MARKET SNAPSHOT
Major averages in Microsoft advance
Nasdaq close to even on the year
By Julie Rannazzisi, CBS.MarketWatch.com
Last Update: 5:18 PM ET Jun 21, 2000 NewsWatch
Latest headlines
NEW YORK (CBS.MW) - Shares registered nifty gains Wednesday, buoyed by healthy buying interest in oil service and biotech stocks as well as a 7.7 percent jump in Microsoft shares.
The Nasdaq is now almost even on the year, ending only 5.30 points below its 4,069.31 close on Dec. 31.
?Fear is slowly dissolving from the market, as detected by the advance in biotech shares,? said Chris Wolfe, equity market strategist at J.P. Morgan.
The steady advance in biotech shares, which have risen for five straight trading sessions, suggests that investors are willing to step up to the plate and take on more risk, Wolfe said.
?We?re sneaking up ahead of the Fed meeting and earnings season,? Wolfe said.
Inside the broader market, drug, biotech and oil service shares rose while retail, bank and brokerage stocks retreated. In the tech arena, networking, chip and hardware stocks edged up.
The Dow Jones Industrial Average climbed 62.58 points, or 0.6 percent, to 10,497.74.
Microsoft (MSFT: news, msgs) was a major upside mover, adding 7.7 percent, or 5 3/4 to 80 11/16, reaching its highest levels in over two months. The stock got a boost from news that implementations of all sanctions imposed on the software behemoth?s conduct have been delayed until all appeals are exhausted. See full story. Meanwhile, CIBC World Markets upped Microsoft to a ?buy? from a ?hold? rating.
Also moving higher were shares of 3M, AT&T and Hewlett-Packard. On the downside were Citigroup, General Electric, American Express and Wal-Mart.
The Nasdaq Composite climbed 50.65 points, or 1.3 percent, to 4,064.01 while the Nasdaq 100 index rose 36.17 points, or 0.9 percent, to 3,970.
?The market will do better this week and next week as the Fed meeting concludes and fund managers put cash to work for quarter end,? said Joe Liro, equity strategist at Stone & McCarthy Research Associates.
Steady Fed policy is a positive for the market, Liro added. Moreover, fund managers are sitting on a lot of liquidity that needs to be put to work.
In the meantime, investors absorbed more earnings pre-announcements.
?Investor enthusiasm has been held back by some pre-announced disappointing earnings for the second quarter. Although the list of those unfortunate companies that won't achieve earnings projections has been small, they come at a bad time,? said Al Goldman, chief market strategist at A.G. Edwards & Sons.
?Evidence of a slowdown in the economy's growth rate has investors worried that corporate earnings overall will deteriorate big time. Thus, pre-announced disappointments fell on nervous participants,? Goldman continued.
?The pre-announcements are making a lot of noise because the background is so quiet,? Liro conceded.
What will be key for the market, Wolfe said, is the guidance that companies give on earnings and revenue growth for the remainder of the year.
The Standard & Poor's 500 Index edged up 0.2 percent while the Russell 2000 Index of small-capitalization stocks inched up 0.4 percent.
Volume was decent, checking in at 1.00 billion on the NYSE and at 1.54 billion on the Nasdaq Stock Market. Breadth was marginally negative on the NYSE even as the major averages staged a smart advance, with losers beating winners by 16 to 12. Advancers matched decliners on the Nasdaq.
Sector and specific movers
Oil service shares were Wednesday?s upside leaders, with the Philadelphia Oil service Index ($OSX: news, msgs) up 4.9 percent. Among the biggest gainers were shares of Schlumberger (SLB: news, msgs), up 3 9/16 to 77 5/8, and Nabors Industries (NBR: news, msgs), up 2 1/4 to 42.
OPEC, which met Wednesday in Vienna, upped oil production by 708,000 barrels per day. See full story. August crude rose 72 cents to $31.37 as market participants don?t believe OPEC production increases will be sufficient to lower prices. Crude oil jumped $1.01 on Tuesday. Meanwhile, the Bridge CRB index added 1.20 to 225.04 View latest commodity prices.
Oracle declined 9/64 to 86 3/16. The company (ORCL: news, msgs) posted after the close Tuesday fourth-quarter earnings per share of 31 cents compared to the First Call estimate of 25 cents a share. The company made 18 cents a share in the year-ago period.
Oracle shares suffered as investors reacted to lower-than-expected revenue of the company?s flagship database software. Analysts had expected database revenue of as much as $1.35 billion while the actual numbers were $1.22 billion. Read the story.
The CBOE Computer Software Index ($CWX: news, msgs), of which Oracle is a component, fell 0.6 percent. Keeping the index from losing additional ground were stellar gains in shares of Microsoft.
Merrill Lynch downgraded Oracle to a ?near-term accumulate? from a ?near-term buy.? Lehman Brothers reiterated its ?buy? recommendation and $100 price target, indicating that it expects re-acceleration of database license revenue next quarter. Deutsche Banc Alex. Brown and UBS Warburg called the company?s results ?solid? while Chase H&Q called the numbers ?outstanding.? See Rating Revisions.
