Unfazed by Rubin's Goodbye, Market Cruises Through Solid Session

A strong tech rally and a tiny Dow decline reverse what looked like disaster for a few minutes this morning.
Author:
Publish date:

Invinthible!

would be the final word on today's stock market action if

Wallace Shawn

had anything to do with it.

While technology cried no rivers for the prince that

many consider

Robert "Just call me Bob" Rubin

to be and the

Nasdaq Composite Index

enjoyed its fourth straight gain, blue-chips continued to play turtle to tech's hare. But not by much. All in all, the final tallies for the major market indices describe more of a fairy-tale day than of a day that the favored

Treasury

secretary resigned.

Even the lately hurting bond market had a nice day. On word of today's sale of $12 billion of 10-year notes and ahead of tomorrow's economic data, the price of the 30-year Treasury lifted 3/32 to 91 28/32, dropping its yield to 5.83%.

The broad

S&P 500

bested its April 27 high of 1362.80 and rose 8.39 to an all-time high of 1364.00. The smallish-cap

Russell 2000

, meanwhile, picked up 2.45 to 449.26.

The White House this morning confirmed months-old rumors that Rubin will step down with about a year left in

President Clinton's

term. The resignation is expected to become official around July 4. Shortly before the closing bell, the president, Rubin and his current deputy and designated successor,

Lawrence Summers

, held a press conference in the Rose Garden.

"I think it's time for me to go home to New York to do whatever I'm going to do next," Rubin said at the conference. It's been widely known that Rubin's wife dislikes Washington and that Rubin has been itching to return to "private life" for some time. It's also been said among analytical types that Rubin was waiting for global economic conditions to improve, for the "revival," as these folks call it.

After falling as low as 10,812.81 on the Rubin resignation, the

Dow Jones Industrial Average

closed down 25.78 to 11,000.37.

IBM

(IBM) - Get Report

led the Dow's gainers for the second day in a row, with

J.P. Morgan

(JPM) - Get Report

not far behind. Although banks had a mixed reaction to the Rubin news (or no reaction at all), the

American Stock Exchange Broker/Dealer Index

rose 2.1%.

Not falling neatly into place, several economically sensitive members of the gilded 30 failed to rejoice at the widely held idea that Rubin's resignation confirms recent talk that global economic conditions are improving.

Alcoa

(AA) - Get Report

,

Chevron

(CHV)

and

DuPont

(DD) - Get Report

all ended the session in the red. The

Morgan Stanley Cyclical

index fell 1.1%.

Large-cap tech bellwethers powered the Nasdaq up 39.86, or 1.55%, to 2606.54, not too far behind its April 26 closing record of 2652.05. The

Nasdaq 100

jumped 41.83, or 1.9%, to 2217.68.

Cisco

(CSCO) - Get Report

flew 6 7/8, or 6.2%, to 118 3/4 on last night's solid earnings,

Dell

(DELL) - Get Report

rose 1 1/4 to 43 15/16 and

Sun Microsystems

(SUNW) - Get Report

climbed 4 13/16, or 8%, to 65 1/8.

Despite losses in

America Online

(AOL)

,

Yahoo!

(YHOO)

and

Amazon.com

(AMZN) - Get Report

,

TheStreet.com Internet Sector

index picked up from yesterday's forward marching and rose 2.82 to 656.91.

In

New York Stock Exchange

trading, 834.2 million shares were exchanged while decliners led gainers 1,618 to 1,388. In

Nasdaq Stock Market

activity, 1.04 billion shares were exchanged while gainers led 2,199 to 1,790. New 52-week highs led new lows 69 to 27 on the Big Board and by 131 to 31 in over-the-counter trading.

Ricky Harrington, chief technical analyst at

Wachovia Securities

in Charlotte, N.C., said he wasn't all that surprised by Rubin's resignation or the market's response.

"I think the market thinks Summers is capable of taking over and I'm not surprised that something like this didn't have a major influence

on the stock market for a long period of time," he said. "But we fell so rapidly and we came back so rapidly, we fell 200 points in three or four minutes -- that's what was surprising. The market shows a susceptibility to news; this is a fragile market. What if what got some fundamental news about interest rates?

