Why is this day different from all others? On other days (of late, at least) major stock-market groups have either risen or fallen in uniformity, while equities as a whole diverged from the bond market.
On this day, however, technology stocks and blue-chips parted like the Red Sea for much of the session, only to rejoin later, trapping some investors far from shore. Additionally, stocks and bonds traded in unison, each with a downward bias.
The price of the 30-year Treasury bond fell 21/32 to 94 18/32, its yield rising to 5.63%.
Dow Jones Industrial Average
began the session in ascendancy, rising as high as 10,002.34. But selling soon began to accumulate and the pharaoh of market proxies tumbled as low as 9781.45 late in the session before closing off 127.10, or 1.3%, to 9786.16.
For the second-consecutive day, weakness in
plagued the Dow. The former fell 3% as investors continued to parse its warning
late Monday. The latter dipped another 7.3% in wake of
yesterday's $80.3 million jury award.
, consumer giant
Procter & Gamble
and financial bellwether
also made big contributions to the Dow's late-day slide.
again followed the Dow's lead, rising as high as 1313.53 early on before reversing to close down 14.33, or 1.1%, to 1286.42.
In addition to the aforementioned, the S&P 500 was sabotaged by weakness in drug makers such as
, as well as transports such as
Delta Air Lines
Dow Jones Transportation Average
shed 68.76, or 2%, to 3299.04, the
American Stock Exchange Airline Index
fell 2.3% and the
Amex Pharmaceutical Index
Technology's late-session retreat also torpedoed the S&P 500, as well as the
Nasdaq Composite Index
-esque index (young, but powerful and compelling) rose as high as 2520.63 early on but failed to sustain its record-setting pace, closing down 18.89, or 0.8%, to 2461.40.
proved most damaging to the index. The
lost 6% and
shed 32%; each posted a profit warning.
Despite weakness in chip equipment makers sympathetic to Etec and
Philadelphia Stock Exchange Semiconductor Index
gained 13.4% and
rose 5.2% after
Morgan Stanley Dean Witter
upped recommendations on both. Meanwhile,
climbed as high as 401.48 but closed down 1.15, or 0.3%, to 397.63.
"A lot of little things if you add 'em up give people a reason to sell first and ask questions later," said Randy Billhardt, co-head of block trading at
. "The valuation of the market has been stretched and the breadth on the upside is narrow. That you saw relatively decent volume on a down day was indicative of growing concerns, particularly before a long weekend." The stock market is closed Friday in observance of Good Friday.
New York Stock Exchange
trading, 930.7 million shares were exchanged while losers led gainers 1,645 to 1,392. In
Nasdaq Stock Market
activity 1.106 billion shares were exchanged while declining issues led 2,240 to 1,869. New 52-week lows bested new highs 175 to 48 on the Big Board and by 171 to 99 in over-the-counter trading.
In addition to end of the quarter, the holiday weekend, and recent gains, Billhardt mentioned rising oil prices as a culprit for today's setback.
"I think crude oil is sneaking up on people; people are starting to watch that," he said. "There's been no hint of inflation for 18 months but if oil creeps up then something that's not even an issue now becomes a concern."
Crude prices fell 4 cents but at $16.76 a barrel remain well above recent lows.
Still, the trader wasn't overly concerned, noting the selling was fairly broad-based.
"The only group that holds in like a rock is Internet stocks," he said.
seems like it's done nothing but go up every day and names like
all seem to hold in remarkably well."
AOL closed up 1.7% to 147, though down from an early high of 155. iVillage rose 8.1%. Meanwhile,
rose 4.5% to 172 3/16.
TheStreet.com Internet Sector
index slid 0.87, or 0.1%, to 643.01 after rising as high as 664.45. But
TheStreet.com E-Commerce Index
gained 2.99, or 2.7%, to 113.44, thanks largely to
, which rose 18%.
Correction Coming, If Not Already Begun
"You always see exaggerated moves on the last day of a quarter," said Barry Hyman, senior market strategist at
Ehrenkrantz King Nussbaum
. "On the surface, it looks like end-of-the-quarter behavior with concerns over technology once again."
With the preannouncement season over (although
got one in under the wire after the close) investors are now wondering if "the reality of a slowdown in a Dell or
or Oracle or
actually comes true," Hyman said. "I think that weighs on the market right here. Tech, and Internet stocks particularly, got ahead of themselves."
Ehrenkrantz King Nussbaum "lightened up" on existing positions in AOL and Yahoo! today, the strategist said.
"We had what I would consider an increased exaggerated move in the Internet sector accompanied by tremendous investor cockiness," he said. "I'm not knocking the sector, but that makes me nervous. As well as these stocks perform, there are corrections along the way."
The late reports that Yahoo! plans to acquire
will likely add a little to that Net-sector confidence tomorrow. Yahoo! reportedly issued a statement calling the reports premature, but according to
West Coast bureau, an analyst says Yahoo! called to say there will be an announcement 30 minutes before the market opens tomorrow.
Hyman said the "underpinnings of the market are still good" but foresees a 7% correction in the Dow and S&P coming "down the line," a slightly bigger slide for the Nasdaq, and as much as a 20% to 50% reversal for Internet names.
