Stocks were up early, then down hard, and investors spent most of the session trying to get the (bullish) feeling again. Blue-chips made it through the rain under the cover of resurgent commodity names, while technology stocks got drenched again. Still, there were some signs the worst of the storm has passed.
Flood waters continue to rise in the bond market, however, which fell again after the
reported nonfarm payrolls grew by 245,000 in January, significantly exceeding expectations for a rise of 135,000. The unemployment rate was unchanged at 4.3%, a 28-year low. The price of the 30-year Treasury bond fell 26/32, to 98 18/32, its yield rising ever higher to 5.34%.
Nasdaq Composite Index
fell as low as 2346.82 at midday and losses in big-cap tech names were no doubt giving some investors heart palpitations. But losses moderated in the afternoon for most bellwethers and the index closed down "just" 36.45, or 1.5%, to 2373.62.
Still, it was hardly a day of celebration in techland as nearly all tech standards faltered in both over-the-counter and listed trading. The
Morgan Stanley High-Tech 35
slid 2.7% and the
Chip and equipment makers were battered again by worries about price gouging and a profit warning from
Advanced Micro Devices
, which fell 11.2%. Elsewhere in the group,
lost 7.1% and
declined 3%. The
Philadelphia Stock Exchange Semiconductor Index
Electronic Data Systems
slid 7.5% after reporting fourth-quarter earnings down 50% from a year ago. The results were in line with expectations and
upgraded its recommendation, but investors were unimpressed. Additionally,
tumbled 23.4% and
lost 17.8% after each posted disappointing earnings.
Internet stocks also struggled despite reports
is considering buying a large stake in
and rumblings about other similar combinations.
TheStreet.com Internet Sector
index fell 5.93, or 1.1%, to 532.52.
Not everyone was scared off by the action, however.
"The pros are so focused on what's happening right now they turn bullish at the top and bearish at the bottom. I am buying today, to put it mildly," said Brian Gilmartin, portfolio manager at
Trinity Asset Management
in Chicago. "I think what's going on is very natural. This happens every six or eight months: There's nothing for people to pin their hopes on, no fresh tech news to drive valuations higher."
Gilmartin said the tech sector could struggle until the next major event, the earnings report by
on Feb. 16, which is Trinity's largest holding. "Depending on what
says in the conference call we might see another leg up at the end of the quarter," he said. "I am buying here in anticipation of what happens at end of February and early March."
The fund manager is more concerned about the second half of the year, however, given reports "so much business is being pulled into the first quarter because of Y2K," he said.
Today, Gilmartin was buying both Micron and
, believing the "downturn
in memory chips that's been going on really since 1995 is almost over. The stock prices have incorporated a lot of that but the next leg up is going to be much longer. When I can get 'em at prices like today, I'll buy 'em."
The fund manager was undeterred by concerns about the impact rising interest rates are having on tech valuations. "We're going to have the largest budget surplus in history -- interest rates are not going up for a long period of time," he said. "Valuations on tech stocks are going to continue to be compelling."
Commodities Rise from the Dead
Meanwhile, blue-chip proxies sustained relatively modest declines, thanks to another strong performance by heretofore unpopular groups such as energy, paper, chemicals and utilities.
Dow Jones Industrial Average
closed down 0.26 to 9304.24, well up from its nadir of 9247.34 thanks largely to strength in
slid 9.09, or 0.7%, to 1239.40 but off its low of 1232.33, supported largely by energy stocks such as
, which was upgraded by
American Stock Exchange Oil Index
lost 5.07, or 1.2%, to 412.72.
"I have felt all week this was just part of the nervousness that's gone on because of the bond market and what's going on around the world," said Ned Collins, executive vice president of U.S. stocks at
Daiwa Securities America
. "Unfortunately the media is always looking for some underlying reason to cause this huge move and maybe it's just normal rotation, correction or consolidation."
Collins said he's not terribly worried about the downturn in technology stocks, either. "
are all under pressure, but they've also had great moves," he said. "I don't know if it's anything to be all concerned about."