"It's a real schizophrenic market out there," Harrington continued. "Because now we have IBM accounting for 30 Dow points and Cisco carrying up the Nasdaq and tech taking back their lead. I don't think these days we can draw too many conclusions from anything. We have a change in leadership almost daily -- tech one day, cyclicals another, then financials and secondaries. This is a volatile market in every sense -- price, volume, change of leadership."

The analyst said he sees a correction in the market's near future, especially with the traditionally slowing period of May to October upon us. He also said he's afraid people aren't prepared for such a turn of events.

"The larger picture is: I'm scared to death of this market," Harrington said. "I talk to people about this every week, retired people who say, 'I can finally afford to invest instead of save.' And they've got

Money

magazine saying, 'Come aboard and do it!' But people are uninformed, they don't have any history -- only encouragement from the government and the industry.

"No one thinks about the downside. I think we're going to do more than 200 points in three minutes. We'll do 2,000-3,000 points in days. We could do more than a 5% to 10% correction. At some point over the next 60, 90, 120 days, we're going to see interest rates go up. But this is different than any market I've seen."

Elsewhere in North American equities, the

Toronto Stock Exchange 300

dipped 6.82 to 7003.81 and the

Mexican Stock Exchange IPC Index

tumbled 103.81, or 1.7%, to 5877.28.

Wednesday's Company Report

By Thomas Lepri
Staff Reporter

(

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

.)

Mergers, acquisitions and joint ventures

Motion sensor device maker

Optek Technology

(OPTT) - Get Report

jumped 4 7/8, or 24.7%, to 24 11/16 after it agreed to be acquired by private investment firm

Dyson-Kissner-Moran

for about $200 million, or $25.50 a share.

TCA Cable

(TCAT)

jumped 8, or 15.4%, to 60 after acquisitive

Cox Communications

(COX)

agreed to buy it for about $4 billion in stock and cash, or just under $64 a share. Cox, which is also acquiring the cable operations of

Media General

(MEGA)

, lost 1 15/16 to 86 1/16.

Lycos

(LCOS)

surged 8 9/16, or 8.7%, to 107 on the official word that the Web portal is no longer being acquired by

USA Networks

(USAI) - Get Report

. Lycos was up 10 1/16, or 10.2%, to 108 1/2.

Ticketmaster Online-CitySearch

(TMCS)

, the deal's third wheel, rose 3 7/16, or 10.6%, to 36 1/16 on the news. USA Networks got a more modest pop, rising 3 5/8, or 10.1%, to 39 7/16.

Earnings/revenue reports and previews

Cisco

(CSCO) - Get Report

shot up 6 7/8, or 6.2%, to 118 3/4 after it posted third-quarter earnings last night of 38 cents a share, 1 cent above the 29-analyst

First Call

consensus and up from the year-ago 30 cents. Cisco also announced a 2-for-1 stock split, its eighth split in nine years.

Shares of medical products firm

Cooper

(COO) - Get Report

rose 3 11/16, or 22.7%, to 19 15/16 after the company said it expects second-quarter earnings from continuing operations to exceed analysts' expectations of 34 cents a share. Cooper is due to report on April 30.

Engle Homes

(ENGL)

rose 1 1/8, or 9.4%, to 13 7/8 after reporting second-quarter earnings of 60 cents a share, besting the three-analyst estimate of 47 cents and up from the previous year's 34 cents.

Shares of

Federated Department Stores

(FD)

added 3 5/16, or 6.5%, to 54 5/16 after the company reported first-quarter earnings of 40 cents a share, 9 cents above the 17-analyst call and up from the year-ago 27 cents.

Kmart

(KM)

lost 7/16 to 17 1/8 after it posted its first-quarter numbers. The company earned 14 cents a share, in line with the 17-analyst forecast and up from last year's dime.

Perot Systems

(PER) - Get Report

dropped 1 1/8 to 30 7/8 after posting first-quarter earnings of 15 cents a share, 4 cents above the five-analyst estimate and up from the year-ago 10 cents.

Retail mortgage firm

Rock Financial

(RCCK)

shed 2 5/8, or 12.1%, to 19 after the company last night warned that its second-quarter earnings will be below its first quarter's 18 cents a share, and that it may not be able to meet analysts' expectations of $1.12 a share for the full 1999 fiscal year.

Starwood Hotels

(HOT)

rose 3/8 to 36 1/8 after it posted first-quarter pro-forma earnings of 14 cents a share, topping analysts' expectations of a dime a share, and up from the year-ago 4 cents.

