Wall Street Crawls Into Weekend With More Selling, No Climax

Today's faltering, stutter-step rallies and failures offered no resolution to traders hungering for one.
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SAN FRANCISCO -- The past month of trading has provided some big, juicy dips, most notably

yesterday and

Tuesday. Another emerged today, enticing some hungry buyers in the final hour, but they could not hoist major proxies back to break-even.

Notwithstanding select strength in Internet, financial and gold stocks, and another bond-market rally, stock proxies finished a difficult week with another setback. Moreover, market internals continued to produce the kind of ugliness only a mother (bear) could love.

The price of the 30-year Treasury bond rose 8/32 to 102 3/32, its yield falling to 5.97%. Bonds were supported by the dollar's stability -- it was quoted at 104.20 yen late today vs. 103.75 yesterday. Moreover, fixed-income got a boost from investors' desire to escape equities, a group reportedly including

Berkshire Hathaway

(BRK.A) - Get Report

Chairman Warren Buffett.

"I think the story is, one guy in Nebraska bought a lot of

bonds and sold some equities" yesterday, said one bond-market trader. "When that fellow does something there's a lot of copycats."

Berskhire Hathaway's spokeswoman did not return a phone call seeking comment.

After trading as low as 10,187.20 with about an hour remaining in the session, the

Dow Jones Industrial Average

recovered smartly but still closed down 39.26, or 0.4%, to 10,279.33. The close is the Dow's lowest since April 9 and left the blue-chip index down 9.2% from its

Aug. 25 record.

The Dow was pressured by

Merck

(MRK) - Get Report

,

3M

(MMM) - Get Report

and

Union Carbide

(UK)

, the last of which fell 4.2% after forecasting lower-than-expected earnings.

IBM

(IBM) - Get Report

and

Hewlett-Packard

(HWP)

were the Dow's best performers and helped the

Morgan Stanley High-Tech 35

rise 0.7% to 1217.70 after trading as low as 1187.

Over-the-counter tech bellwethers also rose smartly from session lows; the

Nasdaq 100

fell 0.2% to 2399.58 vs. its nadir of 2345.22.

The

Nasdaq Composite Index

, once as low as 2684.70, closed down 9.42, or 0.3% to 2740.41. The blinded-by-tech index is now 5.1% below its all-time high, set

Sept. 10.

MCI WorldCom

(WCOM)

pressured the Comp throughout the session, falling 3.2% amid reports it is negotiating to acquire

Sprint

, which gained 5.6%.

Chip stocks continued to be hampered by concerns about the fallout from the earthquake in Taiwan, but the

Philadelphia Stock Exchange Semiconductor Index

closed well off its session low of 502.17, down 1% to 516.40.

Intel

(INTC) - Get Report

pressured the SOX, falling 2.3% after

BancBoston Robertson Stephens

made some negative comments. The brokerage firm also downgraded

Rambus

(RMBS) - Get Report

, which tumbled 18.8%.

The

S&P 500

lost 3.05, or 0.2%, to 1277.36 after trading as low as 1263.84. At its lows, the index was 10.9% below its all-time high, set

July 16. At its closing level the index is a hair below the more-than-10% decline that marks a "correction" in technical terms.

Among big industry groups moving the index, weakness in energy stocks, big-cap tech, pharmaceuticals and insurers such as

Allstate

(ALL) - Get Report

overcame strength in financials. The

Philadelphia Stock Exchange/KBW Bank Index

rose 2% but the

American Stock Exchange Oil & Gas Index

fell 1.6%, the

American Stock Exchange Pharmaceutical Index

lost 1.4% and the

S&P Insurance Index

slid 2.7%; Allstate fell 11% after issuing a profit warning.

With stalwarts such as

America Online

(AOL)

the kind of daylong strength any deodorant would be proud to duplicate in,

TheStreet.com Internet Sector

index closed up 5.96, or 1%, to 617.61.

The

Russell 2000

fell 3.12, or 0.7%, to 417.09, reflecting the aforementioned "baby bear" internals.

"I think probably it was some short-covering," said Ned Collins, executive vice president of U.S. stocks at

Daiwa Securities America

, of the late-session bounce. "I think a lot of people felt with a

G7

meeting they might as well not go home short a ton of stuff."

