Unconvincing Rebound Leaves Wall Streeters Wary

The major indices finished higher, but the Dow suffered a late breakdown and players saw continued causes for concern.
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SAN FRANCISCO -- Stocks bounced today in a move reminiscent (to some) of a

Domino's

pizza: It was delivered in timely fashion but lacked flavor and ultimately wasn't worth the calories.

After last week's dismal showing, stocks enjoyed a bit of a lift early on. In addition to "oversold" conditions generated by recent selling, today's move was aided by the dollar, which climbed to 105.68 yen from 104.20 late Friday after the

G7

issued some

supportive comments about the greenback.

But even at its apex few equity players were 'buying' the upturn, noting a lack of compelling volume. Their skepticism was verified as major averages closed well below session highs after falling demonstrably in the final hour.

After trading as high as 10,402.49 at midmorning and trading at 10,377.16 with about 45 minutes left in the session, the

Dow Jones Industrial Average

closed up 24.06, or 0.2%, to 10,303.39.

Gains by

General Electric

(GE) - Get Report

,

AlliedSignal

(ALD)

and

Procter & Gamble

(PG) - Get Report

ensured a positive session for the Dow.

J.P. Morgan

(JPM) - Get Report

and

IBM

(IBM) - Get Report

proved the average's greatest drags.

The

S&P 500

followed as similar path as the Dow, closing up 5.95, or 0.5%, to 1283.31 after trading as high as 1295.03. The index did, however, avoid falling into a technical correction after closing

Friday just a fraction short of a 10% decline from its all-time high.

Tech gauges -- of both the traditional and Internet variety -- were the best relative performers today, although they too failed to sustain intraday heights. The

Nasdaq Composite Index

closed up 21.34, or 0.8%, to 2761.75 after trading as high as 2794.16.

TheStreet.com Internet Sector

index rose 11.39, or 1.8%, to 629, albeit off its best of 642.03.

The Comp was led by

Intel

(INTC) - Get Report

and

Sun Microsystems

(SUNW) - Get Report

, which rose 4.2% after an upgrade from

Credit Suisse First Boston

. The

Nasdaq 100

rose 1.1%.

The DOT got a lift from

CMGI

(CMGI)

, which leapt 9.7% ahead of earnings. After the close the "Internet incubator" announced fourth-quarter profits of $4.24 a diluted share (including asset-sale gains) vs. a loss of 30 cents a year ago. The six-analyst estimate was for profits of $4.08.

The small-cap

Russell 2000

rose 4.77, or 1.1%, to 421.86, but it's still down for 1999 (by 0.10). That, of course, means it's also below its 1997 close of 437.02.

What Kevin Spacey Movie Is This Like?

"It's the usual suspects," Charles Payne, president and chief analyst at

Wall Street Strategies

, said of today's gainers, noting CMGI and Sun Microsystems.

He called the action in

Ariba

(ARBA)

"mind-boggling"; after a huge upswing last week, the stock rose as high as 198 5/8 before closing off 0.5% to 175 3/8.

Additinally, he noted

priceline.com

(PCLN)

and

eBay

(EBAY) - Get Report

enjoyed "no follow-through" from recent gains, while

uBid

(UBID)

jumped 29.6% after a

Merrill Lynch

upgrade.

Of the big picture, Payne expressed disappointment.

"In the last three weeks we've had so many instances when the market came out of the gate really strong, then around three o'clock we get the moment of truth," the strategist said. "It's a good thing we weren't down today

at that hour. In the last couple of hours

today declining issues doubled and volume is light. It's tough to get excited about this. I'd be real happy to get a rally when we close at the high with breadth. "

Hoping for a "one-two punch" of no

Fed

action and strong earnings, Payne expects a strong move for stocks in the fourth-quarter, but wonders "just what it will take to get the masses involved."