Moveover, the Dow's ability to hold above 9275 could be a key technical victory, the trader observed. "One area for concern is the lousy advance/decline, therefore maybe we haven't seen the end of it yet. But I think we may be OK here. I still think it's a liquidity driven market and the
has indicated they're going to be friendly."
action, 872.3 million shares traded while declining stocks led advancers 1,775 to 1,158. In
Nasdaq Stock Market
activity, losers led 2,445 to 1,599 on 1.020 billion shares. New 52-week lows led new highs 61 to 24 on the Big Board and by 73 to 42 in over-the-counter trading, the first time new lows have exceeded news highs in OTC action since
Among other indices, the
Dow Jones Transportation Average
rose 0.52 to 3247.66; the
Dow Jones Utility Average
gained 2.31, or 0.8%, to 293.60; and the
American Stock Exchange Composite Index
fell 0.86, or 0.1%, to 706.26.
For the week, the Dow industrials fell 54.59, or 0.6%; the S&P 500 shed 40.24, or 3.1%; the Nasdaq Comp dipped 132.58, or 5.3%; the Russell 2000 slid 14.49, or 3.4%; TheStreet.com Internet index lost 25, or 4.5%; the Dow transports lost 45.16, or 1.4%; the Dow utilities shed 9.20, or 3%; and the Amex Composite fell 8.60, or 1.2%.
Elsewhere in North American equities today, the
Toronto Stock Exchange 300
lost 27.73 to 6633.37. The
Mexican Stock Exchange
was closed for the Anniversary of the Constitution. For the week, the TSE 300 fell 95.68, or 1.4%, and the
Mexican Stock Exchange IPC Index
rose 55.62, or 1.4%.
Friday'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.
(PCNTF:Nasdaq) soared 30 1/2, or 179.4%, to 48 after Lehman Brothers priced its 3 million-share IPO
last night in-range at $17 a share. The company provides Internet access services primarily in the Asia-Pacific region.
Elsewhere in new offerings priced last night,
Delphi Automotive Systems
(DPH:NYSE) jumped 1 7/16, or 8.5%, to 18 7/16 after
Morgan Stanley Dean Witter
priced its whopping 100 million-share IPO in-range at $17 a share. The company is a spinoff of
, which lost 1 1/8 to 85 15/16. And
Del Monte Foods
(DLM:NYSE) lifted 5/8 to 15 5/8 after Morgan Stanley Dean Witter priced the 20 million-share offering at $15 a share.
sliced off 4 3/8, or 8.2%, to 48 15/16 after a third day of technical difficulties. A partial interruption of online trading occurred from 12:20 p.m. to 12:50 p.m. EST and only affected a small percentage of customers, according to a company spokeswoman. Over the past three days, she said, only about 5% of E*Trade's customers have been affected.
Profit-taking after several days of monster gains contributed to the decline of some other online brokers.
fell 15 3/16, or 13.7%, to 95 1/2;
National Discount Brokers
fell 2, or 6.9%, to 27; and
fell 8 3/16, or 18.9%, to 35 1/8.
Mergers, acquisitions and joint ventures
America West Holdings
hopped 13/16 to 21 15/16 after its chairman, William Franke, said the company's largest shareholder would support a proposed acquisition of the company only if it would result in the acquisition of all its Class A and Class B shares.
Lycos took in 7 7/8, or 6.1%, to 137 after
The Industry Standard
network may be close to buying a 35% stake in the company.
-run portal 60% owned by NBC -- would probably merge with Lycos, the
said. GE lowered 2 1/8 to 98.
St. Jude Medical
brought in 1 7/8, or 7.2%, to 27 15/16 after agreeing to acquire
business for $167 million. Tyco fell 2 1/2 to 75 3/8.
Shop at Home
spiked up 3 1/2, or 16.1%, to 25 1/8 after reaching an agreement calling for
to carry Shop at Home's shopping network, beginning Feb. 8. EchoStar closed unchanged at 52 3/4.