However, Collins does not expect either a "concerted effort" to weaken the yen or Japanese officials being convinced to "print more money," the two major possibilities that could hurt those short.

"Who knows what happens over the weekend but all things being equal there's a decent chance for a knee-jerk rally next week," the trader said. "I do think we're way oversold. But I don't necessarily think we're in the clear. This is a very unfriendly time. It's hard to make a case you've got to buy stocks."

Collins remains optimistic about the long-term prospects for stocks, but said "we may see 9500 before" the current weakness "is all over with."

In

New York Stock Exchange

trading today, 877.8 million shares were exchanged while declining stocks led advancers 1,810 to 1,139. In

Nasdaq Stock Market

action 1.16 billion shares traded while losers led 2,341 to 1,491. New 52-week lows bested new highs 246 to 10 on the Big Board and by 149 to 31 in over-the-counter trading.

Approaching Oversold

"We did do some serious technical damage yesterday," said Greg Nie, chief technical analyst at

Everen Securities

in Chicago. "I think the fade probably carries into next week just to find that oversold spot. We're not there yet. We're probably still vulnerable."

When (if) the bounce comes, Nie said it needs to support the Dow above 10,500 and the S&P 500 above 1280 and 1300 on the S&P December futures contract, which closed around 1290 today.

A failure to sustain a rally above those levels "confirms the topping-type patterns and is going to energize the sellers," the technician said. "When the bounce comes it must go from knee-jerk attempt to something more meaningful. The momentum is much more critical to the bulls."

In the past, Nie has repeatedly given bulls the "benefit of the doubt." Speaking before today's final-hour bounce, he was less eager to make that statement.

"Internal indicators have been deteriorating," he said. "Things are starting to slip away and look like they can fall in place with the bears. We can get to oversold soon, then we've got to repair the damage and answer the momentum question quickly. There's little if any margin for error."

Among other indices, the

Dow Jones Transportation Average

fell 17.26, or 0.6%, to 2878.72; the

Dow Jones Utility Average

slid 0.13 to 294.73; and the

American Stock Exchange Composite Index

fell 5.71, or 0.7%, to 771.79.

For the week, the Dow lost 4.9%; its weekly point loss of 524.30 was its largest ever. The Nasdaq slid 4.5%; the loss of 129.22 points was its sixth-worst weekly decline. The S&P shed 4.3%, the Russell lost 4%, the DOT dipped 0.5%, the Dow transports fell 4%, the Dow utilities fell 5.2% and the Amex Composite lost 2.9%.

Elsewhere in North American equities today, the

Toronto Stock Exchange 300

fell 48.72, or 0.7%, to 6763.40 and the

Mexican Stock Exchange IPC Index

climbed 6.95 to 4980.99. For the week, the TSE 300 slumped 4.2% and the IPC moved up 0.5%.

Friday's Company Report

By Eileen Kinsella
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.

)

Alteon Websystems

(ATON:Nasdaq) powered to one of the strongest IPO debuts of the year, soaring 55 15/16, or 294.4%, to 74 15/16. The investor clamor for this networking outfit shows that the craze for companies building the Net's infrastructure continues apace.

Lehman Brothers

last night priced the 4 million-share deal top-range at $19 a share, having boosted the range from $14 to $16 and raised the offering size from 3 million shares. (For more on today's IPO action, see "Offerings and stock actions" below.)

Mergers, acquisitions and joint ventures

Cendant

(CD)

added 3/8 to 17 15/16 after saying it would sell its

North American Outdoor Group

unit to fund management company

Doughty Hanson

in a deal valued at about $150 million. North American operates six special-interest clubs, including the

Professional Golf Association Tour Partners Club

.

MCI WorldCom lost 2 1/2 to 76 1/8 and

Sprint

gained 2 7/8, or 5.6%, to 54 after

The Wall Street Journal

reported the two companies have been chatting about a merger. The newspaper said that although Sprint has held talks with a few telecom titans, negotiations with MCI have recently picked up. The

Journal

story also said that significant roadblocks remain, which could sink a deal.

Phelps Dodge

(PD) - Get Report

lost 1 15/16 to 54 9/16 after saying it had received antitrust clearance from U.S. regulators for its offers to acquire

Asarco

(AR) - Get Report

and

Cyprus Amax Mineral

(CYM)

. Asarco added 1 3/8, or 6.2%, to 22 9/16, while Cyprus Amax inched up 3/16 to 18 5/8.