In

New York Stock Exchange

trading today, 780.8 million shares were exchanged while advancers led declining stocks 1,753 to 1,238. In

Nasdaq Stock Market

action 936.8 million shares traded while gainers led 2,028 to 1,802. Still, new 52-week lows bested new highs 248 to 22 on the Big Board and by 119 to 63 in over-the-counter trading.

Financial Concerns

"I expected a bounce and you're getting it," said Gary Kaltbaum, chief technical analyst at

GSG Securities

in Orlando, Fla. "Even with the market doing well today, J.P. Morgan and

Merrill Lynch

(MER)

are down. Those are important names that need to be acting well."

J.P. Morgan slid 3.6% and Merrill Lynch lost 3.2% as most financials lagged; the

Philadelphia Stock Exchange/KBW Bank Index

shed 2.1% while the

American Stock Exchange Broker/Dealer Index

slid 0.7%. The action left many questioning the validity of the rally in major stock proxies.

Kaltbaum attributed financials' struggles to the performance of the bond market, where the price of the 30-year Treasury bond fell 25/32 to 101 10/32, its yield rising to 6.03%.

"I think the direction of interest rates is up," he said. "The only reason they came down

last week is a flight to quality. If we go through 6.25% it will have ominous consequences for a market already on the defensive."

Being a stock-market technician, Kaltbaum did not deign to predict whether the long bond yield will crack that level. But utility stocks have "broken down," as have financials such as

Fannie Mae

(FNM)

and

Freddie Mac

(FRE)

, which are "the biggest proxies of interest rates," he observed. "Then you get gold. I don't think anything good comes from gold going higher in price."

Gold futures soared 5.2% to $283.80 the ounce in New York today following the announcement by 15 European central banks of a five-year moratorium on new gold sales. Mining stocks such as

Battle Mountain Gold

(BMG)

and

Placer Dome

(PDG)

were among the biggest percentage gainers, while the

Philadelphia Stock Exchange Gold & Silver Index

leapt 21.2%.

In a research report this morning, Kaltbaum suggested investors "use any short-term bounce at this juncture to lighten up."

It's a sentiment shared by many on Wall Street.

Among other indices,

Dow Jones Transportation Average

fell 16.57, or 0.6%, to 2862.45; the

Dow Jones Utility Average

dipped 1, or 0.3%, to 293.73; and the

American Stock Exchange Composite Index

rose 7.44, or 1%, to 779.23.

Elsewhere in North American equities, the

Toronto Stock Exchange 300

soared 132.32, or 2%, to 6895.70 and the

Mexican Stock Exchange IPC Index

jumped 74.88, or 1.5%, to 5055.76.

Monday's Company Report

By Tara Murphy
Staff Reporter

(

Earnings estimates from First Call/Thomson Financial; earnings reported on a diluted basis unless otherwise specified. New highs and lows on a closing basis unless otherwise specified.

)

Intel

(INTC) - Get Report

jumped 2 5/8 to 78 1/4 after it unveiled its most-recent Pentium III line of microprocessors and the Intel 810E chipset, which enables ordinary Celeron-chip PCs to be upgraded to use Pentium III chips. Intel validated a statement made by

Rambus

(RMBS) - Get Report

that it pushed back the 820 Chipset debut as a result of "platform validation issues that may result in memory errors." Intel said that it developed two Pentium III processors, operating at 533-megahertz and 600-megahertz clock speeds that work with a faster 133-megahertz bus, the data nucleus, which exchanges data between components.

Rambus plummeted 12 1/16, or 16.9%, to 59 1/16 after underwriter

Morgan Stanley Dean Witter

downgraded the shares to outperform from strong buy and

SG Cowen

cut them to neutral from buy.

Mergers, acquisitions and joint ventures

Aurora Foods

(AOR) - Get Report

slid 5/8 to 14 3/16 after it said it is buying

Kellogg's

(K) - Get Report

Lender's Bagels

business for $275 million. Shares of Kellogg fell 5/16 to 36 11/16.