Earnings/revenue reports and previews
added 5/16 to 36 1/8 after posting fourth-quarter earnings of 2 cents a share, better than both the nine-analyst outlook for flat results and the year-ago loss of a penny. Separately,
The Wall Street Journal
reported that the company is considering a plan to turn its Web holdings into a separate public company, hoping to cash in on the Internet-stock frenzy. The company's Internet assets include a 38% stake in
, which dropped 3 3/8 to 69 5/8, and a 12.5% stake in
, which shot up 4 3/4, or 12.5%, to 42 3/4.
Advanced Micro Devices continued its fall, shaving off 2 1/8, or 11.2%, to 16 13/16, after yesterday warning of a first-quarter operating loss and suffering at the hands of Merrill Lynch's Thomas Kurlak. Micron Technology sloughed off 5 3/8, or 7.1%, to 70 1/4 on concerns about competition in the DRAM market;
sloughed off 1 3/8 to 94 5/8.
lowered 1 13/16, or 18.1%, to an annual low of 8 3/16 after last night warning it expects fiscal third-quarter earnings to be "significantly lower" than the six-analyst estimate of 26 cents a share. A year ago, the company earned 25 cents a share.
American Power Conversion
skidded 5 1/16, or 10.3%, to 44 1/4 even after last night beating fourth-quarter earnings estimates by a penny a share with a profit of 49 cents.
vaulted 4 5/16, or 15.6%, to 32 after last night reporting fourth-quarter diluted earnings of 57 cents a share, excluding amortization of intangible assets related to its acquisition of
, vs. the year-ago 37 cents. The six-analyst forecast called for operation earnings of 22 cents. The company said it's not reporting net income until it evaluates whether to adjust a third-quarter pretax charge of $193.7 million from the Softimage acquisition. Today, Morgan Stanley Dean Witter pushed it up to outperform from neutral.
plunged 2 1/8, or 24.3%, to 6 7/8 after last night saying it sees its fourth-quarter results falling below expectations on customer deferrals of certain projects and delays in completing manufacturing projects. The three-analyst prediction called for earnings of 11 cents a share. Today, Morgan Stanley Dean Witter cut it to neutral from outperform.
Central Garden & Pet
swelled 2 1/16, or 13.5%, to 17 1/2 after last night posting a first-quarter loss 1 cent narrower than expected.
Electronic Data Systems tanked 3 7/8, or 7.5%, to 48 1/8 despite last night reporting fourth-quarter earnings of 53 cents a share, 1 cent ahead of the 20-analyst outlook but below the year-ago 57 cents. Today, Lehman Brothers raised the stock to buy from outperform.
SCI Systems plummeted 7 5/8, or 17.8%, to 35 5/16 after last night missing second-quarter earnings forecasts by 2 cents a share with a profit of 48 cents. Today, Merrill Lynch downgraded it to long-term accumulate from buy while maintaining its intermediate-term neutral.
dwindled 9 15/16, or 23.4%, to 32 1/2 after last night posting first-quarter earnings in line with estimates for 33 cents a share. Investors apparently were paying more attention to the company's smaller-than-expected software revenue. Today,
Warburg Dillon Read
slashed the stock to hold from buy.
In other earnings news:
declined 7, or 21.9%, to 25 after Lehman Brothers lowered its price target to 55 from 76 a share.
slid 2 1/8, or 5.7%, to 35 1/8 even after
initiated coverage with a strong buy.
popped up 1 5/8, or 7.4%, to 23 5/8 after
Credit Suisse First Boston
started coverage with a buy and set a price target of 30 a share.
lost 3, or 11.4%, to 23 1/4 after saying a Yugoslav government agency claims to have seized majority control of its Yugoslav unit, cutting ICN's stake to 35% from 75% and naming new directors and a managing director.
slipped 5 1/2, or 13.3%, to 35 7/8 after one of its affiliates expanded a voluntary recall of its dental products, first prompted by a warning from the
Food and Drug Administration