Volume Bullish, Breadth Not as Nasdaq Resumes Record Run

With tech stocks still unchained and surging, technicians want to see the advance/decline line catch up with the market's heavy volume.
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SAN FRANCISCO -- Anyone who thought

yesterday's setback augured more weakness for tech stocks got a comeuppance today. But those enchanted with the group's midday spike also got a jolt. Techs struggled for much of the afternoon before closing a somewhat disjointed session with a flourish.

The

Nasdaq Composite Index

traded as high as 3186.57 around 1:15 p.m. EST before reversing to as low as 3132 in the final hour. But the tech-infused index closed up 30.92, or 1%, to 3155.96, establishing a record for the eighth time in the past nine sessions.

It was almost as if tech favorites had a delayed reaction to the bond market's retreat, which itself was tempered by the close. Once as low as 100, the price of the 30-year Treasury bond finished off 10/32 to 100 13/32, its yield rising to 6.09%.

The bond market's initial setback followed the release of the

Producer Price Index

. At 0.1%, the PPI was in line with expectations. But the core rate, which excludes food and energy, exceeded forecasts of a 0.1% rise, coming in at 0.3%.

The Comp got a boost from bellwethers such as

Cisco

(CSCO) - Get Report

, up 7.1% after posting earnings

last night and receiving positive analyst comments today. Cisco paced the

Nasdaq 100

, up 1.2% to its own all-time high of 2797.71.

The

Philadelphia Stock Exchange Semiconductor Index

also set a new high, up 3.5% to 640.81.

Tech gauges got a lift from the disk-drive industry after

Maxtor

(MXTR)

announced a price hike.

Banc of America Securities

upgraded Maxtor, which rose 20.7%, as well as

Seagate Technology

(SEG)

, up 2.2%, and

Quantum Hard Disk Drive Group

(HDD)

, which jumped 17.7%.

The

Morgan Stanley High-Tech 35

also set a new high, up 2.3% to 1443.50, as

New York Stock Exchange

-traded names such as Seagate and

Motorola

(MOT)

(also a SOX component) joined their over-the-counter brethren on the upside.

TheStreet.com Internet Sector

index failed to join its counterparts in record territory, falling 4.41, or 0.5%, to 834.60. But

TheStreet.com

Red Hots index rose 6.41, or 2.3%, to 291.87. The 20-stock index tracks action in particularly volatile stocks and is meant to measure so-called hot money.

The

Dow Jones Industrial Average

never displayed the effervescence of tech proxies, falling 19.58, or 0.2%, to 10,597.74 after trading as high as 10,654.63.

Ironically, weakness in tech components

Microsoft

(MSFT) - Get Report

,

Intel

(INTC) - Get Report

and, particularly,

Hewlett-Packard

(HWP)

weighed on the Dow.

Fueled largely by tech stocks and energy names, the S&P 500 rose as high as 1379.26 before closing up 8.18, or 0.6%, to 1373.46. The

American Stock Exchange Oil & Gas Index

rose 2.3%, led by

Royal Dutch Petroleum

(RD)

, up 3.9%.

Financials such as

J.P. Morgan

(JPM) - Get Report

, down 2%, restrained blue-chip proxies; the

Philadelphia Stock Exchange/KBW Bank Index

slid 1.5%. Also,

Bank One

(ONE) - Get Report

was halted down 11.2% late in the session; after the close, the company cut its 1999 earning estimates and postponed a Nov. 15 meeting with analysts,

Reuters

reported.

While some saw a bifurcated, uncertain session, Ned Collins, executive vice president of U.S. stocks at

Daiwa Securities America

, saw reasons for those long to smile.

"My feeling is with the PPI, the fact you had a ton of money invested in new issues, and the fact we've been up in the over-the-counter market for quite some time, the market acted extremely well," Collins said.

It was a big day for new issues, led by the biggest IPO yet,

United Parcel Service

(UPS) - Get Report

, which rose 34.5% from its $50 offering price. (

TheStreet.com/nytimes.com

joint newsroom covered the action in a

story this afternoon.) Also, Microsoft spinoff

Expedia

(EXPE) - Get Report

rose 281%. Elsewhere,

Next Level Communications

(NXTV)

rose 155% from its offering price and

iBasis

(IBAS)

jumped 152%.