Regency Realty

(REG) - Get Report

was unchanged at 19 15/16 and

Federal Realty

(FRT) - Get Report

climbed 1/8 to 20 3/4 after the two companies called off talks about Regency's possible acquisition of Federal's shopping center assets.

Security First Technologies

(SONE)

slipped 7/8 to 37 7/8 after saying it would buy privately held

VerticalOne

for $166 million in stock. Security First provides Web-based services for banks and brokers, while VerticalOne organizes personal account information on the Internet.

Timken

(TKR) - Get Report

added 1/8 to 16 5/16 after it said it was exploring alternatives for its specialty steel unit

Latrobe Steel

, including selling the unit or forming an alliance with a third party.

Earnings/revenue reports and previews

Allstate dropped 3 1/2, or 11%, to 28 1/4 after warning it expects lower operating earnings due to higher catastrophe losses. The company said it expects third-quarter operating earnings of 50 cents to 55 cents a share, which would miss both the 13-analyst estimate of 78 cents and the year-ago 76 cents. Allstate said it expects to post earnings Oct. 20. The company also said depending on developments in the weather, fourth-quarter operating earnings could come in at 65 cents to 73 cents a share, which would fall well below the 13-analyst estimate of 81 cents and below the company's year-ago operating earnings of 78 cents.

Merrill Lynch

cut its third-quarter estimates on Allstate to 75 cents from 79 cents a share.

Goodyear

(GT) - Get Report

was unchanged at 44 1/4 after last night saying third-quarter earnings could come in slightly above or below analyst estimates, and would reflect workforce reductions. Goodyear said it expects earnings of 50 cents to 56 cents a share in the third quarter. The current seven-analyst estimate is for 51 cents a share.

Park Electrochemical

(PKE) - Get Report

added 1 1/8 to 29 3/16 after posting second-quarter earnings of 53 cents a share, beating the three-analyst estimate of 44 cents and the year-ago 2 cents.

Pinnacle West

(PNW) - Get Report

climbed 1 9/16 to 36 3/8 after the company said it expects to take a third-quarter charge of $1.65 a share related to an agreement with Arizona regulators.

Steelcase

(SCS) - Get Report

lost 1/16 to 14 3/8 despite reporting second-quarter earnings of 25 cents a share, beating the six-analyst estimate of 24 cents but down from the year-ago 41 cents.

Offerings and stock actions

Beyond Alteon, a number of the stocks that made their trading debut today were ready for happy hour:

  • Keynote Systems (KEYN:Nasdaq) rocketed 13 1/4, or 94.6%, to 27 1/4.
  • NetZero (NZRO:Nasdaq) zoomed up 13 1/8, or 82%, to 29 1/8.
  • Interspeed (ISPD:Nasdaq) trotted up 6 5/16, or 52.6%, to 18 5/16.
  • Trintech (TTPA: Nasdaq) tacked on 2 1/2, or 21.6%, to 14 1/16.

While others were headed home for bed:

  • Webstakes.com (IWIN:Nasdaq) was a loser despite its stock symbol, off 2 1/2, or 17.9%, to 11 1/2.
  • Manulife Financial (MCF:NYSE) slipped 3/16 to 12 9/16.

Sylvan Learning Systems

(SLVN)

added 1/8 to 16 after it announced plans to spin off its prometric testing unit.

Universal Forest Products

(UFPI) - Get Report

slipped 3/16 to 15 3/4 after the company said it recently repurchased 100,000 shares.

Analyst actions

Merrill Lynch lowered third-quarter earnings estimates on a number of property and casualty insurance firms due to recent catastrophe losses.

Chubb Insurance

(CB) - Get Report

lost 1 3/8 to 52,

W.R. Berkley

(BKLY)

slipped 1/4 to 22 9/16 and

Frontier Insurance Group

(FTR) - Get Report

fell 1 9/16, or 14.5%, to 9 3/16.

Atmos Energy

(ATO) - Get Report

lost 1/2 to 24 1/8 after

Deutsche Banc Alex. Brown

upgraded it to buy from market perform.

Ericsson

(ERICY)

lost 3/8 to 31 and

Nokia

(NOK) - Get Report

climbed 1 to 88 5/16 after Merrill Lynch raised its rating on the stocks to intermediate-term buy from accumulate.

