Wall Street Gets the Bounce it Wanted but Doesn't Rest Easy

SAN FRANCISCO -- This time, they didn't forget the gravy.

After being whipped about like a towel in the hand of former

Celtic

"great"

M.L. Carr

, equity proxies secured the "oversold bounce" that has been expected but so elusive in recent days. The histrionic-soaked session featured rumors about hedge-fund woes and a big dip and rebound in Internet stocks. Trading levels improved from recent soporific levels, although many investors remain fixated on tomorrow's employment data.

The day got off to a somewhat harried start (for those long) as worries about

Microsoft's

(MSFT) - Get Report

plans to undercut

America Online

(AOL)

, as reported in

The Wall Street Journal

, roiled an already-jittery Internet sector.

"With AOL opening down huge, there was a snowball effect that created some panic," said Randy Billhardt, co-head of block trading at

PaineWebber

.

Billhardt observed Internet stocks are "not a huge portion" of institutional investors' portfolios, but "I think they are in a role of leaders, at least psychologically." Big names in the group "got down to levels which created more of what some said was already a buying opportunity," he said. "As they rallied back, that proved some relief."

TheStreet.com Internet Sector

index, once as low as 452.90, recovered to close at its high of the day, up 23.64, or 4.8%, to 513.55. Rising bellwethers such as

Amazon.com

(AMZN) - Get Report

and

Yahoo!

(YHOO)

aided the DOT although AOL shed 4.8%.

The

Nasdaq Composite Index

closed up 25.83, or 1%, to 2565.83, inspired by

MCI WorldCom

(WCOM)

as well as Internet stocks, its recent nemeses. But it was far from a smooth path for the tech-soused index. The Comp traded as low as 2474.41 early on, then rose as high as 2550 midday before sliding back below break-even heading into the last hour of trading, when buyers reemerged.

One sign of improving sentiment in technology was the solid performance of IPOs such as

Mission Critical Software

(MCSW)

, up 59.4%;

Internet Capital

(ICGE)

, which leapt 103%; and

HomeStore.com

(HOMS:Nasdaq), up 13.8%. Conversely,

Cobalt Group

(CBLT:Nasdaq) shed 25%.

Blue-chip gauges enjoyed a steadier session as big financials and cyclicals joined growth stocks on the upswing. The

Dow Jones Industrial Average

rose 119.05, or 1.1%, to 10,793.82 after trading as low as 10,566.18 and as high as 10,798.25.

A diverse group paced the Dow, featuring

IBM

(IBM) - Get Report

,

Hewlett-Packard

(HWP)

,

American Express

(AXP) - Get Report

,

Union Carbide

(UK)

,

3M

(MMM) - Get Report

,

DuPont

(DD) - Get Report

and

General Electric

(GE) - Get Report

.

Led by many of the same names and their sector peers, the

S&P 500

rose 8.38, or 0.6%, to 1313.71, overcoming an intraday low of 1287.23.

The

Russell 2000

rise fractionally to 429.75 after trading as low as 422.23 while market internals again belied the blue-chip advance.

In

New York Stock Exchange

trading, 859.4 million shares were exchanged while declining stocks led advancers 1,817 to 1,195. In

Nasdaq Stock Market

action 1.17 billion shares traded while losers led 2,296 to 1,666. New 52-week lows bested new highs 196 to 39 on the Big Board and 199 to 35 in over-the-counter trading.

The increased volume -- especially on the Nasdaq -- and early morning dive and recovery had some television pundits saying the action looked like a "capitulation" session, earmarking the end of the recent decline. However, market players were more cautious.

"People are still concerned about the

employment numbers tomorrow," Billhardt said. "We'll follow the lead from those. Today shows me there is cash on the sideline and if the numbers are softer, there'll be huge upside. On the other hand, people will get concerned about rising rates if the numbers are strong. I hate to sound like I'm

hedging but that's the role we're put in."

One San Francisco-based trader echoed the sentiment: "At the moment, I'm not convinced," he said. "I think you have some short-covering" but fundamental buying is "still very tentative."

The trader, who requested anonymity, believes "we still need something to kick start a rebound" but is skeptical even a market-friendly employment report will provide the impetus on a sustained basis.

Ghosts of Long Term Capital

Like stocks, the bond market was subjected to some wild swings today. The price of the bellwether 30-year Treasury bond traded as low as 88 3/32 around 8:30 a.m. EDT after jobless claims proved smaller than expected, adding to the nervousness about tomorrow's jobs report. The bond recovered to as high as 88 29/32 by 9:30 a.m. but was subsequently hit again when weaker-than-expected productivity figures were reported a half-hour later.