Calpine

(CPN)

hopped 1 1/16 to 82 15/16 after it announced that it would pay

Florida Power & Light

affiliate

FPL Energy

and

Caithness

roughly $78 million for

Calistoga

geothermal power plant. The deal is expected to close in October.

CBS

(CBS) - Get Report

skidded 7/16 to 46 1/4 after it said that it bought a 40% interest in online women's consumer site the

Women's Consumer Network

. The transaction calls for CBS to provide $50 million worth of advertising for the Network over its various media outlets including television and radio. CBS said the its radio division

Infinity

(INF) - Get Report

would receive a portion of the interest. Shares of Infinity climbed 1/2 to 27 3/16.

Cirrus Logic

(CRUS) - Get Report

advanced 1 5/16, or 12.9%, to 11 7/16 after it said it would provide

Microsoft

(MSFT) - Get Report

with chips that would power future portable music players. Cirrus said its new

Maverick

Internet audio chips would energize Microsoft's

Windows Audio Media

format, possibly by Christmas. Microsoft mounted 1/2 to 91 7/16.

Dell

(DELL) - Get Report

and

IBM

(IBM) - Get Report

announced an expansion of their $16 billion technology services pact, adding a $6 billion deal in which IBM will be a key supplier of computer services to Dell corporate customers. Dell popped 5/16 to 44 1/16, while IBM shares tumbled 2 to 123.

DQE

(DQE)

division

Duquesne Light

said

Orion Power

has agreed to pay $1.705 billion for some of its assets including seven of its power plants in Ohio and Pennsylvania. Orion, which is comprised of affiliates of

Goldman Sachs

(GS) - Get Report

and

Constellation Energy

(CEG)

, was the highest bidder for the facilities, which went up for sale last year. The sale was an effort by Duquesne to leave the generating business. Shares of DQE bounced up 9/16 to 37 3/4.

Federal Mogul

(FMO) - Get Report

hopped 3/8 to 24 7/8 after it announced plans to put its $700 million lighting, wiper-blade and fuel divisions up for sale, in an effort to concentrate on core businesses. The divisions, which has roughly 5,400 employees at 14 manufacturing plants, produce

Wagner

,

Blazer

,

Zanxx

and

Signal-Stat

lighting products,

Anco

wind shield blades and

Carter

fuel system parts.

Grupo Mexico

on Friday said it was offering $26 a share for

Asarco

(AR) - Get Report

, which is above

Phelps Dodge's

(PD) - Get Report

bid for Asarco. Asarco shares advanced 3 3/8, or 14.3%, to 26 15/16, while Phelps jumped 2 1/16 to 56 5/8.

Separately, Phelps' other takeover target

Cyprus Amax

(CYM)

, bounced 15/16, or 5%, to 19 9/16 after it said that it was seeking other potential partners. Cyprus and Asarco were set to merge before Phelps launched an unsolicited bid for the two companies.

Harris

(HRS)

climbed 15/16 to 28 5/16 after it said that it and seven other telecom companies have joined to make a bid for a $1.9 billion

Federal Aviation Administration

plan to improve its communications infrastructure. The winner of the three-year contract, which has an option for a 12-year extension, would be responsible for replacing more than 35,000 circuits, improving switching and routing services.

Ameritech

(AIT) - Get Report

,

Bell Atlantic

(BEL)

,

BellSouth

(BLS)

,

Raytheon

(RTN.A)

, Sprint and

U S West

(USW)

are all part of the bidding group.

Heinz

(HNZ)

advanced 11/16 to 43 3/4 after it said it is purchasing a 19.5% stake in

Hain Food Group

(HAIN) - Get Report

, a nearly $100 million investment, confirming a report in

The Wall Street Journal

. Hain slipped 2 3/8, or 8.3%, to 26 1/16 on the news.

Separately, Heinz said that it expects its fiscal 2000 earnings to meet the analysts' consensus estimate of $2.54.

