MARKET ACTIVITY/TRADING NOTES FOR DAY ENDING MONDAY JUNE 29, 1998 (2)
MARKET OVERVIEW, Con't
NEW YORK
Monday's Markets In The U.S.
The Dow rose 53, while the Nasdaq gained 21.55 and the S&P 500 closed up 5.29 to another record close.
Technology stocks were again at the vanguard of the advance, led by industry titans and Internet related names. In broader markets, utilities, transports and retail stocks stayed hot, while individual stocks were whipsawed by earnings warnings and merger news.
The Dow Jones Industrial Average ($INDUA) opened solidly higher in the morning, topping out at 9,052.66 shortly before 1 p.m. EDT. Some computer driven sell programs hit the market soon thereafter, erasing much of the early enthusiasm. The Dow recovered then slid again in the last hour of trading to close near its intraday low of 8,996.11, up 52.82 at 8,997.36.
The Nasdaq Composite (COMP) rose 21.55 to 1,891.08.
The S&P 500 (SPX), after a historic climb Friday, continued by closing up 5.29 to 1,138.49. The small-cap proxy Russell 2000 Index (IUX) closed up 3.56 to 453.83.
In NYSE trading, a modest 540 million shares changed hands while advancers bested declining stocks by an 18-to-11 spread. In Nasdaq activity, 668 million shared were exchanged while the breadth of the market favored gainers by a 22-to-19 margin.
Strength by the yen vs. the dollar and a modicum of caution ahead of tomorrow's FOMC meeting helped send bond prices lower by nearly 1/4 point. The yield on the benchmark 30-year bond rose to 5.65%.
Active issues
In addition to its tech members, the Dow was led higher by American Express (AXP), which rose 1 3/16 to 111 11/16, and Walt Disney Co. (DIS), up 2 11/16 to 113 3/16.
Additionally, retailing giant Wal-Mart (WMT) gained 2 3/8 to 62 1/16 and consumer products colossus Procter & Gamble (PG) closed up 1 7/8 to 92 1/4.
General Motors (GM) rose 1 3/8 to 68 1/4 as company officials and the United Auto Workers held their first meetings since a pair of strikes began at GM plants in Flint, Mich.
Dow laggards were led by Boeing (BA), which slid 1 1/8 to 44 9/16, and International Paper (IP), off 1 to 42 7/8.
Oil stocks remained under pressure, sending Chevron (CHV) down 1 1/8 to 82 1/2 and Exxon (XON) off 1/8 to 71 9/16. The AMEX Oil Index (XOI) slid 2.89 to 468.46.
That helped send transports higher, led by the airlines. The AMEX Airline Index (XAL) jumped 9.68 to 384.10 as Delta Air Lines (DAL) climbed 1 15/16 to 128 5/16 and AMR Corp (AMR) closed up 1 7/16 to 83 1/16.
Financial stocks were modestly higher, led by Chase Manhattan (CMB), which rose 2 3/16 to 75 5/16. The Philadelphia KBW Banking Index (BKX) climbed 4.66 to 862.86.
An earnings warning sent Ikon Office Solutions (IKN) down 6 15/16 to 15 1/8. Morgan Stanley Dean Witter lowered its rating on the stock to "neutral" from "outperform."
Snap-On Inc. (SNA) tumbled 3 1/2 to 34 15/16 after saying it will take a third-quarter charge of about $175 million to pay for a restructuring. Snap-On said it won't meet its earnings goal for this year.
Similarly, Cash America International (PWN) shed 4 9/16 to 15 5/8 following its warning that second-quarter earnings will be about half the level reached a year ago.
Analytical Surveys (ANLT) fell 2 1/8 to 34 5/8 on news the company will sell 2.5 million shares in a secondary offering.
News Corp.'s (NWS) American Depositary Receipts rose 3 9/16 to 331/16 as it said it plans to sell as much as 20% of its Fox television network to the public.
Young Broadcasting Inc. (YBTVA) soared 16 5/16 to 63 13/16 after the owner of 12 television stations said it has hired Lazard Feres to help it consider "strategic alternatives," including putting itself up for sale.
Medtronic Inc. (MDT)said it will buy Physio-Control International Inc. (PHYS) for about $493 million in stock. Physio-Control rose 3 1/4 to 26 1/4 while Medtronic closed up 11/16 to 63 5/8.
Amid speculation further consolidation is in the offing for cardiology product makers, St. Jude Medical (STJ) gained 1 3/16 to 37 3/16 andBoston Scientific (BSX) closed up 1 15/16 to 71 15/16.
Dow member Johnson & Johnson (JNJ), which the Wall Street Journal speculated is in the market to acquire a hearing-device maker, slid 1/16 to 76 7/8.
In general, big drug stocks were in a malaise Monday, as the AMEX Pharmaceutical Index (DRG) rose just 0.58 to 680.60. Pfizer (PFE) was the big laggard in the group, falling 2 to 109 15/16. Analysts at DLJ recommended investors switch out of Pfizer and into shares of Warner-Lambert (WLA), which closed up 2 3/16 to 69 3/16.
In other acquisition news, Philadelphia Suburban Corp. (PSC) agreed to acquire the Consumers Water Co. (CONW)for about $460 million. Consumers Water closed up 1 3/4 to 26, while Philadelphia Suburban slid fractionally.
Monsanto (MTC) slid 15/16 to 56 3/8 on word it will acquire Cargill's international seed operations for $1.4 billion.
Dawson Production Services (DPSI) closed up 1 15/16 to 14 3/8 thanks to a $16 per share buyout offer from Key Energy (KEG), which closed off 5/8 at 13.
