A pitched battle was waged on Wall Street today along the 38th Parallel known as key "technical support" levels. In the end, those long stocks lost the battle but may have won the war. Or, at least, staved off final defeat as major proxies closed well off session lows. However, the possibility for a counterattack remains high as forces are massed along the Yalu River of skepticism.
was most encouraging to market players. The index closed down 16.37, or 1.3%, to 1281.43 but up from its session low of 1267.73. At its worst, the index was more than 10% below its
July 16 all-time high of 1418.18 and below its 200-day moving average of 1279.40. Those levels raised the fear factor even among the most jaded Wall Street participants.
"A lot of people are looking for a rally. A little bit of the Sir Walter," one trader quipped at midday. "But if it doesn't hold right here
at the 200-day moving average, it's probably going to get ugly."
The closely watched (and benchmarked) index avoided falling into official correction territory, but it's down 9.7% from its all-time high.
Dow Jones Industrial Average
closed down 52.55, or 0.5%, to 10,655.15 after trading as low as 10,549.08. Some market watchers said 10,600 was a key level for the blue-chip proxy, for it was from around that level that the index rose in late June to its all-time high of 11,209.84.
The Dow was hampered most by
as growth stocks and financials continued to feel the pinch of higher interest rates.
After giving up early gains, the price of the 30-year Treasury bond closed down 4/32 to 86 19/32, its yield rising to 6.25%. (For more on the fixed-income market, see today's late
The Dow and the S&P were aided by strength in retailers, notably
, which rose 6.7% after posting robust second-quarter earnings and predicting a strong second half. The
S&P Retail Index
rose 1.9%. Additionally, consumer stocks such as
Procter & Gamble
and cyclicals such as
buoyed blue-chip averages.
'We may have hit support here intraday but it doesn't mean anything,' said Gary Kaltbaum of J.W. Genesis. 'If you take a look at a chart of the
long bond's yield, there's a perfect breakout to the upside. I suspect 6.50% is a lock. That's what's causing the pain in growth names.'
Nasdaq Composite Index
fell 28.87, or 1.2%, to 2490.11 after trading as low as 2442.22. The tech-flavored index is now down 13.1% from its all-time high.
As had been the case on the downside of late, Internet stocks led today's rebound.
TheStreet.com Internet Sector
index, once as low as 458.09, recovered to trade as high as 490.61 before closing up 8.37, or 1.7%, to 488.40.
Bellwether Net names such as
led the DOT's comeback. Still, the average remains mired in a bear-market reversal, down 38.2% from its April 12 high of 790.44.
Reflecting the day's ebb and flow, the
Chicago Board Options Exchange's
volatility index closed up 1.1% to 28.30 vs. its session high of 31.09. The VIX, as it's known, is basically a measure of investors' level of fear and has not closed above 30 since March 2.
On the Other Hand
Despite the "moral" victory by major averages, there was plenty for those betting against stocks to crow about today. Most troubling, the
Dow Jones Transportation Average
fell 82.91, or 2.6%, to 3137.54 and is now down 17.1% from its all-time high of 3783.50, set May 12. Additionally, the
fell 3.07, or 0.7%, to 422.82 after trading below its year-opening level of 421.95 intraday. Meanwhile, market internals continue to sour like cucumbers in garlic and dill, salt and spices.
New York Stock Exchange
trading, 836.3 million shares were exchanged while declining stocks swamped advancers 2,313 to 764. In
Nasdaq Stock Market
action 989.3 million shares traded while losers led 2,684 to 1,343. New 52-week lows bested new highs 324 to 40 on the Big Board and by in 182 to 38 over-the-counter trading.
"Breadth stats have turned to mush and made a big bearish statement," said Greg Nie, chief technical analyst at
in Chicago. "What more do you want me to say?"
In absolute terms, the advance/decline has lost over 12,000 "units" since its July 16 peak, Nie said. "That's a lot of ground in a fast period of time."
The questions from here: "Are price charts going to break down? Is volume going to confirm to keep things under pressure?" the technician posed. "We are playing with fire."
The S&P holding above 1280 was significant today but "I think we're going to flirt with these numbers for a couple of days," Nie said. "We're getting close to a bottom but it's going to be very testy."
Like many on Wall Street, Nie said the "real risk" to stocks is interest rates.
"It's the interest rates, stupid," agreed Gary Kaltbaum, chief technical analyst at
J.W. Genesis Securities
in Boca Raton, Fla. "We may have hit support here intraday but it doesn't mean anything. If you take a look at a chart of the
long bond's yield, there's a perfect breakout to the upside. I suspect 6.50% is a lock. That's what's causing the pain in growth names."
