thestreet.com explanation for rise. Sounds very, very good
[See the bottom]
Market Roundup: Led by Blue-Chip
Charge, Market Moves Higher
thestreet.com
By John J. Edwards III
Markets Editor
4/14/98 6:40 PM ET
With no glaringly apparent reasons to stay away, market
players piled into stocks large and small, high tech and
low tech. All the major equity indices moved higher, bonds
rallied, the sun shone, the lame walked...
Okay, it was still only Wall Street. But Wall Street had
itself quite a day on the long side, with momentum
building through the heart of the session to a restful
plateau. The Dow Jones Industrial Average didn't
challenge its April 6 intraday high of 9170.74, but it traded
as high as 9121.41 after 3 p.m. EDT. It then settled for a
gain of 97.90, or 1.1%, to a record 9110.20. Dow leader
Alcoa (AA:NYSE) was on fire all day, rising 4 11/16 to
76, and Eastman Kodak (EK:NYSE) bounded 3 13/16 to
70 13/16 on a modest upside earnings surprise. The broad
S&P 500 trailed its smaller but bluer-chip cousin, rising
6.06, or 0.6%, to 1115.75.
There was no lagging for the tech-turbocharged Nasdaq
Composite Index, which jumped 18.08, or 1%, to
1843.03. The large-cap Nasdaq 100 recovered from early
weakness to gain 10.15, or 0.8%, to 1213.12. More
specialized tech indices strongly outperformed, as the
Morgan Stanley High-Tech 35 gained 9.88, or 1.9%, to
539.07 and the Philadelphia Stock Exchange
Semiconductor Index (SOX) surged 8.04, or 2.8%, to
296.32. The small-cap Russell 2000 added 5.29, or 1.1%,
to 484.85.
"When you have big moves like you have today in the
SOX, in the Morgan Stanley High-Tech index, those are
good for longer-term momentum continuing in the tech
sector," said Brian Belski, market strategist at
Dougherty Summit Securities in Minneapolis. "There
was fairly steady volume on some of the down and out
technology issues. Some people are making some
calculated bets, so to speak." He pointed to beleaguered
Seagate (SEG:NYSE), which pounded up 1 11/16, or
6.8%, to 26 1/2 ahead of its post-close earnings report.
Not that earnings seem to matter a whole lot at this point.
"Even three to four quarters ago, the market would only
reward companies that blew away earnings," Belski said.
"Now it seems the market is ready, willing and able to
reward stocks that come in at consensus. I think that's
just a sign of a full shift in where the priorities are in the
market. The priorities are money flow and momentum and
emotion."
Stanley Nabi, vice chairman of the Wood Struthers &
Winthrop unit of Donaldson Lufkin & Jenrette,
lamented the Street's level of complacency in the face of
sharply reduced first-quarter earnings estimates.
"Whatever comes out, it's going to be explained away," he
said. "If it comes out decent, they're going to say 'I told
you so.' If it comes out weak, they'll say it was expected."
Nabi warned that the now-quiet Federal Reserve may be
spurred to raise short-term interest rates by the second
half if the current pace of stock market gains continues. "If
this continues a little longer, whether for economic
reasons or just flow of funds, the Fed may be forced to do
something," he said. "They may not talk about it, they'll
just do it. The Fed cannot allow this market to rise
unburdened by fundamentals."
New York Stock Exchange advancers beat decliners by
1,877 to 1,088 on 613.7 million shares, with a strong 258
new highs leading 23 new lows. On the Nasdaq, 2,540
advancers topped 1,931 decliners on 787.7 million shares.
New Nasdaq highs outpaced new lows by 309 to 67.
The benchmark 30-year Treasury bond gained 14/32 to
103 4/32, its yield easing to 5.90%.
Elsewhere in North America, the Toronto Stock
Exchange 300 powered up 125.08, or 1.6%, to a record
7780.50 and the Mexican Bolsa rose 42.19 to 4961.25.
Tuesday's Company Report
By Heather Moore
Staff Reporter
(Earnings estimates from First Call; new highs and lows
on a closing basis unless otherwise specified.)
It was not a good day to be a tree.
After several positive earnings reports and analyst
upgrades, the paper industry was flying high.
International Paper (IP:NYSE) soared 3 3/8, or 6.6%, to
54 3/8 after reporting first-quarter earnings of 25 cents per
share -- just missing the 18-analyst estimate of 27 cents.
Last year, the company made 11 cents per share.
International Paper also said it will soon announce the
sale of its Veratec nonwovens and label businesses.
Goldman Sachs raised IP -- and a pile of other paper
stocks -- to market outperform from market perform. After
being upped to the firm's recommended list from market
perform, Weyerhaeuser (WY:NYSE) jumped 4 7/16, or
7.7%, to 61 13/16, Rayonier (RYN:NYSE) climbed 2 1/16
to 49 7/8 and Temple-Inland (TIN:NYSE) flourished 2
11/16 to 64 5/16. Raised to market outperform from
perform were Stone Container (STO:NYSE), which rose
1 5/16, or 10.5%, to 13 7/8, Longview Fibre
(LFB:NYSE), which rocketed 13/16, or 5.1%, to 16 7/8
and Jefferson Smurfit (JJSC:Nasdaq), which leapt 1
15/16, or 11%, to 19 5/8.
Weyerhaeuser also reported first-quarter earnings of 43
cents per share, beating the 17-analyst estimate by a
penny and the year-ago 22 cents.
* * * * *
Ciena (CIEN:Nasdaq) popped 5 1/4, or 12.7%, to 46 1/2
after analyst Mary Henry at lead underwriter Goldman
Sachs said Ciena CFO Joe Chinnici is "very optimistic"
about the April quarter, according to three sources on
Wall Street. First Call forecasts profits of 28 cents per
share.
