, to 120 1/4 after last night

J.P. Morgan

priced its 20 million-share IPO top-range at $97. The price range for the biotech company's first offering was raised to $88 to $98 from $85 to $95. The company, whose parent is

Roche Holding

, develops, manufactures and markets pharmaceuticals.

Among other new issues:

  • Convergent Communications (CONV:Nasdaq) was up 6 3/16, or 41.3%, to 21 3/16 after Goldman Sachs priced its 8.4 million-share offering top-range at $15. The company is a data and voice communications services provider. The price range for the offering was raised to $13 to $15 from $11 to $13.
  • Gadzoox Network was rocketing up 50 1/16, or 238.3%, to 71 1/8 after Credit Suisse First Boston priced its 3.5 million-share offering above-range at $21. The company makes products that connect computer systems to data storage services. The price range for its offering was raised to $18 to $20 from $9 to $11.
  • Finally, Talk City (TCTY) was up 2, or 16.7%, to 14 after Lehman Brothers priced its 5 million-share IPO top-range at $12. The company is an online communities provider. The price range for its offering was raised to $10 to $12 from $8 to $10.

Mergers, acquisitions and joint ventures



was down 1 7/16 to 99 on news it's formed a $70 million venture capital fund with partners that include Paul Allen's

Vulcan Ventures

. The venture capital fund will be called

Lycos Ventures


Earnings/revenue reports and previews

IBM was down 5 5/8, or 4.2%, to 129 after last night recording second-quarter earnings of 91 cents a share, topping the 21-analyst prediction of 88 cents and moving ahead of the year-ago 75 cents. Today, Credit Suisse First Boston raised its price target on IBM to 155 and reiterated its buy rating. BancBoston Roberston Stephens lifted its 1999 earnings view to $3.90 from $3.78, and Bear Stearns lifted its 1999 earnings view to $3.85 from $3.80.

Microsoft was down 4 5/8, or 4.7%, to 93 3/4 after last night warning of a revenue slowdown for fiscal 2000. The software giant also posted fourth-quarter earnings of 40 cents a share, 4 cents better than the 26-analyst estimate and up from the year-ago 25 cents.


(SAP) - Get Report

, the German software company, was down 11/16 to 33 13/16 after saying its second-quarter net income fell 7% to 142 million euros, down from the year-ago 152 million euros, while income before taxes fell 7% to 248 million euros, down from the year-ago 268 million.



was up 2 7/16, or 5.2%, to 49 7/8 after last night reporting second-quarter earnings of 60 cents a share, 5 cents higher than the five-analyst estimate and significantly ahead of the year-ago 15 cents The company also set a 2-for-1 stock split.

In other earnings news:

Analyst actions

ISS Group


was down 11 13/16, or 30.8%, to 26 9/16 after Goldman Sachs downgraded the stock to market outperform from the firm's recommended list. Goldman cited the stock's recent run-up and said the company is moving into a "seasonally slower" third quarter. Yesterday, ISS met second-quarter earnings estimates of 3 cents a share.

Continental Airlines

(CAL) - Get Report

was up 7/8 to 42 5/16 after

Donaldson Lufkin & Jenrette

upgraded the stock to buy from market perform.