If the companies agreed to sell off certain assets, an

MCI WorldCom

(WCOM)

acquisition of

Sprint

(FON)

might obtain the regulatory go-ahead, federal officials said, the

Journal

reported. MCI skidded 2 1/4 to 73 7/8, while Sprint shares slid 1/2 to 52 1/2.

NatWest

(NW)

soared 16 11/16, or 12.9%, to 145 1/2 on news that

Royal Bank of Scotland

was planning to launch a takeover offer for the bank. The Bank of Scotland has already expressed interest in acquiring NatWest.

Nike

(NKE) - Get Report

bounced 2 9/16 to 56 3/8 after it said it will allow online sporting goods dealer

Fogdog Sports

to sell its full product line, reversing an earlier stance of blocking Web-only stores from selling its goods,

The New York Times

reported.

Separately, Fogdog Sports announced its plans for a $60 million IPO.

Credit Suisse First Boston

,

J.P. Morgan

,

Thomas Weisel Partners

and

Warburg Dillon Read

are serving as underwriters for the deal.

Home shopping network

ValueVision

(VVTV)

advanced 1 3/4 to 27 7/8 after it said it finished the $28 million sale of two Houston television stations to privately held

Pappas Telecasting

and will use the proceeds for business growth. ValueVision said that, as a result of the sale, it would assume a third-quarter pre-tax gain of $22 million, bringing the company's cash to about $290 million. The latest deal will allow the company to join

NBC

in an effort to re-brand its TV shopping network as

SnapTV

and its online shopping site as

SnapTV.com

.

Earnings/revenue reports and previews

Osteotech

(OSTE)

popped 3/4, or 5.4%, to 14 9/16 after it warned that it expects third-quarter revenue and earnings to fall short of analyst estimates due to fewer surgical procedures and competitive pressures. Osteotech said it expects earnings of 15 cents to 17 cents a share, well below the 10-analyst estimate of 24 cents a share, and lower than the year-ago 19 cents. The company said it expects to return to more favorable earnings growth in the fourth quarter.

Offerings and stock actions

FDX

(FDX) - Get Report

, parent of

Federal Express

, mounted 5/16 to 35 1/2 after it said it would buy back up to 15 million shares, or about 5% of the total outstanding.

General Mills

(GIS) - Get Report

mounted 3/8 to 82 9/16 after it said it set a 2-for-1 stock split to be paid Nov. 8 to shareholders of record Oct. 8.

Analyst actions

AGL Resources

(ATG)

slid 9/16 to 16 3/16 after

PaineWebber

cut its fourth-quarter earnings estimate to 3 cents a share from 13 cents and its fiscal 2000 estimate to $1.05 from $1.25.

Air Express

(AEIC)

mounted 1 1/4, or 6%, to 22 1/8 after Merrill Lynch upped its rating to a near-term accumulate from neutral.

Barclay's

(BCS) - Get Report

jumped 6 7/16, or 5.6%, to 119 15/16 after

Donaldson Lufkin & Jenrette

upped its rating to buy from market outperform.

Baxter

(BAX) - Get Report

climbed 1 1/8 to 60 1/2 after

Lehman Brothers

started coverage of the stock at buy with a price target of 76.

Celgene

(CELG) - Get Report

advanced 2 1/8, or 8.5%, to 27 after

U.S. Bancorp Piper Jaffray

rolled out coverage of the stock as a strong buy and set a price target of 34.

Conoco

(COCA)

climbed 5/16 to 26 1/4 after DLJ upgraded its shares to top pick from buy, while lowering its rating on

Phillips Petroleum

(P)

to buy from top pick. Shares of Phillips stumbled 1 1/16 to 48 7/16.

Expeditors International of Washington

(EXPD) - Get Report

fell 15/16 to 36 after Merrill Lynch lowered its rating on the stock to near-term neutral and long-term accumulate from near-term accumulate and long-term buy.