Today's rebound from the lows notwithstanding, "there's too much damage being done to important stocks," the technician said, citing
as examples; each fell more than 3%.
He said sellers are also "coming after" recent highfliers such as
-- which fell 6.1% in investors' continued disappointment with its
acquisition -- and
, which lost 1.9%.
After the close, Cisco reported fiscal fourth-quarter earnings of 21 cents a share, a penny ahead of the consensus estimate.
Among other indices, the
Dow Jones Utility Average
fell 1.26, or 0.4%, to 317.69; and the
American Stock Exchange Composite Index
shed 7.10, or 0.9%, to 770.77.
Elsewhere in North American equities, the
Toronto Stock Exchange 300
dropped 73.48, or 1.1%, to 6790.26 and the
Mexican Stock Exchange IPC Index
lost 13.39 to 5058.31.
Tuesday's Company Report
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.
were slammed today as static about
falling stock price raised questions about the companies multibillion-dollar merger. Fears about a phone-rate war and overall weakness in the high-tech sector weren't helping matters any. Frontier was one of the big losers on the Big Board today, dropping 4 1/8, or 9.2%, to 40 3/4. Global Crossing continued its slide, falling 2 5/8, or 8.6%, to 28.
Mergers, acquisitions and joint ventures
of Canada rose 1 13/16, or 5.7%, to 33 5/8 and
of France rose 5/16 to 28 1/4 after the companies confirmed they and
of Switzerland were in three-way merger talks.
The Wall Street Journal
reported earlier that the three could be planning to create an aluminum-and-packaging behemoth to rival
. Alcoa rose 13/16 to 66 7/16 despite the news.
shaved 3 1/4, or 11.5%, to 25 after it said it would acquire
in a deal valued around $677 million. i-Cube melted 1 1/8, or 5.4%, to 19 7/8
Lucent lost 2 to 61 5/8 after it agreed to acquire
International Network Services
in a deal valued at $3.7 billion. Each International Network share will be converted into 0.8473 Lucent share. At yesterday's prices the takeover is valued around $3.7 billion, or about $54 an International Network share, Lucent said. International Network added 2 15/16, or 6.2%, to 50 7/16.
added 1 to 65 11/16 after its board rejected
advances for the second time at a meeting on Monday. Elf lost 3/8 to 89.
Earnings/revenue reports and previews
lost 1 3/8 to 38 despite saying it expects double-digit growth in earnings per share next year in addition to an improvement in operating margins.
gained 7/16 to 37 15/16 after posting fourth-quarter earnings of 56 cents a share, a penny better than the lone-analyst estimate and up from 38 cents a year ago. The company said the year-ago EPS included a 3-cent restructuring charge.
Overseas Shipholding Group
floated down 1/8 to 13 9/16 after it reported second-quarter earnings of 23 cents a share, compared with 20 cents a year ago. The latest quarter included a 16-cent gain, and no operating income figures were available. The single analyst estimate called for a 5-cent operating loss.
Polo Ralph Lauren
added 3/4 to 19 after posting first-quarter operating earnings, excluding a charge, of 28 cents a share, ahead of the 14-analyst estimate of 24 cents.
Wal-Mart rose 2 11/16, or 6.7%, to 42 7/8 after it posted second-quarter operating earnings of 31 cents a share, excluding a litigation-settlement charge of 3 cents. Earnings were ahead of the 17-analyst estimate of 28 cents and up from the year-ago 23 cents.
In other earnings news:
Offerings and stock actions
The market may be cool, but
Red Hat Software
(RHAT:Nasdaq) is proving to be red hot.
, the IPO's lead underwriter, fired up the price range to $12 to $14 from $10 to $12 a share, discounting recent investor pessimism toward Internet stocks.
tagged Linux, Red Hat's largest distribution product, as "the fastest-growing operating system for servers in 1998."
is conjuring up plans to go public and reorganize its stock trading operation. Spokesperson Dale Carlson told
Securities and Exchange Commission
and current members give the green light, the third-largest U.S. exchange will abandon a membership stock trading operation for a for-profit corporate subsidiary, which would take an estimated nine months. Implementing the proposed changes would give the exchange the niche it needs to compete in the world of online trading by giving trading rights to anyone who holds a $2,000-a-month license.
added 1/16 to 8 7/16 after it said it would increase steps to buy back 2 million shares. The footwear manufacturer will accept restructuring charges of 4 cents a share and plans to eliminate 125 jobs.
slipped 1 3/16 to 62 3/8 after its board approved a buyback of up to 15 million shares.
lost 2 1/16 to 44 3/4 after
cut it to a long-term buy from buy based on valuation, leaving its price target unchanged.
