MARKET ACTIVITY/TRADING NOTES FOR DAY ENDING MONDAY, JULY 06, 1998 (2)
MARKET OVERVIEW
NEW YORK, Con't
Technology stocks
Internet stocks rule the roost, helping send the Morgan Stanley High Tech Index (MSH) up 9.60 to 605.98 and the Nasdaq 100 Index (NDX) higher by 10 to 1,342. The AMEX Ineter@ctive Week Internet Index (IIX) jumped 6.10 to 396.34.
Lycos (LCOS) jumped 20 1/2 to 99 9/16 following its announcement of a 2-for-1 stock split.
Leading search engines rose in tandem, with Yahoo! (YHOO) up 26 3/8 to 199 1/4 and Excite (XCIT) higher by 8 1/16 to 107.
Among other leaders in the group, Amazon.com (AMZN) rose 15 1/2 to 139 1/2, America Online (AOL) closed up 2 15/16 to 113 3/16, while Nescape Communications (NSCP) slid 2 5/16 to 39 after rising to as high as 44 1/2 intraday.
Zapata Corp. (ZAP) also rode the Internet surge, climbing 11 5/16 to 21 3/16. The company announced it would split into two companies, with one concentrating on the burgeoning online sphere, dubbed Zap Corp.
Egghead.com (EGGS) closed up 5 13/16 to 14 13/16 on its announcement that online sales rose 95% in the second quarter.
Creative Computers (MALL) rose 4 1/2 to 11 7/8 on news that its Internet auction unit, uBid, has filed for an initial public stock offering.
Audio Book Club (KLB) continued to gain on last week's announcement of the growth of its club via Internet offerings, up 9 3/4 to 19 1/4.
Elsewhere in the sector, recent IPO NetGravity (NETG) jumped 7 7/8 to 27 and USWeb (USWB) closed up 4 1/8 to 29 1/4.
Tech stocks in Salomon Smith Barney's "Ten Exceptional Names" list included Applied Materials (AMAT), which rose 11/16 to 30 3/8, and Motorola (MOT), up 1 1/2 to 53 5/8.
IBM (IBM) was also included on the list, but the Dow component fell 1 7/16 to 113 3/4.
Texas Instruments (TXN) led the chip sector lower, falling 1 15/16 to 5515/16, while equipment maker Novellus Systems (NVLS) slid 1 3/16 to 33 5/16. The Philadelphia Semiconductor Index (SOX) closed off 0.81 to 244.80.
Most other tech bellwethers posted only fractional moves. Exceptions included Dell Computer (DELL), down 1 1/8 to 91 3/4. On the upside were Computer Associates (CA), which rose 1 15/16 to 59 1/8, Gateway (GTW), higher by 1 3/4 to 54 5/16, and PeopleSoft (PSFT), up 2 3/16 to 46 5/8.
Other high-tech gainers included Sun Microsystems (SUNW), higher by15/16 to 43 7/16, and Apple Computer (AAPL), up 1 3/8 to 30 3/8.
Inktomi (INKT) climbed 25 5/8 to 73 5/8 after receiving a new "market outperform" rating from Goldman Sachs and new "buy" recommendation from Hambrecht & Quist.
Structural Dynamics Research Corp. (SDRC) fell 5 15/16 to 15 7/16 as the software company said second-quarter earnings will be far below analysts' expectations.
In a similar vein, separate profit warnings sent shares of FTP Software Inc. (FTPS) lower by 9/32 to 1 17/32, and Computer Motion (RBOT) off 21/8 to 10 7/8.
Active issues
Merck (MRK) led the Dow's rise, gaining 2 1/4 to 135 15/16. Other gainers included General Electric (GE), up 1 1/4 to 91 13/16, and DuPont (DD), which gained 2 1/8 to 78 5/16.
Johnson & Johnson (JNJ) led the Dow decliners, sliding 1 3/8 to 72 5/16. Prudential Securities cut its rating on the company to "hold" from "buy."
Profitt's (PFT) shares dipped 4 to 36 11/16 on word that it has agreed to acquire Saks Holdings (SKS) for nearly $3 billion. Saks shares rose 7/16 to 29 7/16.
