Unsteady Nerves Rule the Day as Market Finishes Mixed

Gillette's warning rattles investors in the multinationals, but tech stocks continue to attract attention.
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If

yesterday was one for the record books, today was one for the filing cabinet.

The

Nasdaq Composite Index

managed to scratch out another new record but closed well off its best levels of the session. Meanwhile, the

Dow Jones Industrial Average

and the

S&P 500

each retreated modestly from respective all-time highs, despite another impressive bond-market advance.

The price of the 30-year Treasury bond rose 30/32 to 96 1/32, its yield falling to 5.52%.

The Nasdaq Comp rose as high as 2582.37, then slid as low as 2544.04 before recovering to close up 3.11, or 0.1%, to 2563.17.

Sun Microsystems

(SUNW) - Get Report

embodied the Nasdaq's experience, gaining 8.3% to an all-time high of 140 5/8, but off its lofty intraday best of 145.

Other bellwethers such as

Dell

(DELL) - Get Report

and

Intel

(INTC) - Get Report

notched solid gains. But the

Nasdaq 100

fell fractionally thanks mainly to weakness in

Oracle

(ORCL) - Get Report

, down 6.2%, and

MCI WorldCom

(WCOM)

, which fell 3.1%.

The Wall Street Journal

reported MCI WorldCom is in "preliminary" talks to acquire

Nextel Communications

(NXTL)

, which fell 1%.

Yesterday, you'll recall,

SkyTel Communications

(SKYT)

jumped 26.1% after

Business Week

reported WorldCom could acquire the wireless messaging company. Today, Skytel lost 6.6%.

In

New York Stock Exchange

trading tech stalwarts were similarly mixed, leaving the

Morgan Stanley High-Tech 35

up 0.5%.

Lucent

(LU)

rose 9.4%, and

Micron Technology

(MU) - Get Report

gained 4%, but

Compaq

(CPQ)

slid 2.2% and

EMC

(EMC)

shed 2.5%.

Internet proxies, meanwhile, found little resistance on their way to a second consecutive session of new highs.

TheStreet.com Internet Sector

index gained 37.54, or 5.5%, to 720.66 while

TheStreet.com E-Commerce Index

climbed 0.15, or 0.1%, to 123.38.

The DOT was led by

RealNetworks

(RNWK) - Get Report

, which rose 26% after

Donaldson Lufkin & Jenrette

initiated coverage with a buy rating and a price target of 250.

However,

Yahoo!

(YHOO)

, which rose as high as 244 on word its offerings will be featured on certain PCs sold by

Micron Electronics

(MUEI)

, closed down 2% to 214 7/8.

America Online

(AOL)

managed to sustain its daily routine of hitting a new high, closing up 0.3% to 167 7/16, but faltered from its intraday high of 175 1/2.

The Dow industrials closed down 43.84, or 0.4%, to 9963.49 after rising as high as 10,030.37.

American Express

(AXP) - Get Report

and

J.P. Morgan

(JPM) - Get Report

exerted the greatest drag on the index while lagging the performance of their financial peers.

'Everyone is talking about the market setting new highs on increasingly worse breadth and increasingly narrow stock selection, and that finally caught up with us,' said D.A. Davidson's Jim Volk.

General Motors

(GM) - Get Report

was the Dow's best performer, rising 4% after

Ford

(F) - Get Report

reported a record 13.6% rise in light vehicle sales in March.

The S&P 500 slid 3.23, or 0.2%, to 1317.89 after rising as high as 1326.76. The

Russell 2000

fell 1.12, or 0.3%, to 401.08.

Blue-chip proxies were restrained by

last night's profit warning by

Gillette

(G) - Get Report

, which fell 13.4%.

But rather than any fundamental development, today's blue-chip setback was "more a matter of the market getting to 10,000, stopping, and having nothing to follow through on in terms of positive news until we see earnings," said Jim Volk, co-director of institutional trading at

D.A. Davidson

in Portland, Ore. "Everyone is talking about the market setting new highs on increasingly worse breadth and increasingly narrow stock selection, and that finally caught up with us. I can't see any other reason."

Market internals were worrisome again today.

In NYSE trading, 787.5 million shares were exchanged as losers led gainers 1,766 to 1,185. In

Nasdaq Stock Market

activity a hefty 1.12 billion shares were exchanged while declining issues led 2,423 to 1,573. New 52-week lows bested new highs 93 to 69 on the Big Board and by 157 to 117 in over-the-counter trading.

Volk noted prominent market watchers such as Elizabeth MacKay of

Bear Stearns

have recommended scaling back equity allocation in recent days, contributing to some investors' hesitation. Also, the bond market has "done a flip-flop from being nervous last Thursday to feeling positive about inflation," causing some momentum players to switch assets into fixed-income, he said.

Trouble Ahead, Trouble Behind

While most market watchers were sanguine about the session, particularly after yesterday's big advance, Hugh Johnson, chief investment officer at

First Albany

, was nonplussed.