It is unclear how Henry's comments were disseminated;
she did not return a call seeking comment. A Ciena
spokeswoman says the company hasn't altered its
guidance since reporting 37 cents per share in February.
Henry says some contracts might be unveiled shortly,
according to a trader and a buy-side source. More details
weren't available, but AT&T (T:NYSE) is one
long-anticipated piece of business. Recently, Ciena stock
has been battered by worries about a delayed contract
with WorldCom (WCOM:Nasdaq). In addition, its
competitor Lucent (LU:NYSE) claims that it is developing
superior optical fiber products for phone carriers.
A short squeeze factored into Tuesday's jump. "If you
were short the stock, you have made an error," says a
Ciena shareholder who bought shares last week.
-- Kevin Petrie
Mergers, acquisitions and joint ventures
DuPont (DD:NYSE) vaulted 1 to an all-time high of 76 7/8,
at one point hitting an intraday high of 78 1/4, after
announcing a joint venture with Toronto's Noranda to
market sulfuric acid.
Earnings reports and previews
Cytyc (CYTC:Nasdaq) plummeted 8 1/8, or 33.9%, to 15
7/8 after warning late yesterday that it expects to report a
first-quarter loss of 36 to 38 cents per share, short of the
six-analyst view of an 11-cent loss but up from the
year-ago loss of 42 cents.
Lightbridge (LTBG:Nasdaq) slid 3 5/8, or 20%, to 14 5/8
after warning late yesterday that it expects to report
first-quarter earnings of 1 cent per share, missing the
four-analyst expectation of 7 cents and the year-ago 4
cents.
PairGain Technologies (PAIR:Nasdaq) lost 3, or 12.6%,
to 20 15/16 after late yesterday reporting disappointing
first-quarter earnings. This morning, Goldman Sachs
downgraded the company to market outperform from its
recommended list, Lehman Brothers cut it to neutral
from outperform and Volpe Brown Whelan lowered it to
neutral from buy.
Sanmina (SANM:Nasdaq) climbed 8 11/16, or 12.2%, to
80 1/4 after late yesterday reporting second-quarter
earnings above expectations.
Advanced Fibre Communications (AFCI:Nasdaq) rose
4 1/8, or 11%, to 42 1/4 after late yesterday reporting
first-quarter earnings a penny above analyst estimates.
Harley Davidson (HDI:NYSE) swelled 2 5/8, or 8.1%, to
a high of 35 1/8 after late yesterday posting first-quarter
earnings a penny above estimates.
Vitesse Semiconductor (VTSS:Nasdaq) added 4, or
7.8%, to 55 5/8 after late yesterday reporting
second-quarter earnings above estimates.
Apex PC Solutions (APEX:Nasdaq) sprung 1 7/8, or
6.7%, to 30 after late yesterday reporting first-quarter
earnings of 24 cents per share, up from the year-ago 18
cents and above the three-analyst estimate of 17 cents.
For a table showing other earnings news, please click
here.
Offerings and stock actions
Montreal-based paper and pulp manufacturer Alliance
Forest Products (PFA:NYSE) gained 7/8 to 22 1/8 in its
NYSE debut.
Analyst actions
Arco Chemical (RCM:NYSE) soared 6, or 12.4%, to 54
1/2 after Goldman Sachs increased it to trading buy from
market outperform.
Echostar Communications (DISH:Nasdaq) rose 2, or
8.4%, to 26 after Deutsche Morgan Grenfell raised it to
buy from hold.
J. Baker (JBAK:Nasdaq) jumped 5/8, or 6.6%, to 10 1/4
after Bear Stearns upgraded it to buy from neutral. Last
Thursday, the company reported that March same-store
sales rose 2.7%.
Salomon Smith Barney upgraded three electric utility
companies: Houston Industries (HOU:NYSE), which
leapt 11/16 to a high of 30, to buy from neutral; New
Century Energy (NCE:NYSE), which jumped 3/8 to 50
1/16, to outperform from neutral; and Cinergy
(CIN:NYSE), which jumped 5/16 to 36 1/4, to outperform
from neutral.
American Physician Partners (APPM:Nasdaq) slipped
5/8, or 6.3%, to 9 3/8 after Salomon Smith Barney
downgraded it to outperform from buy.
Miscellany
K-tel (KTEL:Nasdaq) leapt an additional 6 11/16, or 45%,
to 21 5/8 on good feelings about the company's
announcement that it will sell its music titles over the
Internet.
Schick Technologies (SCHK:Nasdaq) lost 1 5/8, or
6.6%, to 23 1/8 after saying a delay in an order from a key
supplier prevented the firm from shipping $2 million to $3
million of orders to its clients in the fourth quarter. The
delay will constrain revenues for the quarter to between
$12 million and $13 million, the company said.
Gillette (G:NYSE) fell 4 1/8 to 120 1/4 even after it rolled
out a three-blade razor today, its first big new razor launch
since 1989.
Fannie Mae (FNM:NYSE) added 1/8 to 61 7/8 after
announcing that Franklin Raines, director of the Office of
Management and Budget, will replace Chairman and
CEO James Johnson when he retires at the end of the
year. Raines once served as vice chairman of the
company.
See Also
MIDDAY
MUSINGS
Out-of-Favor
Big-Caps
Lead the
Market
Higher
4/14/98 0 PM
OPTIONS BUZZ
View from
the Pit: Intel
Options
Leaning
Higher on
Tonight's
Earnings
4/14/98 1 PM
MARKET
ROUNDUP
ARCHIVE |