"People probably did sell Microsoft today to buy Expedia and obviously some stocks were sold to pay for UPS," the trader said. "So when you think we were down 19 on the Dow and up 30 on the Nasdaq, all in all the market gave a helluva performance."

On the Cusp

As impressive as the recent gains by tech proxies have been "we need to broaden participation, along the lines of finding companion a leadership group to go a long tech," said Greg Nie, chief technical analyst at

First Union Securities

in Chicago. "I'm still bullish overall, but feel like we have to keep one eye on tech and Internet

stocks getting a little stretched out. Yesterday's retreat was predictable; we are extended short-term."

Today's gains aside, the technician said yesterday's setback on record Nasdaq volume was "mildly disturbing."

In general, market internals have improved "significantly" since the mid-October lows, Nie said. "It's all about momentum, which has been there frequently enough to get the rally started. Now it's about consistency and staying power."

Rather than focusing on particularly levels for major averages, Nie said a combination of strong volume -- more than 900 million shares on the NYSE and more than 1.2 billion on the Nasdaq -- and at least 2-to-1 positive breadth is necessary to propel the rally further.

"Today we're making a nice push on the volume side but advance/decline is marginally negative," he said. "We need some improvement there. One more good push from the bulls might be enough to catapult this recovery into January. It's literally on the cusp of taking the next step from recovery to rally. For a technician that's two different worlds: A recovery may be a contratrend. A rally is the real deal."

In NYSE trading, 984.8 million shares were exchanged while declining stocks led advancers 1,399 to 1,623. In

Nasdaq Stock Market

action 1.435 billion shares traded -- the third-busiest day in Nasdaq history -- while gainers led 2,083 to 1,921. New 52-week lows outpaced lows 118 to 65 on the Big Board while new highs led 204 to 98 in over-the-counter trading.

Among other indices, the

Dow Jones Transportation Average

rose 16.83, or 0.6%, to 3006.24; the

Dow Jones Utility Average

slid 2.15, or 0.7%, to 297.33; the

Russell 2000

gained 2.44, or 0.6%, to 448.72; and the

American Stock Exchange Composite Index

added 3.50, or 0.4%, to 815.81.

Elsewhere in North American equities, the

Toronto Stock Exchange 300

gained 73.87, or 1%, to 7366.45 and the

Mexican Stock Exchange IPC Index

added 96.46, or 1.6%, to 5963.84.

Wednesday'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.

)

Bank One

(ONE) - Get Report

put options fetched big prices this afternoon amid swift-moving rumors the company might cancel its Nov. 15 analyst meeting, two investors and two options traders told

TheStreet.com

during the session.

After the close, the rumors proved true: Bank One canceled that meeting and lowered its 2000 earnings estimates to $3.45 to $3.55 a share.

Bank One shares were halted late in the session, last down 4 3/8, or 11.2%, to 34 5/8. They reportedly tumbled to 32 1/2 in after-hours action.

One of the investors, a New York hedge fund analyst who requested anonymity, had said he thought Bank One might guide analysts to a lower earnings-per-share number for 2000. Due mainly to sluggishness in its credit-card division,

First USA

, Bank One would probably earn $3.60 a share next year, rather than the $3.88 forecast by

First Call/Thomson Financial

, said the analyst, whose fund has no position in Bank One shares.

Bank One did not immediately return calls seeking comment.

"It's creating a panic in the stock because

Rite Aid

(RAD) - Get Report

did the same thing," said one options trader on the

Pacific Exchange

. Bank One is a multibank holding company. Another options trader in Chicago cited a rumor the company would announce some negative news after the close of trading.

More than 3,000 November 35 puts had traded by late afternoon, nearly equal to the open interest in the options, and the put option price had ratcheted up 7/8 ($87.50) to 1 1/16 ($106.25) per contract. (In other words, investors were more willing to pay up to make bets the stock will fall.) Investors also piled out of December 35 calls, the price of which had dropped nearly by half to 2 9/16 ($256.25).