Unit Instruments Inc. (UNII) gained 1 3/4 to 10 3/4 thanks to a $50.5 million buyout offer from U.S. Filter (USF), whose shares rose 3/4 to 3015/16.
Peoples Telephone Co. (PHO) rose 15/16 to 4 1/16 on news that it will acquire Davel Communications Group (DAVL) for $211 million. Davel shares fell 2 1/2 to 22 7/16.
Ford (F) shares gained 1 5/8 to 59 3/4 after the auto maker said June sales of light trucks and cars rose 11%. Dow member General Motors (GM) closed up 2 to 70 7/8 in concert.
Home Depot Inc. (HD) rose 3 5/16 to 46 3/16. On Thursday, the home improvement company completed a 2-for-1 stock split.
Several names got a lift from inclusion on Salomon Smith Barney's "Ten Exceptional Names" list for 1998, including: Alcatel Alsthorn (ALA), up 1 1/4 to 42 1/4; Chase Manhattan Bank (CMB), up 1 1/2 to 76 15/16; Navistar International (NAV), higher by 2 1/2 to 30 5/8; Schering Plough (SGP), up 3 9/16 to 98; and Williams Cos. (WMB), which gained 1 5/16 to 35 1/8.
Among major industry groups, airline stocks got a boost from positive comments at Morgan Stanley Dean Witter. The AMEX Airline Index (XAL) rose 14.08 to 404.90. Shares of AMR Corp. (AMR), Delta Air Lines (DAL), and UAL (UAL) each rose more than $3.
Reversing last week's trend, the AMEX Oil Index (XOI) slid 1.76 to 477.63, while the Philadelphia Oil Service Index (OSX) dipped 3.15 to 88.89.
Financial stocks rose in concert with the bond market, sending the Philadelphia KBW Banking Index (BKX) up 9.54 to 890.44.
Drug stocks were also higher, with the AMEX Pharmaceutical Index (DRG) rising 7.14 to 683.76.
Pfizer Inc. (PFE) shares rose 2 to 109 1/2 although The Wall Street Journal reported Monday that two major U.S. insurance companies would not cover Viagra.
Immucor Inc. (BLUD) rose 1 7/8 to 10 3/8 after the FDA cleared the way for it to market a new blood-test system in the U.S.
However, Agouron Pharmaceuticals (AGPH) shares slid 2 7/8 to 2513/15, despite receiving some positive comments from Morgan Stanley Dean Witter.
ContiFinancial Corp. (CFN) fell 6 1/8 to 19 1/8 after the home-mortgage lender said its earnings will plunge as borrowers pay off loans faster than expected.
FirstPlus Financial Group Inc. (FP) said it does not expect extraordinary losses from loan prepayments; its shares rose 1 3/4 to 38 1/16.
Illinova Corp. (ILN) shares slid 2 1/8 to 28 1/4 after the energy firm said it expects a "significant" loss for the six months ending June 30. Additionally, the company said it will have "little in the way of earnings" for all of 1998.
WD-40 (WDFC) slid 1 1/8 to 26 3/4. On Thursday, the firm posted fiscal third-quarter earnings of 26 cents per share, 11 cents shy of expectations.
American Business Information (ABIIA) tumbled 1 11/16 to 12 15/16 on news that CEO Scott Dahnke is leaving August 1. Just last week, President and Chief Operating Officer John Wellman resigned from the direct-marketing concern.
After the bell
Adept Technology Inc. (ADTK) warned it could lose up to a nickel per share in its fiscal fourth quarter. Analysts were looking for profits of 11 cents per share from the designer and manufacturer of intelligent automation software and hardware.
Zoran (ZRAN), a developer of chips and software for digital video and audio compression applications, said it would lose up to 12 cents per share in the second quarter. The company was expected to earn 7 cents per share.
SmallWorldwide Plc (SWLDY), a developer of client/server software, warned of disappointing results for its fiscal fourth quarter.
Radiant Systems (RADS) also waved the red flag, as did Aetrium (ATRM) and help-desk software developer Vantive Corp. (VNTV).
TESSCO Technologies (TESS) posted first-quarter profits of 7 cents per share, 2 cents shy of expectations.
Insituform Technologies (INSUA) said it will buy back up to 10% of its outstanding common stock.