All the while, fixed-income trading was awash with rumors about distressed selling by hedge funds, with the focus on a derivative trade gone awry in European markets. The rumors were as prevalent as they were lacking in detail, and remain unsubstantiated. But traders used the scuttlebutt as a rationale to flow into the relative safety of the 30-year Treasury bond, which closed up 28/32 to 89 1/32, its yield falling to 6.05%. (For more, see today's

Bond Focus. And

TheStreet.com

previewed the jobs report in a separate

story this afternoon.)

Among other indices, the

Dow Jones Transportation Average

gained 3.09, or 0.1%, to 3283.16; the

Dow Jones Utility Average

rose 1.08, or 0.3%, to 317.72; and the

American Stock Exchange Composite Index

shed 0.87, or 0.1%, to 776.09 after trading as low as 768.83.

Elsewhere in North American equities, the

Toronto Stock Exchange 300

lost 56.65, or 0.8%, to 6906.60 while the

Mexican Stock Exchange IPC Index

climbed 7.88 to 5150.790.

Thursday's Company Report

By Eileen Kinsella
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.

)

Raising cash proved easy for Internet Capital, which shot up 12 3/8, or 103.1%, to 24 7/16 on its first day of trading, making it stand out in an otherwise poor IPO market.

Merrill Lynch

priced 14.9 million shares at $12 each.

Talk about a bad day.

Pier 1 Imports

(PIR) - Get Report

got docked 2 7/8, or 32.7%, to 5 7/8 after getting hit with a steady stream of bad news. Last night the company said CFO Stephen Magnum resigned "to pursue other interests," and warned second-quarter earnings would miss the 15-analyst estimate of 18 cents a share by as much as 6 cents. The company also said talks for a potential acquisition had ended with no deal.

Raymond James

thought all the bad news made the Pier look fishy, and cut its rating to neutral from buy.

Mergers, acquisitions and joint ventures

American Access Technologies

(AATK)

rose 5/8 to 17 1/4 and

Herman Miller

(MLHR) - Get Report

lost 1/4 to 25 3/4 after the companies announced a marketing deal.

Calpine

(CPN)

gained 1/2 to 74 after it entered into an agreement with a subsidiary of

Enron

(ENE)

to acquire development rights for a natural gas power plant in California. Shares of Enron edged up 11/16 to 85 7/16.

Cardinal Health

(CAH) - Get Report

was unchanged at 67 1/6 after it said it's acquiring privately held

Automatic Liquid Packaging

of Woodstock, Ill., a custom manufacturer of sterile liquid pharmaceuticals and other health-care products, for $390 million in stock.

General Motors

(GM) - Get Report

slipped 1 13/16 to 61 after it announced a broad, four-year, multimillion-dollar marketing pact with

Warner Bros.

which allows GM to create promotions with WB Entertainment tie-ins. Does this mean those hip kids on

Dawson's Creek

will sport around in minivans and Cavaliers? Shares of WB's parent company

Time Warner

(TWX)

also slipped, down 1 1/4 to 67 9/16.

IBM

(IBM) - Get Report

added 4 11/6 to 123 3/16 and

i2 Technologies

(ITWO)

added 4 9/16, or 17.5%, to 30 13/16 after the two companies agreed to jointly market supply chain software to companies moving their business onto the Internet.

Jabil Circuit

(JBL) - Get Report

gained 4 7/8, or 13.3%, to 41 1/2 after it said it plans to acquire

GET Manufacturing

, a privately held electronics manufacturing services provider which is headquartered in Hong Kong, for $250 million in stock. GET has principle manufacturing operations in China, with additional sites in Mexico and California.

Earnings/revenue reports and previews

Buckle

(BKE) - Get Report

got belted 9 15/16, or 35.3%, to 18 1/4, after the company said it could miss the First Call consensus expectation of 31 cents a share by as much as 4 cents.

Danka Business

(DANKY)

gained 3/16 to 10 7/8 after it reported first-quarter earnings of 21 cents a share, well above the nine-analyst estimate of 2 cents and up from 9 cents a year ago. The company said the year-ago figure included a $12.5 million research and development charge but did not provide a per-share figure for operating income.

Four Seasons

(FS)

rose 1 1/2 to 47 1/2 after it reported second-quarter earnings of 43 cents a share, compared with the five-analyst estimate of 44 cents. The company reported earnings in Canadian currency of 64 cents, up from 53 cents Canadian a year ago.

Mirage Resorts

(MIR)

lost 3/8 after it reported second-quarter earnings per share of 9 cents including a special charge of 1 cent a share, and down from 18 cents a year ago. The 20-analyst estimate had called for earnings of 9 cents a share.

Upscale retailer

Neiman Marcus

(NMG)

looked a little ragged, losing 2 1/16, or 8.7%, to 21 3/4 after it warned fourth-quarter earnings might miss their mark by as much as 5 cents due to weak sales. The current five-analyst estimate is for 12 cents.