Orders for put options were "coming from all different sorts of firms," indicating more interest than just retail investors, said the Pacific Exchange trader.

--

Erin Arvedlund and Peter Eavis

Mergers, acquisitions and joint ventures

Amazon.com

(AMZN) - Get Report

rose 1 1/8 to 72 and

NextCard

(NXCD)

shot up 9 7/16, or 29.9%, to 41 after the companies set a strategic relationship under which NextCard will be the exclusive provider of a co-branded Amazon.com NextCard credit card. Amazon also has obtained a warrant to acquire up to 4.4 million shares of NextCard stock, a stake of about 9.9%. Amazon was in the news yesterday after saying it was launching four online stores.

TheStreet.com/nytimes.com

joint newsroom wrote about the move in a story

yesterday.

TSC's

Herb Greenberg

also wrote about the news in a column

this morning.

CNet

(CNET) - Get Report

slipped 3/4 to 49 1/16 and

Commerce One

(CMRC)

fell 3 7/16 to 317 3/4 after the companies said they were in a deal to provide content for a portal. The alliance will provide CNet technology through a Commerce One market site.

A new joint venture company involving an Irish consortium and

GPU International

(GPU)

said it planned to compete in Ireland's deregulated electricity market beginning in February. The company, known as

ePower

, said it would invest $264 million over the next three years. Shares of GPU fell 1/4 to 32 13/16.

Pfizer

(PFE) - Get Report

was unchanged at 35 after it announced it has brought

Lazard Freres

and

Merrill Lynch

on board to serve as financial advisors for its unsolicited $75 billion bid for

Warner-Lambert

(WLA)

. Shares of Warner climbed 2 to 92 1/16.

Earnings/revenue reports and previews

Baan

(BAANF)

climbed 1 1/8 to 13 13/16 after saying it expects to return to profitability in 2000 and that sales and license revenue were improving in the fourth quarter,

Reuters

reported.

Cisco

(CSCO) - Get Report

jumped 5 1/4, or 7.1%, to 79 1/2 after posted first-quarter earnings of 24 cents a share last night, beating the 32-analyst estimate by a penny and above the year-ago 17 cents. Yesterday Cisco said it was purchasing rival

Aironet

(AIRO)

in a $799 million stock swap. Shares of Aironet were still on a high today, closing up 3 3/16,oe 7%, to 48 1/2.

TheStreet.com/nytimes.com

joint newsroom wrote about Cisco's

earnings and its

acquisition of Aironet in stories yesterday.

CompUSA

(CPU)

fell 3/16 to5 11/16 after it said it has adjusted its first-quarter 2000 earnings downward, to reflect the sale of certain extended service plans. The company is now posting a revised first-quarter loss of 4 cents a share, a penny more than previously stated.

Federated Department Stores

(FD)

climbed 1 7/16 to 43 1/16 after it reported third-quarter earnings of 56 cents a share, beating the 18-analyst estimate of 53 cents a share and the year-ago 50 cents a share.

Kmart

(KM)

inched up 3/16 to 9 3/4 after it reported third-quarter earnings of 9 cents a share, missing the 13-analyst estimate by a penny but up from the year-ago 8 cents a share.

New Plan Excel Realty

(NXL)

slipped 1/16 to 16 1/2 after it reported third-quarter funds from operations of 51 cents a share. Last week, the company announced it would report FFO below the consensus estimate, in the range of 51 cents to 52 cents a share. The current First Call/Thomson Financial estimate by 11 analysts was for 53 cents, while the year-ago funds from operations were 54 cents a share.

Oneida

(OCQ)

fell 1/8 to 23 7/8 after it posted third-quarter earnings of 60 cents a share, beating the single-analyst estimate by a penny and up from the year-ago 34 cents.

Payless ShoeSource

(PSS)

stepped up 1 3/16 to 43 3/16 after it reported third-quarter earnings of $1.11 a share, in line with the seven-analyst estimate and up from a year-ago 98 cents a share.