Connect Inc (CNKT) said it has hired Alliant Partners to help explore "strategic alternatives," including a sale of the developer of Internet-based interactive commerce software.
Outside of tech, General Cigar Holdings (MPP) posted second-quarter earnings of 24 cents per share, 2 cents better than expectations.
Lone Star Technologies (LSS) warned that its second-quarter results will not meet expectations.
Medical device maker DePuy Inc. (DPU) cautioned that its second quarter earnings will not meet expectations due to a charge of $131 million stemming from its recent acquisition of AcroMed.
INTERNATIONAL
Tax Cuts Cloud Asia
HK Drops 1.8 percent; Tokyo Drags On Tax Remarks; Gains Elsewhere
Uncertainty over Japan's tax cut plans and disappointing real estate sales in Hong Kong sent those two markets down Monday, despite positive gains in neighboring Pacific Rim markets.
In Hong Kong, a weakening yen and disappointment over a new real estate development brought the index down almost 2 percent.
And uncertainty over whether the Japanese government will introduce permanent income tax cuts, widely seen as necessary to revive Japan's economy, sapped energy from the stock market in Tokyo and caused concern in neighboring exchanges.
Singapore and Sydney, however, both posted gains in light-trading sessions.
Hong Kong stocks drifted to a lower close on Monday as investors clung to the sidelines, eyeing a weaker Japanese yen and following a cool response to a sale of apartments launched over the weekend, brokers said.
The Hang Seng Index lost 155.19 points, or 1.80 percent, to 8,484.12 after hitting a low of 8,451.83. Turnover shrank to its lowest in over one month, finishing at HK$3.12 billion against Friday's quiet HK$4.51 billion.
Investors are now set to look for guidance from the yen and Wall Street, brokers said.
"In the short term, obviously people will be looking to the United States, but I think more importantly, this market's direction is based on the yen," said Miles Remington, sales trader at SG Securities.
The U.S. dollar climbed above 140 yen after comments by Japanese Prime Minister Ryutaro Hashimoto that permanent income tax cuts were still only being debated.
Property counters suffered the largest setback on Monday after disappointing results from a weekend property sale, brokers said. The sub-index shed 3.85 percent.
Sun Hung Kai Properties said about 60 percent of registered potential buyers for apartments at its Castello development showed up to choose apartments on the first day of sales Saturday.
Little concrete positive news from U.S. President Bill Clinton's visit to China also weighed down the index, brokers said.
Utilities went against the current as investors sought refuge in defensive stocks.
Nikkei shows confusion over tax remarks
Tokyo stocks closed moderately lower on Monday.
The Nikkei 225 average closed down 160.79 points, or 0.97 percent, at 16,350.45, snapping an eight-session winning streak.
The Nikkei stumbled after Prime Minister Ryutaro Hashimoto, referring to a speech he made last Friday, told Television Asahi on Sunday, "I never said permanent tax cuts. I just said we would review the tax system to make permanent reforms."
On Monday, Deputy Cabinet Secretary Teijiro Furukawa reiterated that Hashimoto did not mention permanent tax cuts, but talked about overall tax reform after an Upper House election on July 12..
Brokers said participants were perplexed by what appeared to be backtracking by the prime minister and other cabinet members.
"We're not sure what they intend to do," said Tsuyoshi Segawa, general manager at the equity department at New Japan Securities Co. Ltd. "But they will be forced to introduce permanent tax cuts sometime in the future, although they may not be able to do so before the election."
Mamoru Shimode, a strategist at Deutsche Morgan Grenfell Capital Markets, said there were some hopes that Japan will announce a decision on permanent tax cuts before Hashimoto meets U.S. President Bill Clinton later this month.
Such hopes limited losses on the Nikkei 225 on Monday.
Some said after a strong rally that added1,456.64 points, to the Nikkei 225 average in eight days, a setback on Monday was natural. "There will be some people who want to take a little cash off the table," said a trader at Wako Securities.
Despite losses in stock indices, many low-priced shares attracted speculative buying by individual investors, which were seen by traders a sign of a long-term recovery in the market.
Singapore pulls ahead
Most Singapore shares bounced off their day's lows to end higher on Monday following a late bout of program buying by overseas funds, dealers said.