"I think it's hard to be very sensible about the market these days," he said. "What's troubling is the way we get to 10,000 -- we seem to reach it in a blowoff of exuberance. Everybody knows there's too much optimism

and the stock market is pricey or overvalued. Then there are these divergences, which occurred even yesterday. In order to get the market going on a sustained basis, you have to have buyers, and at these levels they have to have courage."

Johnson, who has retrenched his equity exposure considerably in recent months, was particularly discouraged by the action today in Gillette, which he is long.

"To look at the stock, you would have thought they said earnings would be 1 cent per share and well below analysts' estimates of 25 cents," he said. "The biggest surprise is Gillette said earnings will only be 1 cent below current consensus. I'm inclined to believe they would have been better off announcing the earnings than preannouncing a disappointment."

The fact Gillette got so hammered on a penny-per-share shortfall "dramatizes the vulnerability" of the market, Johnson continued.

"What Gillette did is remind you we're starting earnings season and a stock can get crunched, as unjustified as that might seem to men of common sense," he said. "Gillette also reminded us that in a momentum-driven market it works two ways. There's momentum on the upside and on the downside. This is not the stuff out of which stable bull markets are made, period."

Among other indices, the

Dow Jones Transportation Average

fell 28.28, or 0.8%, to 3325.12; the

Dow Jones Utility Average

lost 3.66, or 1.2%, to 293.57; and the

American Stock Exchange Composite Index

slid 6.03, or 0.8%, to 715.21.

Elsewhere in North American equities, the

Toronto Stock Exchange 300

rose 28.81 to 6768.51 and the

Mexican Stock Exchange IPC Index

gained 44.85, or 0.9%, to 5146.79.

Tuesday's Company Report

By Heather Moore
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.

)

Gillette tripped down 7 3/4, or 13.4%, to 50 after last night warning it expects to post a mid-single-digit percentage increase in first-quarter earnings, leaving results about a penny below the 16-analyst outlook for 25 cents a share. The company, which earned 23 cents in the year-earlier period, said greater-than-anticipated softness in the

Braun

business and in Latin America will hurt results. Today,

Morgan Stanley Dean Witter

downgraded the stock to neutral from outperform, Donaldson Lufkin & Jenrette lowered it to market perform from top pick and

Brown Brothers Harriman

dropped it to short-term neutral from buy.

Internet companies, meanwhile, continued to work more deals and watch their stocks explode.

Globix

(GBIX)

jumped 11 11/16, or 32.6%, to an all-time high of 47 9/16 after announcing an agreement making it one of the largest providers of RealNetworks' online video and audio streaming architecture on the East Coast. After, as noted above, DLJ started coverage of the stock with a buy and price target of 250 a share, RealNetworks swelled 40 1/8, or 26%, to an all-time high of 195 7/16.

Lycos

(LCOS)

shot up 18 3/16, or 20.1%, to 108 13/16 after it and

USA Networks'

(USAI) - Get Report

Sci Fi Channel

announced an exclusive agreement to sell

Star Wars Episode I

merchandise at a co-branded Web site. Terms of the agreement were undisclosed. USA Networks lowered 1 3/8 to 36 1/16.

Sabre

(TSG) - Get Report

hopped up 3, or 5.5%, to an all-time high of 58 on investor enthusiasm for the company's

Travelocity

Web site, which reserves airline tickets, hotel rooms and car rentals. Analysts also have tied excitement about the stock to

priceline.com's

(PCLN)

recent IPO. Today, priceline.com picked up 3 7/8, or 5.2%, to 79.

TCI Music

(TUNE)

rocketed 21 5/16, or 258.3%, to an all-time high of 29 9/16 on news

AT&T's

(T) - Get Report

Liberty Media

(LMGA)

offered to sell its Internet and interactive television assets in exchange for TCI Music stock. Liberty Media lifted 3 1/8, or 5.6%, to an all-time high of 59; and Telephone lifted 2 11/16 to 80 1/8.

Yahoo! lost 4 3/8 to 214 7/8, after rising as high as 244 earlier, following news it will be featured on the default Web page on PCs sold by Micron Electronics. Micron, which added 1/4 to 11 11/16, also announced pacts with

EarthLink

(ELNK)

and

3Com

(COMS)

, and concurrently launched its

Mconnect

technology initiative for rapid-growth, small businesses. EarthLink rose 2 9/16 to 72 9/16; 3Com lost 11/16 to 21 15/16.

Mergers, acquisitions and joint ventures

Century Business Services

(CBIZ)

lowered 3/8 to 10 11/32 after saying it's exploring options for divesting its specialty insurance division to focus on the professional outsourcing business.

E*Trade

(EGRP)

popped up 3 7/16 to an all-time high of 76, continuing yesterday's push skyward fueled by news of strong online trading volume. Today, the company said

Reuters

(RTRSY)

will be its primary provider of financial news and market data. Reuters tacked on 1 7/8 to 90 11/16.