"I think it will start later this month but if it occur now, so be it," he said. "It's not surprising with us around 10,000. If anything, that heightens the sense that valuations are kind of extended. You see it in momentum stocks and today looks like a momentum-driven decline," noting small- and mid-cap stocks outperformed blue-chips.
Among other indices, the
Dow Jones Utility Average
fell 1.65, or 0.6%, to 292.28 and the
American Stock Exchange Composite Index
slid 1.33, or 0.2%, to 710.30.
For the month of March, the Dow industrials rose 479.58, or 5.2%; the S&P 500 gained 48.09, or 3.9%; the Nasdaq Comp added 173.37, or 7.6%; the Russell rose 5.37, or 1.4%; the DOT jumped 132.46, or 25.9%; the E-Commerce Index climbed 16.33, or 16.8%; the Dow transports added 91.61, or 2.9%; the Dow utilities slid 1.59, or 0.5%; and the Amex Composite gained 12.01, or 0.2%.
For the first quarter, the Dow industrials rose 604.73, or 6.6%; the S&P 500 gained 57.18, or 4.7%; the Nasdaq Comp added 269.71, or 12.3%; the Russell lost 24.33, or 5.8%; the DOT jumped 236.59, or 58.2%; the E-Commerce Index climbed 28.34, or 33.3%; the Dow transports added 149.73, or 4.8%; the Dow utilities slid 20.02, or 6.4%; and the Amex Composite gained 21.31, or 3.1%.
Elsewhere in North American equities today, the
Toronto Stock Exchange 300
rose 21.85 to 6597.79 and the
Mexican Stock Exchange IPC Index
gained 48.37, or 1%, to 4930.37. For the month of March, the TSE 300 advanced 285.18, or 4.5%, and the IPC shot up 669.57, or 15.7%. For the first quarter, the TSE moved up 112.26, or 1.7%, and the IPC leapt 969.59, or 24.5%.
Wednesday'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.
As noted above, AOL picked up 2 1/2 to 147, off its session high of 155, even after a potentially harmful article in
The Wall Street Journal
initiated coverage of the stock with a buy. And
rocketed up 21 7/8, or 54%, to 62 1/2 after AOL named it the exclusive provider of brokerage research for its Personal Finance channel.
Elsewhere among today's Net stars,
surged 20 3/8, or 15.3%, to an all-time high of 154 after setting a 2-for-1 stock split.
Also, a new series of stock intended to track
Internet business division, soared 17, or 89.5%, to 36 from its IPO price of $19. Ziff-Davis, however, tanked 7 1/2, or 25.9%, to 21 1/2 after
downgraded it to intermediate-term neutral from accumulate while keeping its long-term buy. Merrill said the stock met its price target of 24 to 27 set in February.
Not quite as lucky in its IPO today was
Pepsi Bottling Group
, which lost 1 5/16, or 5.7%, to 21 11/16. Merrill Lynch and Morgan Stanley Dean Witter priced the company's 100 million-share IPO yesterday at $23 a share, the low end of the offering's range of $23 to $26. Parent
shaved off 11/16 to 39 3/16.
Philip Morris shed 2 9/16, or 6.8%, to 35 3/16 after falling 8.4% yesterday on news that an Oregon jury awarded $80.3 million to the family of a smoker who died of lung cancer. Today, Morgan Stanley Dean Witter cut its recommendation to neutral from strong buy. Other tobacco makers fell in sympathy, notably
British American Tobacco
, which lost 3/16 to 17 7/8;
, which lost 2 3/4, or 9.9%, to 25; and
, which lost 3 15/16, or 5%, to an annual low of 74 5/8.
Mergers, acquisitions and joint ventures
tumbled 7 7/8, or 24.6%, to 24 1/16 on concerns that the its acquisition of U.K.-based
will put pressure on future earnings. Axent said this morning it will buy Passgo for 1.55 million shares, or about $50 million, and will account for the transaction as a purchase. It expects to take a charge of up to $15 million, or 30% of the purchase price, for in-process research and development.
downgraded the stock to hold from accumulate on the news.
Republic New York
climbed 1 7/16 to 46 1/8, off its intraday high of 47, on market chatter that
Bank of New York
is going to buy it. BONY added 1/4 to 35 15/16.
sliced off 2 1/16, or 16.6%, to 10 3/8 after the firm's board declined offers to sell its
Earnings/revenue reports and previews
lifted 1 1/16, or 5.9%, to 19 1/16 after forecasting its first-quarter earnings will be about 60 cents a share, up from 53 cents a year ago and the nine-analyst consensus calling for the same.
Bed Bath & Beyond
rose 2 1/8, or 6.2%, to an all-time high of 36 1/2 after reporting fourth-quarter earnings of 24 cents a share, 2 cents above the 16-analyst estimate and ahead of the year-ago 17 cents.