After trading to a low of 1,103.65 on uncertainties over Japan's tax policies and its ailing economy, the Straits Times Industrials (STI) Index ended up 4.84 points, or 0.43 percent, to 1,127.51,.
"There was some program trading in the late afternoon, namely by American houses. They were buying selected counters in properties, banks and other index-linked stocks," said a broker with an overseas institution.
Most dealers shrugged off the rebound, saying sentiment remained weak on concerns over how Japan will lift itself from its economic doldrums.
"All eyes remain fixed on Japan and how it will pull through this crisis. Notice the rebound on the selected counters was on limited volumes," said a broker.
Total market volume was a light 81 million shares, with 101 gainers to 154 losers.
Sydney posts gain on quiet day
The Australian share market closed higher on Monday as investors bought leading industrials, but activity was low following the long U.S. Independence Day weekend.
The All Ordinaries index rose 8.7 points, or 0.32 percent, to 2,751.8 on thin turnover of A$621.6 million (US$382.3 million).
"It seems to be News Corp. and Telstra leading the way again, with the banks also a little bit firmer," dealer Steve Mayne of Nevitts said.
"(The lead) certainly didn't come from overseas," he said, noting declines on key Asian markets.
Telecom group Telstra was the most actively traded, and the widely held stock hit a new high of A$4.49 before ending 10 cents up at A$4.46.
"There's a lot of fund managers going into what's perceived to be a safe haven in Telstra," Mayne said.
Global media giant News Corp. climbed 14.5 cents to A$13.06 on continued buying interest after the recently announced plan to spin off and float part of its U.S. entertainment assets.
Most mining stocks lost ground despite mainly firmer base metal prices, but resources major BHP held up better than average with a one cent decline to A$14.08.
The gold sector slipped 0.6 percent as gold bullion struggled just under US$294 an ounce.
Elsewhere:
The markets were closed in Malaysia and Indonesia for holidays.
TaipeiI: Share prices closed higher, boosted by an agreement between the government and a Taiwanese consortium to build a high-speed rail project in Taiwan. The market's key Weighted Stock Price Index rose 18.61 points, or 0.2 percent, to 7,894.85.
Manila: Philippine shares closed slightly lower in listless trading. The Philippine Stock Exchange Index of 30 selected issues fell 4.85 points, or 0.2 percent, to 1,854.39.
Bangkok: Thai share prices closed lower on profit-taking. The Stock Exchange of Thailand index fell 2.74 points, or 1 percent, to 271.00.
Seoul: Share prices closed slightly higher. The Korea Composite Stock Price Index rose 1.76 poi
Bourses Battle Doldrums
London And Paris End Marginally Higher; Thin Volume 'Bores' Frankfurt Traders
European stocks lacked conviction on Monday as major markets ended little changed after a session of uninspired trading, dealers said.
London's FTSE-100 index erased early losses to close flat as Wall Street opened stronger after a three-day holiday weekend.
The FTSE ended at 5,990.3, up a scant 1.90 points, still well within the trading range where it has been stuck for more than four months.
Wall Street's rise helped the Paris bourse reverse losses, and the CAC-40 index closed up 6.72 points, 0.16 percent, at 4,311.10. Auto parts maker Valeo rose 3 percent on higher than expected first half sales.
Volume continued thin and conviction was lacking as fund managers waited for firmer news regarding possible tax cuts in Japan. Despite the late gains, traders failed to summon up much enthusiasm in the face of next week's two-day market holiday.
"The CAC always takes a while to wake up on Mondays. But with New York just coming back from holiday and people here preparing for next week's Bastille Day break, it is likely to continue calm for the next couple of days," one said.
Germany's Xetra DAX index closed down 19.39 points, 0.33 percent lower at 5,942.06, while in floor trading the DAX index of 30 blue-chip stocks struggled all day with thin volumes and finished down 34.79 points at 5,918.37.
"I fear we are stuck in it," one trader said. "It's pretty boring. There's no impetus. It's the summer and we are at the mid-year point."
Thin volume hampered trade on Monday as it did much of last week, when the DAX see-sawed and closed the week 33 points ahead.
Among market movers, Hoechst AG fell 1.6 percent after it said it was not in merger or takeover talks with Bayer AG.
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