Intel (INTC: news, msgs) shares edged up 11/16 to 139, erasing earlier losses. After the close Tuesday, the chip kingpin said it will take a second-quarter charge of about $200 million, or 2 cents a share on a post-split basis, for the remaining costs associated with the replacement and refunding of faulty motherboards. The replacement program was announced last month. Read the story.
The Philadelphia Semiconductor Index ($SOX: news, msgs) added 0.4 percent and is up over 80 percent for the year.
Earlier in the session, the sector lost some ground as the monthly report from the Semiconductor Equipment and Materials International trade group revealed the May book-to-bill ratio was 1.30:1, down from a revised 1:37:1 in April and from a peak of 1:46:1 in March. See related story.
In merger news, Battle Mountain Gold is merging with Newmont Mining in a stock deal valued at $557 million. Under the terms of the agreement, Battle Mountain shareholders will get 0.105 of a share of Newmont for each share owned. See full story. Battle Mountain (BMG: news, msgs)jumped 19.4 percent, or 3/8 to 2 5/16 while Newmont (NEM: news, msgs)lost 5/8 to 22 7/16. The CBOE Gold Index ($GOX: news, msgs) rose 3.0 percent.
Avista Corp. (AVA: news, msgs) warned Wednesday that it would do no better than break even in the second quarter and full year because of soaring energy prices. First Call had expected the company to earn 21 cents a share in the second quarter. Read the story. Shares fell 1/4 to 19.
Corel shares (CORL: news, msgs) lost 7/16, or 10.4 percent, to 3 3/4. Late Tuesday, the company posted a second-quarter loss of 36 cents per share compared with the First Call estimate of a loss of 40 cents a share. The Linux company said it had only $9.9 million in cash on its balance sheet and conceded that unless it gets more money, its ?ability to continue would be in substantial doubt.? See full story.
Among other Linux-related companies, Red Hat (RHAT: news, msgs) added 1 11/16 to 31 7/8 while VA Linux Systems (LNUX: news, msgs) rose 3 to 38 1/4.
Verity checked in after the close Tuesday with fourth-quarter earnings of 32 cents a share, well ahead of the First Call estimate of 15 cents a share. The company (VRTY: news, msgs) made 17 cents a share in the year-ago period. Shares rose 2 3/8 to 44 3/8. Banc of America upped the company to a ?strong buy? rating from a ?buy.?
Shares of Akamai Technologies (AKAM: news, msgs) put on 22.7 percent, or 21 3/8 to 115 3/8. The company was initiated with a ?buy? rating and a $175 to $180 price target at Chase H&Q. The company is a component of Merrill Lynch?s Internet Infrastructure Holdrs (IIH: news, msgs), which added 0.3 percent on Wednesday.
Shares of Tyson Foods (TSN: news, msgs) declined 1/2 to 9 1/16 after warning late Tuesday that it expects earnings to be in the range of 18 to 20 cents a share. First Call expects the company to make 26 cents a share in the third quarter. View the story. Merrill lowered its rating on the company to a ?near-term neutral? from a ?near-term accumulate.?
Shares of Gillette (G: news, msgs) added 11/16 to 31 11/16. The consumer-products giant was upgraded to a ?strong buy? from a ?hold? at Prudential Securities.
Over in the IPO arena, China Unicom?s American Depositary Shares (CHU: news, msgs) opened at 22, well above their $19.99 price. The stock ended at 22 after rising to a high of 24 5/8 in intra-day dealings. The wireless telecom provider?s huge $4.9 billion IPO is the largest Asian IPO ever seen outside of Japan. See IPO Report.
Shares of WorldCom (WCOM: news, msgs) fell 1 3/8 to 40 5/16. The European Union is reportedly set to block WorldCom?s proposed $129 billion acquisition of Sprint on concerns that the deal would concentrate too much of the Internet within the company?s own network. See full story. Shares of Sprint (FON: news, msgs) lost 1 1/8 to 59.
In the meantime, Texas Instruments (TXN: news, msgs) said after the close of trading Wednesday that it will acquire Burr-Brown Corp. in a stock-for-stock transaction valued at about $7.6 billion. Read the story. Texas Instruments closed down 3 1/8 to 83 3/4 ahead of the news.
See After Hours for post-market trading activity.
Treasury focus
Bond prices lost ground, with losses clustered in the long end of the Treasury yield curve, led by the 30-year issue.
The long end suffered even as the Treasury announced early Wednesday that it would buy back up to $2 billion in 12 different 30-year issues Thursday.
The 10-year Treasury note fell 20/32 to yield 6.11 percent while the 30-year bond dropped 29/32 to yield 5.96 percent. See Bond Report.
There is no economic data on tap for Wednesday. Thursday will see the release of weekly initial claims. View Economic Preview,economic calendar and forecasts and historical economic data.
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Julie Rannazzisi is markets editor for CBS.MarketWatch.com.
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