In case you missed volatility, one of the hallmarks of the market for some time now, it's back from its recent vacation.
Investors have been taken on a choppy ride so far today. Stocks opened slightly higher, but nothing to get excited about. Gains faded quickly and it didn't take long for the memories of
yesterday's selloff to reassert themselves in investors' minds as the
Nasdaq Composite Index
bottomed out around 10:15 a.m. EDT. The index traded as low as 2425 before mounting its comeback, rising up to the 2466 level.
But since then, well, the Comp has softened, along with the
, while the
Dow Jones Industrial Average
The Comp was down 17, or 0.7%, to 2437. Among tech-sector indices, the
Philadelphia Stock Exchange Semiconductor Index
was off 1.7%. The
Morgan Stanley High-Tech 35
was down 0.3%, while the
was down 0.2%.
Internet stocks, which were decimated yesterday, were weaker again today.
TheStreet.com Internet Sector
index was down 4, or 0.6%, to 573. It tumbled 7.5% yesterday.
Meanwhile, the blue-chip Dow was up 42 to 10,697, boosted the most by oil giant
. It was up 1 15/16 to 81 9/16.
The S&P 500 was up 2 to 1309. The Russell 2000 was down 1 to 439.
The recent slump in the market hasn't been much of a surprise for a lot of market participants, considering the nice gains stocks for the most part have enjoyed this year, and of the outsized gains off the October lows, and in light of the weakness in the Treasury market lately.
"We're way overdue for a correction," said Ted Bridges, vice president and money manager of
Bridges Investment Counsel
in Omaha, Neb.
Basically the market has had a seven-month run higher and "it's reasonable for people to take some money off the table," Bridges said.
He said he thinks the market is experiencing a normal correction in a market environment lately in part where interest rates have been rising, positive earnings news has ended, and valuations are high.
Bank stocks were again prominent in the news again today after falling sharply yesterday.
Topping news in the sector was
profit warning. The confession sent its stock down 9.9%.
Philadelphia Stock Exchange/KBW Bank Index
was down 1.6%. First Union is a component of the index.
Elsewhere in the sector, a day after
Credit Suisse First Boston
analyst Michael Mayo got out the hacksaw and
downgraded several banks, including
to the dreaded sell from hold,
Banc of America Securities
upgraded the two financial services giants to buy from hold. Chase was down 1 13/16 to 74 1/16, while Citigroup was 15/16 to 64 3/16.
Some key questions for the market going forward are whether the market's old leadership will reassert itself, whether small-caps will have the upper hand vs. large-cap stocks and whether growth or value issues will become dominant, Bridges said.
Bridges said if he was pressed for a sense, he said that the old leaders will have a tough time reasserting themselves for a while.
Bridges said he's a "little more positive" on the relative performance of the smaller parts of the market. However, if the market gets ugly, small stocks' "cheapness won't help," because of investors' being leery of the illiquidity of the stocks in a rough market environment.
Meanwhile, among some names he owns and is looking to buy on weakness are
Today Capital One was up 2 7/8 to 148 15/16, State Street was down 1/8 to 76 1/2 and Transaction Systems was down 3/4 to 30 7/8.
Tim Hayes, senior equity strategist at
Ned Davis Research
in Nokomis, Fla., said it's going to be "hard for
the market to make significant headway here."
Hayes said Ned Davis is telling clients to think defensively.
Market breadth was negative. On the
New York Stock Exchange
, decliners were outpacing advancers 1,538 to 1,250 on 455 million shares. On the
Nasdaq Stock Market
, losers were beating winners 2,101 to 1,537 on 600 million shares.
On the NYSE, 42 issues had set new lows 52-week while 16 had touched new highs. On the Nasdaq, 46 issues had set new lows while new highs totaled 32.
On the Big Board,
was most active, with 15.5 million shares changing hands. It was down 13/16 to 118 11/16.
On the Nasdaq,
was most active, with 28.2 million shares changing hands. It was down 11/16 to 35 7/16.
As for the Treasury market, the 30-year Treasury bond was lately down 12/32 to 92 12/32, yielding 5.79%. (For more on the fixed-income market, see today's early
On the economic front, the
consumer confidence index
rose to 135.8 in May from 135.5 in April.
Meanwhile, among other indices, the
Dow Jones Utility Average
was up 1%, the
American Stock Exchange Composite Index
was up a fraction and the
Dow Jones Transportation Average
was up 0.9%.
Tuesday's Midday Movers
(BNBN:Nasdaq) was flying up 7 1/2, or 41.7%, to 24 3/4 after
late yesterday priced its 25 million-share IPO top-range at $18 a share. The online bookseller is owned by
Barnes & Noble
and is a rival of
, which was down 2 7/16 to 115.
First Union was down 4 15/16, or 9.9%, to 45 after warning it sees second-quarter and full-year 1999 earnings falling short of estimates. For the quarter, the company expects to earn 80 cents to 83 cents a share, which would miss the 22-analyst
view of 97 cents. And for the year, the bank expects to earn $3.40 to $3.50 a share, which would miss the 25-analyst forecast of $3.98.
lowered the stock to market performer from buy.
, which First Union agreed to buy earlier this year, was down 2 3/4, or 10.3%, to 23 15/16.
In other news:
In other new issues,
(TCLPZ:Nasdaq) was flat at 20 1/2 with 3.2 million shares traded after Goldman Sachs priced its 11.5 million-share IPO low-range at $20.50 a share late yesterday. Calgary-based TC PipeLines was recently formed to acquire, own and participate in the management of U.S.-based pipeline assets.
Brocade Communications Systems
(BRCD:Nasdaq) had not yet begun trading at midday after
Morgan Stanley Dean Witter
priced its 3.25 million-share IPO above-range at $19 a share. The company is a supplier of switches that computers use to save information.
was up 2 3/4, or 13.5%, to 23 1/16 after last night agreeing to acquire privately held
Cable Systems Holding
for $180 million in cash. Today,
ING Baring Furman Selz
upgraded the stock to strong buy from hold.
was up 4 7/16 to 101 3/4 after
Credit Suisse First Boston
Internet analyst Lise Buyer upgraded the stock to buy from hold. In a research note, Buyer wrote Lycos has "significant unrealized potential." She also noted that this is the third time in the past eight months that Internet stocks have seen a downturn and that each case has been "a catalyst for significant M&A activity in the group." Lycos will join the Nasdaq 100 Friday.
Elsewhere in Net strength,
was soaring 3 27/32, or 104.2%, to 7 9/16 after the wireless Internet service provider announced video capabilities.
was up 2 to 61 5/8 after America Online signed a long-term licensing pact to use the company's technology to develop electronic programming guides. AOL, which was down 1/4 to 119 1/4, plans to launch
, which last month saw a sharp drop in its stock after revising downward estimates for its fourth quarter, was down 3 3/16, or 8.4%, to 35 after saying "further downward revision will be required of those fiscal year's results as well as quarterly results during the fiscal year." The company said auditors have found additional improper recognition of software sales, which was the culprit for the last warning.
Polo Ralph Lauren
was down 2 3/8, or 10%, to 21 1/2 after posting fourth-quarter earnings of 27 cents a share, in line with the 13-analyst estimate but down from the year-ago 29 cents.
was down 5 3/16, or 17.2%, to 25 1/4 after slashing earnings targets for 1999, blaming softening market conditions, repositioning actions of the
brand and deteriorating performance of
-related hotels. The company sees annual earnings-per-share growth in the mid-single digits, down from previous expectations in the mid-teens. In sympathy,
was down 1 3/16 to 34.