EarthLink

(ELNK)

jumped 5 3/16, or 12.2%, to 47 9/16 after

Morgan Stanley Dean Witter

raised its rating to strong buy from outperform and set a price target of 74.

Intel fell 1 1/16 to 75 43/64 after

BancBoston Robertson Stephens

said the stock will likely face pressure in the near-term due to weaker PC demand from the Taiwan earthquake.

Kroll-O'Gara

(KROG)

plummeted 11 3/8, or 44.4%, to 14 5/16 after

Warburg Dillon Read

sliced its rating to hold from strong buy. Kroll late yesterday warned that it will defer undisclosed acquisitions as it weighs strategic alternatives, and that analysts should trim their estimates for the company if they'd assumed the acquisitions.

Lehman Brothers

(LEH)

added 15/16 to 54 5/16 after Merrill Lynch upgraded it to near- and long-term buy from accumulate.

McLeodUSA

(MCLD)

gained 1 to 36 1/2 after Merrill Lynch rolled out coverage with a near-term accumulate, long-term buy rating.

Microsoft

(MSFT) - Get Report

fell 1/4 to 90 15/16 despite a hand from

Salomon Smith Barney

, which said weakness in its share price represented a buying opportunity.

Motorola

(MOT)

slipped 13/16 to 82 7/8 despite an upgrade from Merrill Lynch to near-term buy from accumulate.

Natrol

(NTOL)

gained 1/8 to 8 1/4 after

Banc of America Securities

initiated coverage at buy and set a price target of 11 1/2.

TheStreet.com Inc.

(TSCM)

, publisher of this Web site, rose 1 7/8, or 10.1%, to 20 5/8 after

Prudential Securities

initiated coverage at strong buy and set a price target of 30.

Miscellany

Aetna

(AET)

added 3/16 to 70 after the company said it adopted a new shareholder rights plan in an effort to strengthen the board's ability to respond to hostile takeover attempts and maximize shareholder value in case of an unsolicited event. The company said the action was not in response to any known effort to acquire control of it.

AutoNation

(AN) - Get Report

gained 5/16 to 12 1/16 after saying it tapped Michael J. Jackson to become its CEO.

DaimlerChrysler

(DCX)

climbed 2 1/8 to 68 3/8 after announcing, as expected, that it trimmed its management board to 14 from 17 members and that Thomas Stallkamp, the company's North American president, will leave the company by the end of the year.

General Motors

(GM) - Get Report

lost 11/16 to 62 1/16 after saying it will raise its investment in its Arlington, Texas, truck assembly plant by $75 million, to more than $500 million.

Rite Aid's

(RAD) - Get Report

woes continue as Lehman Brothers cut its 2000 earnings estimate to $1.28 a share from $1.56, and 2001 earnings estimates to $1.49 from $1.88 a share. Amid a lawsuit and flagging share price, the company said it would cut 330 jobs in a corporate downsizing it hopes will result in after-tax savings of $20 million a year. Rite Aid fell 1, or 8.3%, to 11.

Sky Financial

(SKYF)

added 5/16 to 22 5/8 after it said chairman and CEO David Francisco will retire and the company will take a merger-related charge in the third and fourth quarters. Sky also said it authorized the repurchase of up to 3.5 million common shares.

The Heard on the Street column in the

Journal

said that in the wake of the devastating earthquake this week in Taiwan, some big hedge funds are going long the

Philadelphia Stock Exchange Semiconductor Index

.

Dial

(DL) - Get Report

gained 3/16 to 26 7/16 after

Business Week's

Inside Wall Street column, mentioned the company as a takeover target. (

TheStreet.com

examined an Inside Wall Street item on

Log On America

(LOAX)

in a recent Truth Serum

story.) Shares of Dial soared in June on rumors it was a takeover target, but the stock has since cooled off as the takeover chatter chilled. The column cites an unidentified money manager who has been snapping up shares of Dial and says

Clorox

(CLX) - Get Report

, lately up 1/16 to 40 7/8 is interested in buying Dial. Meanwhile, Andrew Shore, an analyst at

PaineWebber

, is quoted in the column as saying Dial is "vulnerable to a takeover," but he doesn't think anything will happen over the next six to nine months.