BrightStar Information Technology
shrank 1 1/2, or 28.6%, to an all-time low of 3 7/8 after posting a forth-quarter loss of 13 cents vs. the two-analyst estimate of an 18-cent profit. The company went public last April, so no year-ago results are available.
shaved off 2 3/4, or 17.7%, to 12 3/4 after warning
last night it sees first-quarter earnings of 2 cents to 4 cents a share. The single-analyst forecast called for 13 cents vs. the year-ago 32 cents.
Etec Systems plunged 13 11/16, or 31.7%, to 29 7/16 after saying it will post a third-quarter loss of 35 cents to 45 cents a share, including charges. Excluding the charges, Etec expects earnings of 10 cents. The 12-analyst view called for earnings of 26 cents vs. the year-ago profit of 47 cents.
fell 1 3/4, or 10.5%, to 15 after posting a fourth-quarter loss of 10 cents, reversing a gain of 10 cents a year ago. No estimates were available.
surged 1 5/8, or 10.7%, to an annual high of 16 7/8 even after posting a fourth-quarter loss of 34 cents a share, wider than both the three-analyst prediction for a loss of 23 cents and the year-ago loss of 20 cents.
declined 1 3/16, or 21.6%, to an annual low of 4 3/8 after saying it expects fourth-quarter earnings to fall below the single-analyst estimate for 17 cents a share. The company earned 21 cents a year ago.
collapsed 7/16, or 18.9%, to 1 7/8 after reporting a fourth-quarter loss of $8.68 a share vs. a loss $3.65 a year ago. Results for both periods include one-time items; the company did not provide fully diluted results. KCS also said it is in violation of covenants of its revolving credit agreements.
MSC Industrial Direct
rallied 2 5/16, or 15.7%, to 17 after posting second-quarter earnings of 22 cents a share, on target with the 10-analyst prediction and above the year-ago 17 cents.
picked up 1 1/16, or 6.7%, to 17 after saying it sees 2000 earnings coming in 35 cents to 45 cents a share above current estimates if certain "efficiencies" are realized under its restructuring plan. The single-analyst view calls for $1.50 vs. 1999's $1.35.
stumbled 6 3/8, or 17.1%, to 31 1/8 after telling analysts its revenue in 2000 probably will come in $100 million lower than expected.
slid 5/16, or 7.4%, to 3 15/16 after the company delayed the filing of its annual report due to problems completing its 1998 audit.
PeopleSoft skidded 15/16, or 6%, to an annual low of 14 5/8 after saying its first-quarter operating profit margins, excluding expected one-time charges, are expected to be lower than it previously forecast due to lower-than-expected revenue.
Silicon Graphics' stock was halted at 3:41 p.m. for news, with its most recent trade at 16 1/2. After the closing bell, the company warned it expects a third-quarter loss 20 cents to 25 cents a share wider than the Street estimated.
swelled 1 1/16, or 18.3%, to 6 7/8 after last night saying it expects first-quarter earnings to come in at or slightly above the single-analyst estimate of 8 cents a share. The company made 16 cents a year ago. Today, Sportsman's announced it will offer items for bidding on Amazon.com's new auction service.
shot up 4 1/16, or 21.5%, to 22 15/16 after it reported fourth-quarter earnings of 64 cents a share, 2 cents ahead of the 16-analyst view and above the year-ago 53 cents. Morgan Stanley Dean Witter upped its recommendation to outperform from neutral.
tacked on 3/8, or 5.6%, to 7 1/8 despite saying it expects to break-even in the first quarter. The company said planned layoffs will result in a quarter charge of $11 million to $12 million. The nine-analyst prediction called for earnings of 10 cents vs. the year-ago 13 cents.
United Auto Group
sloughed off 1 3/16, or 13.3%, to 7 3/4 after recording fourth-quarter earnings of 8 cents a share, 12 cents below the five-analyst forecast but above the year-ago loss of 39 cents.
Offerings and stock actions
US Office Products
lifted 1/2, or 14.3%, to 4 after its largest investor agreed to infuse $51 million in cash. In exchange, the fund managed by
Clayton Dubilier & Rice
received a new class of nonvoting preferred stock convertible into about 7.3 million common shares.
Bausch & Lomb
jumped 3 to 65 after
U.S. Bancorp Piper Jaffray
started coverage with a buy.
climbed 2 1/8, or 12.2%, to 19 1/2 after
raised it to buy from attractive.
LSI Logic surged 3 11/16, or 13.4%, to an annual high of 31 3/16 after Morgan Stanley Dean Witter upped its recommendation to strong buy from outperform.
popped up 2 1/4, or 6.4%, to an all-time high of 37 1/4 after Merrill Lynch started coverage with a buy.
expanded 1 15/16 to 50 after Merrill Lynch upped it to buy from accumulate, naming Seagram its Focus One stock.
Xilinx advanced 2, or 5.2%, to 40 9/16 after Morgan Stanley Dean Witter upped its price target to 60 from 50 a share.
slouched 1 1/2 to 60 1/2 after being halted this morning. The medical device maker announced that some of its pacemakers have batteries that lose power more quickly than normal. Before the news, Morgan Stanley Dean Witter upped its earnings estimates on the company.
soared 5/16, or 20.8%, to 1 13/16 after announcing it has renegotiated its bank revolving credit agreement with its lenders.