Beringer Wine Estate
added 1/8 to 36 9/16 and
rose 1/8 to 36 3/8 after J.P. Morgan started coverage with a buy and a market perform, respectively.
jumped up 9 9/16, or 12%, to 89 1/4 after
Morgan Stanley Dean Witter
analyst Mary Meeker was out with positive comments on the stock.
lost 9/16 to 49 1/16 after
Salomon Smith Barney
cut its recommendation to neutral from outperform and slashed its 12-month price target.
added 1 5/16 to 57 after
upgraded it to attractive from neutral.
fell 1/2 to 28 15/16 and
lost 3/8 to 9 13/16 even after
CIBC World Markets
complimented both stocks with initial buy ratings.
National Golf Properties Inc
edged down 1/8 to 22 5/8 after
started coverage of the real estate investment trust with a buy rating.
slipped 7/8 to 38 1/4,
fell 13/16 to 36 11/16 and
Morgan Stanley Dean Witter
rose 7/8 to 83 5/16 after Salomon Smith Barney's upping its third-quarter earnings estimates on all three financial stocks.
rose 5 3/4, or 8.6%, to 72 7/8 after ING bumped up estimates, taking its price target to 84.
gained 1 11/6, or 8.6%, to 21 7/16 after
Banc of America Securities
gave the software maker just what the doctor ordered, raising its rating from a buy to a strong buy.
Taiwan Semiconductor Manufacturing
moved up 1 1/2 to 32 after
Donaldson Lufkin & Jenrette
tech analyst Boris Petersik booted up its rating to a buy from a market perform.
lost 1/16 to 5 7/8 after it said it concluded an internal investigation into financial wrongdoing by former employees.
Six former Halter employees, including one who was a senior officer of the company until May 1999 and a director until June 1999, and another was a senior officer of a Halter subsidiary, were involved in schemes to defraud the company, Halter disclosed in a document filed late Monday with the SEC. Shares of Halter appeared unaffected by the filing; HLX closed at 5 7/8, down 1/16.
The two former officers, who were not named in the filing, apparently had an undisclosed relationship with vendors of the company. Halter paid these vendors $6.2 million over a three-year period for services that were actually performed "in whole or in substantial part" by Halter's own workforce. The amounts paid were then included as expenses in Halter's financial reports. Other wrongdoing which has come to light included the use of company workforce for personal use.
Halter said in its filing that every employee known to have participated in the misconduct has been terminated. It will seek recovery of the misappropriated funds, and will strengthen internal audit functions and controls. News of the investigation surfaced prior to the announcement of Halter's pending merger with
lost 1 3/16 to 60 13/16 after the company said it will form a new Internet unit called
which will boost the company's existing online and business operations.
was under the weather, shedding 7 5/16, or 18.8%, to 31 3/4 after inside shareholders took advantage of their first chance to sell shares since the online healthcare company's IPO in February. In May, the stock soared to 126 when it brought WebMD on board in a $7.9 billion deal, forming the largest online health service.
gained 2 9/16 to 65 7/16 after
Standard & Poor's
said it will be added to the
, which is being bought by
. The change will occur after the close of trading Thursday.
slipped 1 15/16 to 64 15/16 despite saying that the U.S.
Food and Drug Administration
approved its Sigma line of pacemakers.
gained 5/8 to 26 7/8 after saying it will offer free Net access for consumers who buy special long-distance calling services. The company said for a flat rate of $24.95 a month, the package features free, unlimited dial-up Net service and 250 minutes of domestic long-distance calling service. The move comes a day after rival MCI WorldCom, cut evening, overnight and weekend calling rates to as low as 5 cents a minute. Shares of MCI fell 2 3/8 to 75 1/16.
lost 3 3/4 or 23.2%, to 12 7/16 after it announced its second restructuring plan in under a year. The company said it will spin off its media operations, cut up to 1,500 jobs, and form an alliance with
of Japan. NEC lost 5/8 to 73.
lost 2, or 32.9%, to 4 15/16 after it said U.S. regulators suspended clinical trials of its phentolamine-based drugs due to concerns over cancer risks. However, the FDA said it will allow Zonagen's marketing partner
to complete an ongoing 12-week human study of Vasomex, whose active ingredient is phentolamine. Schering-Plough lost 1 1/16 to 47.
Tara Murphy contributed to this story.