Pennzoil-Quaker State

(PZL)

lost 1/16 to 12 3/16 after it reported third-quarter operating net of 7 cents a share, falling short of the five-analyst estimate of 15 cents a share but up from the year-ago 6 cents a share. The company said it expects to achieve $105 million in cost savings by the end of next year.

Rite Aid dropped 2 9/16, or 32.3%, to 5 3/8 after it cautioned investors not to follow its previously stated profitability and cash flow outlook announced on Oct. 11 and canceled a planned conference call with analysts. The announcement comes after a prior statement that the

Securities and Exchange Commission's

enforcement division had contacted Rite Aid to address its plans to scratch $500 million in pretax earnings from the past three years in a restatement.

Sierra Health

(SEI)

edged up 7/8, or 14.4%, to 6 15/16 after it reported third-quarter earnings of 33 cents a share, in line with the nine-analyst estimate but lower than a year-ago 46 cents a share. The company said it sees a fourth-quarter charge due to job cuts and unit sales. Sierra said recapitalization was not in its shareholders best interests and said it would proceed with a previously announced share buyback plan.

Waste Management

(WMI)

fell 2 3/16, or 12.3%, to 15 9/16 after it reported third-quarter earnings of 44 cents a share, missing the 10-analyst estimate of 47 cents and down from the year-ago 49 cents. Last night,

TheStreet.com/nytimes.com

joint newsroom covered Waste Management's

third-quarter earnings report.

Offerings and stock actions

TheStreet.com

wrote about the United Parcel Service IPO in a story

last night, and

TheStreet.com/nytimes.com

joint newsroom reported on UPS, Expedia and other IPOs in a

story today.

Abbott Labs

(ABT) - Get Report

was unchanged at 37 after it said it has set a shareholders' rights plan, in an effort to shield investors from an unsolicited takeover bid. Abbott spokeswoman Rhoda Luniak said the plan is not a reaction to any certain offer. The plan calls for shareholders to receive one preferred stock purchase right per Abbott share, with the rights being exercisable only if a person or group purchases 10% or more of Abbott's stock or a tender offer or exchange offer is announced.

Merrill Lynch

said

Centerprise Advisors

has decided to ax its IPO plans, citing unfavorable market conditions. Merrill was expected to price Centerprise Advisors' 10.5 million-share IPO on Wednesday in a price range of $11.50 to $13.50 a share.

Copper Mountain

(CMTN)

bounced 4 13/16, or 6%, to 84 1/4 after it set a 2-for-1 stock split of its common shares. A stock dividend will be distributed on Dec. 9 to shareholders of record on Nov. 24.

Dataram's

(DTM)

board approved a 3-for-2 stock split. Dataram's shares hopped 7/8 to 19 3/8.

Online wedding Web site

The Knot

has set a 3.5 million-share IPO, which is expected to price in the range of $8 to $10 a share. Credit Suisse First Boston is serving as the deal's lead underwriter.

Analyst actions

Merrill cut its rating on

Allied Waste

(AW)

to near-term neutral from accumulate. Allied Waste fell 7/8, or 9.4%, to 8 3/8.

Credit Suisse First Boston

upped his rating on

American Home Products

(AHP)

to buy from hold. AHP bounced 2 to 54 7/8.

Warburg Dillon Read

started

American Standard

(ASD)

at buy. American Standard climbed 1/16 to 38 7/16.

Banc of America initiated coverage of MGM

(MGM) - Get Report

with a strong buy rating and a price target of 27. MGM popped 2 13/16, or 13.7%, to 23 5/16.

Merrill upgraded

Bay View Capital

(BVC)

to intermediate-term accumulate from intermediate-term neutral and long-term buy from long-term accumulate. Bay View Capital added 1 3/16, or 8.4%, to 15 1/4.

Merrill Lynch upped its price target on electronic manufacturing service stocks including

Celestica

(CLS) - Get Report

to 76 from 62,

Jabil Circuit

(JBL) - Get Report

to 77 from 62 and

Solectron

(SLR)

to 91 from 82. Shares of Celestica climbed 6 5/16, or 10%, to 69, while Solectron shares jumped 4 1/4, or 5.1%, to 86 3/4. Jabil mounted 3 3/4, or 5.9%, to 66 3/8.