Georgia-Pacific

(GP)

hopped 2 3/16, or 5.5%, to 41 9/16 after J.P. Morgan upped its rating on the shares to buy from market perform.

L-3 Communications

(LLL) - Get Report

climbed 7/8 to 38 after

Credit Suisse First Boston

raised its rating on the shares to strong buy from buy.

National Data

(NDC)

was unchanged at 25 1/8 after SG Cowen cut its rating to neutral from buy. Cowen cut its fiscal 2000 earnings estimate to $2.25 from $2.35 and its fiscal 2001 estimate to $2.60 from $2.77.

National Semiconductor

(NSM)

bounced up 1 1/2 to 33 9/16 after PaineWebber raised its price target from 44 to 36, while maintaining its buy rating.

Newmont

(NEM) - Get Report

leaped 4 7/8, or 21.2%, to 27 13/16 after Goldman Sachs upped the shares to trading buy from outperform.

Pharmacyclics

(PCYC)

slid 2 1/16 to 40 after Morgan Stanley Dean Witter upped its price target to 50 from 42.

Terex

(TEX) - Get Report

hopped 1 3/16 to 30 3/16 after Credit Suisse First Boston raised its rating on the share to a strong buy from a buy.

Unicom

(UCM)

climbed 5/16 to 37 1/4 after

ABN Amro

upgraded the shares to buy from outperform.

UnitedAuto

(UAG) - Get Report

advanced 1 1/4, or 11.1%, to 12 1/2 after

Salomon Smith Barney

upped its rating on the stock to buy from neutral.

Werner Enterprises

(WERN) - Get Report

climbed 7/8, or 5.3%, to 17 1/4 after Morgan Stanley upgraded it to a strong buy from outperform.

Westvaco

(W) - Get Report

advanced 1 to 26 1/2 after

J.P. Morgan

upped its rating to buy from a long-term buy.

Weyerhaeuser

(WY) - Get Report

hopped 1 11/16 to 57 1/4 after J.P. Morgan raised its rating on the shares to a buy from market perform.

Zebra

(ZBRA) - Get Report

fell 11/16 to 44 after

Banc of America Securities

upgraded its price target to 56.

Miscellany

General Electric

(GE) - Get Report

bounced up 2 to 120 after said it launched a $50 million fund to invest in European-based Internet companies seeking early-stage financing.

Liberty Media

(LMG.A)

advanced 15/16 to 35 1/16 after it said

AT&T

(T) - Get Report

it approved its repurchase of 135 million Liberty shares. Shares of AT&T climbed 1 to 43 5/8.

Lockheed Martin

(LMT) - Get Report

hopped 1 9/16, or 5.1%, to 32 3/16 after it announced its plans to cut business divisions and possibly divest eight noncore units, which account for 9000 employees. The company said the restructuring changes would not impact its fiscal 1999 and 2000 estimates of $1.50 and $2.16 respectively.

Primedia

(PRM)

climbed 2 3/16, or 19.8%, to 13 3/16 after it named Tom Rogers, president of

NBC Cable

, chairman and CEO of Primedia, confirming a report in today's

New York Times

.

Trimeris

(TRMS)

stumbled 3 3/8, or 14%, to 20 5/8 after researchers said that studies are indicating that AIDS drugs are failing to effectively suppress the disease, reported in

Reuters

. Trimeris is the maker of an experimental infusion inhibitor called

T-20

.

Gilead

(GILD) - Get Report

, which makes reverse transcriptase inhibitor

adefovir

, fell 7 1/4, or 9.4%, to 69 9/16.

The

United AutoWorkers

union said its members approved a new four-year contract with

DaimlerChrysler

(DCX)

. According to the union, 86% of its 75,000 members favored the agreement. The contract calls for a 3% wage increase in each of the four years, a $1,350 signing bonus, higher pensions and better job security. Shares of DaimlerChrysler mounted up 1 1/8 to 69 1/2.