Bibb (BIB) gained 1 5/16 to 15 1/8 thanks to a $250 million buyout deal with Dan River (DRF), which closed off 1/8 at 17 5/8.
AHL Services (AHLS) rose 2 7/8 to 38 7/8 as the outsourcing and staffing company agreed to buy Germany's EMD Gesellschaft for about $42 million.
General Mills Inc. (GIS) fell 1 13/16 to 68 7/16 after the food company was downgraded to "market perform" from "buy" by Donaldson Lufkin & Jenrette. DLJ also downgraded Kellogg Co. (K), which fell 1 9/16 to 38 5/16.
Play By Play Toys & Novelties (PBYP) shed 2 11/16 to 10 9/16 thanks to a downgrade from Merrill Lynch to short-term "neutral" from "accumulate."
Anchor Gaming (SLOT) lost 1 3/4 to 80 1/4 following a downgrade from BT Alex. Brown to "buy" from "strong buy."
Similarly, a downgrade from SBC Wargburg Dillon Read sent shares of Laser Vision Centers (LVCI) down 2 1/4 to 11 5/8.
Technology stocks
Technology's biggest guns were firing again on Monday, sending measures of the industry's bellwethers further into record territory. The Morgan Stanley High Tech Index (MSH) climbed 6.98 to 599.26 and the Nasdaq 100 Index (NDX) jumped 19 to 1,339.
Leading the gainers were Microsoft (MSFT), up 2 15/16 to 107 3/8, Dell Computer (DELL), higher by 1 23/32 to 94 1/8, Cisco Systems (CSCO), which rose 1 15/16 to 91 13/16, and Lucent Technologies (LU), higher by 1 7/8 to 82 3/16.
Dow members Hewlett-Packard (HWP) rose 1 11/16 to 61 11/16 and International Business Machines (IBM) gained 1 1/8 to 114 1/8.
Excite (XCIT) soared 9 7/8 to 86 after the Internet search-engine company announced a 2-for-1 stock split.
Big Internet stocks as a whole were higher on the session, sending the AMEX Inter@ctive Week Internet Index (IIX) up 5.37 to 381.01. Amazon.com (AMZN) jumped 4 1/2 to 98 7/8, Yahoo! (YHOO) rose 5 3/4 to 154 7/16, and Lycos (LCOS) climbed 7 7/8to 74 3/8.
However, industry bellwether America Online (AOL) fell 2 13/16 to 104 7/8.
Rockwell International Corp. (ROK) rose to as high as 52 before closing up 9/16 at 49. The company said it will take a pretax charge of $625 million in the third quarter to cut 3,800 jobs and said it will spin off its semiconductor business. PaineWebber raised its rating on the stock to "buy" from "attractive."
Rambus Inc. (RMBS) climbed 4 7/8 to 61 1/2 after the developer of high speed computer chip technology said Compaq Computer Corp. (CPQ) will license some of its technology.
Intel Corp. (INTC), however, slid 9/16 to 75 13/16 after cutting prices on chips used in laptops by 30% amid speculation more price declines are in the offing.
Other semiconductor stocks did participate in the day's rally, with the Philadelphia Semiconductor Index (SOX) sliding just 0.91 to 250.13. Texas Instruments (TXN) rose 7/8 to 59 3/16.
LSI Logic (LSI) rose 3/16 to 23 5/16 as the chip maker agreed to acquire Hyundai Electronics' Symbios Inc. unit for about $760 million in cash.
Alliance Semiconductor (ALSC) rose 7/8 to 3 7/16 thanks to an upgrade from Lehman Brothers to "outperform" from "neutral." The chip maker said it will buy back as much as 2 million of its common shares.
Unit Instruments (UNII) rose 2 9/16 to 9 1/8. The designer of controllers used in the manufacturing of integrated circuits and semiconductor equipment said it is in merger talks with an unnamed third party.
A positive mention in Barron's helped send shares of Altron (ALRN) higher by 1 3/8 to 12 7/8.
Compuware (CPWR) gained 2 7/8 to 49 3/4 following an upgrade from Morgan Stanley Dean Witter to "strong buy" from "outperform."
Conversely, a downgrade to "neutral" from "strong buy" at the house of Morgan sent shares of JDA Software Group (JDAS) down 5 3/4 to 47.
After the bell
A spate of profit warnings hit the tape as several companies waited until nearly the last minute before quarter's end to wave the red flag.
Among the firms pre-announcing negative results after Monday's close were CyberCash(CYCH), HMT Technology Corp. (HMTT), General Semiconductor (SEM), UCAR International (UCAR), MetaCreations (MCRE), Silgan Holdings (SLGN), and TBC Corp. (TBCC).
In actual earnings news, Merix (MERX) said it earned 16 cents per share in its fiscal fourth quarter, in line with expectations. However, the company warned that its fiscal first quarter profits will not meet expectations.
Technology Solutions (TSCC) also produced fiscal fourth quarter earnings in line with projections at 22 cents per share. The provider of information-technology consulting and systems integration services also set a 3-for-2 stock split.
The Finish Line (FINL) beat the Street by a penny, reporting fiscal first-quarter profits of 22 cents per share.
In other news, Information Advantage Inc. (IACO) has reached an agreement to acquire IQ Software (IQSW) for $65 million in stock.
Business Objects (BOBJY) said chief operating officer David Ellett has resigned.
E*Trade Group (EGRP) has purchased more than 800,000 shares of First Virtual Holdings (FVHI) for 60 cents per share.
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