PaineWebber

raised its price target on

Electronic Data Systems

(EDS)

to 75 from 70 a share. Shares of EDS hopped 2 3/16 to 65 9/16

SG Cowen

upgraded

Inktomi

(INKT)

to strong buy from buy and set a price target of 150. Shares Inktomi soared 6 1/4, or 5.3%, to 122 1/2.

Salomon Smith Barney

raised it price target on

Lehman Brothers

(LEH)

to 85 from 70. Lehman Brothers gained 2 13/16 to 74 9/16.

Merrill Lynch

upped its intermediate-term opinion on

Methode Electronics

(METHA)

to buy from accumulate. Methode shares rose 3 1/2, or 17.1%, to 24.

Warburg upgraded

QLT PhotoTherapeutics

(QLTI)

to strong buy from buy. QLT said yesterday that its losses widened in the third quarter because of higher marketing costs. QLT hopped 1 5/8 to 36 1/4.

Banc of America raised its ratings on Seagate and Maxtor to buy from market performer. Seagate shares gained 3/4 to 35 1/2, while Maxtor mounted 1, or 20%, to 7 1/8.

Credit Suisse First Boston upgraded shares of

Stanley Works

(SWK) - Get Report

to buy from hold. Shares of Stanley Works added 15/16 to 30 3/8.

Donaldson Lufkin & Jenrette

raised its rating on

Staples

(SPLS)

to buy from market perform. Yesterday, shareholders approved a plan to create a separate tracking stock for Staples.com. Shares of Staples hopped 2 9/16, or 14.7%, to 20.

Banc of America upped its price target on

Visual Networks

(VNWK)

to 125 from 60. Visual Networks soared 8, or 13.1%, to 68 15/16.

Miscellany

Allstate

(ALL) - Get Report

announced its plans to slice its workforce by 10%, cutting 4,000 non-agent jobs in an effort to save $600 million a year. The insurer said it would assume a $100 million fourth-quarter restructuring charge and another $100 million charge for fiscal 2000. Allstate rose 5/8 to 30 1/2.

Avid Technology

(AVID) - Get Report

announced a restructuring plan under which it will cut 200 jobs. The plan, which includes new initiatives focused on the Internet and advanced work group solutions, is expected to produce annual cost savings of about $20 million. Avid will take a charge of between $9 million and $10 million in the fourth quarter related to the revamping. Avid Tech mounted 3/8 to 12.

Compaq

(CPQ)

this morning unveiled a new corporate Internet-access PC priced at $499. Compaq expects the new machine, called the iPaq (sound familiar?), to account for at least 15% of the corporate computers it sells over the next year. Shares of Compaq gained 1 1/4, or 6%, to 22.

Luxottica

(LUX)

said its co-CEO David Browne has resigned effective immediately. Luxottica retreated 1 3/4, or 9.5%, to 16 1/2.

Microsoft

(MSFT) - Get Report

CEO Bill Gates told shareholders at Microsoft's annual meeting that the company was willing to go "a long way" to satisfy government requirements in its ongoing federal antitrust case. Microsoft sank 1 3/4 to 87 1/8.

TheStreet.com/nytimes

joint newsroom wrote about the antitrust suit in a

story this afternoon.

An explosion at a

Tosco

(TOS)

refinery about 40 minutes from Los Angeles sparked a major fire late Tuesday, sending plumes of smoke billowing hundreds of feet and temporarily closing nearly schools and a freeway before it was contained. Shares of Tosco nevertheless added 1 7/8, or 6.9%, to 28 11/16.

Overshadowing the bad news for the refinery were upgrades Wednesday morning from

PaineWebber

on refiners

Valero Energy

(VLO) - Get Report

and

Tesoro Petroleum

(TSO)

.

No injuries were reported in Tuesday's fire, the second major fire at a Tosco refinery this year. Tosco was fined over $810,000 by the federal

Occupational Safety and Health Administration

in August following its investigation into alleged violations which led to the February fire that killed four. The cause of Tuesday's fire is under investigation.

--

Mavis Scanlon