Heuristic Development Group

(IFIT)

soared 2 13/16, or 150%, to an annual high of 4 3/4 after agreeing to merge with privately held

Virtual Communities

, a developer of Internet communities. Virtual's shareholders will receive about 11.1 million Heuristic shares.

Lernout & Hauspie Speech

(LHSP)

vaulted 5 5/8, or 14.9%, to 43 9/16 on last night's news that Intel agreed to invest $30 million in the company. Intel added 3 to 130 7/16.

National Propane

(NPL)

shot up 4 1/2, or 66.1%, to 11 5/16 after last night

Columbia Energy

(CG) - Get Report

said it will buy the company for $12 a share. Columbia Energy fell 5/8 to 52 3/4.

News Corp.

(NWS) - Get Report

tacked on 3/16 to 34 after announcing it's buying Liberty Media's 50% stake in

Fox/Liberty Networks

in exchange for 51.8 million nonvoting News Corp. ADRs. The company also said it plans to repurchase 56.2 million of its nonvoting ADRs from MCI WorldCom for $1.4 billion.

Earnings/revenue reports and previews

Circuit City Stores

(CC) - Get Report

slipped 1 3/8 to 73 7/8 after posting fourth-quarter earnings of 86 cents a share, a penny better than the 15-analyst estimate and up from the year-ago 58 cents. And

Circuit City CarMax

(KMX) - Get Report

added 1/16 to 3 15/16 after reporting a fourth-quarter loss of 10 cents a share, 1 cent narrower than the seven-analyst outlook and narrower than the year-ago loss of 23 cents.

Core Laboratories

(CLB) - Get Report

skidded 5 1/16, or 28.7%, to 12 9/16 after saying weakness in oilfield activities will push 1999 earnings "significantly below" last year's 71 cents a share. The three-analyst estimate called for earnings this year of 97 cents.

Cummins Engine

(CUM)

expanded 1 1/4 to 38 3/4 after saying it sees first-quarter earnings of 63 cents a share, a nickel higher than the eight-analyst estimate. The company, which credited its new products for the projection, made 96 cents in the year-ago period.

Genesee & Wyoming

(GNWR)

slid 2 1/4, or 20.7%, to an all-time low of 8 3/4 after saying it expects to report a first-quarter loss of about 7 cents a share due to lower Australian grain movements and northeastern U.S. car loadings. The single-analyst view called for quarter earnings of 40 cents a share vs. the year-ago profit of 42 cents.

Greenbrier

(GBX) - Get Report

advanced 7/16 to 9 13/16 after announcing second-quarter earnings of 43 cents a share, a nickel above the five-analyst forecast and ahead of the year-ago 30 cents.

Shaw

(SGR)

tumbled 11/16, or 5%, to 13 after recording second-quarter earnings of 36 cents a share, a penny higher than the five-analyst prediction but below the year-ago 42 cents.

Silicon Valley Group

(SVGI)

, a semiconductor equipment maker, sloughed off 3/8 to 13 1/32 after warning its second-quarter revenue will be about 30% below the $85.5 million reported during the first quarter.

Starbucks

(SBUX) - Get Report

closed flat at 30 3/4, after rising as high as 32 15/16 earlier, following last night's news that its March same-store sales rose 6%.

Analyst actions

Allied Holdings

(AHI)

tanked 2 7/8, or 30.7%, to an annual low of 6 1/2 after

BT Alex. Brown

lowered it to market perform from buy.

Alpha Industries

(AHAA)

flourished 7 1/4, or 39.2%, to 25 7/8 after

Adams Harkness & Hill

initiated coverage with a strong buy.

LSI Logic

(LSI) - Get Report

excelled 3 1/2, or 10.8%, to an annual high of 36 after

SoundView

started coverage with a strong buy, citing the semiconductor maker's strong bookings.

Pediatrix Medical Group

(PDX)

shed 2 5/8, or 15.3%, to an annual low of 14 1/2 after

U.S. Bancorp Piper Jaffray

dropped the stock to neutral from strong buy. Yesterday, Pediatrix said Arizona and Colorado government officials are seeking billing-related documents from the company.

Miscellany

As mentioned earlier, Sun Microsystems scored 10 3/4, or 8.3%, to an all-time high of 140 5/8 after announcing new efforts to improve its compatibility with

Microsoft's

(MSFT) - Get Report

Windows operating system. Microsoft lost 15/16 to 94 1/16.

Ciena

(CIEN) - Get Report

sank 2 3/8, or 11.2%, to 18 15/16 after detailing in

Securities and Exchange

filings risk factors associated with its acquisition of

Lightera Networks

and planned purchase of

Omnia Communications

.

IBM

(IBM) - Get Report

gave up 15/16 to 183 after introducing what it called the world's largest 64-bit, four-way Web server, designed to provide e-business customers and Internet service providers with greater speed, performance and high availability.