Teleglobe

(TGO)

lost 1 1/4 to 27 5/8 after reporting first-quarter earnings of 10 cents a share, well under the nine-analyst call for 15 cents and down from last year's 30 cents.

Offerings and stock actions

Industrial concern

Dover

(DOV) - Get Report

closed unchanged at 38 13/16 after it set plans to buy back 20 million shares of its stock. The company also gave CEO Thomas Reece the additional post of chairman, replacing Gary Roubos, who will stay on the board.

Cable TV system operator

Insight Communications

filed with the

Securities and Exchange Commission

to raise more than $500 million in an IPO.

Donaldson Lufkin & Jenrette

is the lead underwriter.

Data analysis equipment maker

O.I. Corp.

(OICO)

set plans to buy back as many as 325,000 shares, or 10% of its outstanding stock. O.I. rose 5/16 to 4 3/4.

RJR Nabisco

(RN)

rose 3/8 to 28 3/4 after Chairman and CEO

Steven Goldstone

said that, once the company's domestic tobacco operations are spun off, RJR shareholders will receive one share of

R.J. Reynolds Tobacco

for each RJR Nabisco share they own. The spinoff will be complete by June 15.

Analyst actions

Amar Capital

(ACAS)

rose 1, or 5.4%, to 19 7/8 after

U.S. Bancorp Piper Jaffray

initiated coverage with a buy.

Atmel

(ATML)

rose 1 9/16, or 8.4%, to 20 7/16 after

Prudential Securities

raised it to a strong buy from accumulate.

Gartner Group

(IT) - Get Report

popped 2 13/16, or 13.6%, to 23 9/16 after

Salomon Smith Barney

raised it to buy from a hold.

Eagle Geophysical

(EGEO)

sank 11/16, or 8.1%, to 3 15/16 after

Jefferies

downgraded it to hold from attractive.

EchoStar Communications

(DISH) - Get Report

jumped 6 5/8, or 6.0%, to 117 5/8 after

SG Cowen

initiated coverage with a buy.

Intervu

(ITVU)

gained 7 5/16, or 20.0%, to 43 13/16 after Prudential started coverage with a strong buy.

Omnicom

(OMC) - Get Report

rose 5 9/16, or 8.0%, to 75 3/8 after

Goldman Sachs

initiated coverage on the stock, placing it on the firm's recommended list.

Radio One

(ROIA)

gained 2 3/4, or 7.53%, to 39 1/2 after

Credit Suisse First Boston

initiated coverage with a buy and set a 12-month price target of 40.

ST Microelectronics

(STM) - Get Report

jumped 6 1/8, or 5.7%, to 114 1/8 after Prudential raised it to strong buy from accumulate.

Standard Pacific

(SPF)

added 7/8, or 7%, to close at 13 3/8 after Jefferies started coverage with a buy.

Total Renal Care

(TRL)

grew 1 1/8, or 7.8%, to 15 5/8 after DLJ upgraded it to top pick from buy.

Universal Electronics

(UEIC) - Get Report

shot up 4 3/16, or 19.9%, to 25 3/16 after

Morgan Stanley Dean Witter

started coverage on the stock with a strong buy with a price target of 33.

VoiceStream

(VSTR)

expanded 4 5/16, or 15.1%, to 33 1/16 after CSFB started coverage at buy and set a price target of 36.

Waste Connections

(WCNX)

added 1 5/16, or 5.2%, to 27 after

PaineWebber

initiated coverage at buy.

Worthington Foods

(WFDS)

surged 2 1/2, or 20.6%, to 14 5/8 after Piper Jaffray raised it to strong buy from buy.

Miscellany

ConAgra

(CAG) - Get Report

set plans to close at least 15 plants and cut about 7,000 jobs. The stock added 3/16 to 24 13/16 on the news.

Aptly named to cash in on the Web portal vogue,

Portal Software

(PRSF)

is exploding after Cisco said it bought 3 million shares of the customer management and billing software maker for about $39 million. Portal Software was up 10, or 32%, to 41.

ADRs of Russian wireless telecom

Vimpel Communications

(VIP)

dropped 3 3/16, or 13.5%, to 20 3/8 amid renewed fears of political stability in its home country.

TSC

covered

the Russian fracas in a story today.