Protein Design Labs

(PDLI) - Get Report

lost 4 1/8, or 15.3%, to 22 7/8 after reporting a wider-than-expected loss of 14 cents a share for the second quarter, compared with the five-analyst estimate of a 9-cent loss and the year-ago loss of 5 cents.

Royal Dutch/Shell Group

, on an adjusted current cost of supplies basis, posted better-than-expected second-quarter results of $1.61 billion, up about 5% from $1.54 billion in the year-ago period.

Royal Dutch Petroleum

(RD)

which owns 60% of Royal Dutch/Shell, rose 2 3/16 to 62 9/16 while

Shell Transport & Trading

(SC) - Get Report

, which owns 40%, climbed 2 5/16 to 49 3/16.

UnitedHealth Group

(UNH) - Get Report

gained 7 3/8, or 13.4%, to 52 15/16 after posting second-quarter earnings of 76 cents a share, 2 cents ahead of the 21-analyst estimate and up from the year-ago 45 cents.

J.P. Morgan

raised its rating on UnitedHealth to buy from long-term buy.

Vesta

(VTA) - Get Report

climbed 7/16, or 9.5%, to 5 1/16 after reporting second-quarter earnings of 24 cents a share, up from a 93-cent loss a year ago. Both figures included extraordinary items and no per-share operating income figures were provided. The single-analyst estimate was for 25 cents a share.

In other earnings news:

Offerings and stock actions

Be Free

, an Internet marketing service, said it plans to raise $60 million through an IPO of common stock.

Donaldson Lufkin & Jenrette

,

Hambrecht & Quist

and

Dain Rauscher Wessels

will underwrite the offering.

CIT Group

(CIT) - Get Report

lost 1 13/16,or 7%, to 24 1/4 after it said it approved a 2-million share repurchase program.

Things were looking blue for Cobalt, which lost 2 3/4, or 25%, to 8/5/16 in its trading debut after being priced at $11 a share by

BancBoston Robertson Stephens

.

Galileo Technology

(GALT) - Get Report

climbed 2 3/4, or 5.5%, to 53 1/4 after setting a 2-for-1 stock split effective as a stock dividend Sept. 17. After the split, Galileo would have about 41.3 million shares outstanding.

On its first trading day, HomeStore.com got a warm reception, rising 2 3/4, or 13.8%, to 22 3/4 after being priced at $20 a share yesterday evening.

Interactive Pictures

(IPIX:Nasdaq) gained 11/16 to 19 after J.P. Morgan priced its shares top-range at $18 each.

Trizetto Group

, a health-care Internet portal in Newport Beach, Calif., said it plans to raise more than $57 million in an initial public offering.

Bear Stearns

, DLJ and

Adams Harkness & Hill

will underwrite the offering.

Venturian

(VENT)

lost 7/16, or 6.5%, to 6 1/2 after saying it would pay a 5 cent-per-share cash dividend and set a 10% stock split, the latter of which is effective Oct.15

Analyst actions

Charles Schwab

(SCH)

gained 4 3/4, or 12.8%, to 41 3/4 after

Warburg Dillon Read

initiated coverage with a buy rating and set a price target of 55 on the stock.

Dow Chemical

(DOW) - Get Report

gained 5 11/16 to 124 5/16 after J.P. Morgan and PaineWebber raised their ratings to long-term buy, and attractive respectively.

Miscellany

Bob Evans

(BOBE)

fell 1/4 to 19 3/16 after the company said CEO Daniel Evans will step down in April 2000, the end of the company's fiscal year. Evans will be succeeded by Stewart Owens, currently COO.

DuPont Pharmaceutical

(DD) - Get Report

gained 2 1/2 to 74 and

Syncor

(SCOR) - Get Report

rose 1 15/16 to 34 1/2 after the companies said they were taking steps to terminate legal wrangling related to the distribution of Cardiolite in Mexico.

Eastman Kodak

(EK)

lost 3/8 to 70 1/8 after it said that Jesse Greene has been promoted to senior vice president of business strategy and information technology, a newly created position that expands the executive management team. Greene will report directly to Dan Carp, who will become the company's CEO in January, Kodak said.

Lucent

(LU)

climbed 1 5/16 to 64 1/4 after it canceled an agreement to sell a small-business sales unit to

LSME Holding

, a startup founded by Susan Mandl. Mandl is married to Alex Mandl, CEO of telecom company

Teligent

(TGNT)

.

Microsoft rose 13/16 to 85 3/4 after

The Wall Street Journal

reported it is laying plans for low-priced, or perhaps even free, Internet access in a challenge to America Online's dial-up Net-access business. AOL shed 3 1/2 to 83 15/16.