ALL: Nice move in Intel today...From CBS Marketwatch, the market may have more room on the upside:
joey
Small issues out front
Stocks buoyant
By Kevin N. Marder, CBS MarketWatch
Last Update: 4:19 PM ET Oct 29, 1998
Bond Report
NEW YORK (CBS.MW) -- U.S. stocks bubbled just beneath their
session highs as Monday's session headed into its final hour.
At 3:03 p.m. ET, the Dow Jones Industrial Average advanced 140.06
points, or 1.6 percent, to 8,732.19. Just since Thursday's session low, the
key gauge has bounded more than 4 percent.
Market bulls had little to complain about in Monday's trade. The breadth
of the move was excellent, led by the small- and mid-cap sectors.
"The small- and mid-cap sectors are the ones we've felt would do better,
and continue to feel will do better," said Bruce Bittles, market strategist
at J.C. Bradford & Co.
"We like the sentiment indicators," Bittles said. "Most people have failed
to really get on this new change in momentum since the Fed lowered
interest rates for the second time in October. Until the sentiment surveys
show that extreme optimism has returned, I think the market's going up."
Bittles is heartened by the latest data on inflows into mutual funds.
"Investors poured $9 billion into funds in September. But the interesting
statistic was that the fund managers were net sellers. So they raised $3
billion more."
According to Bittles, the result is that mutual fund managers hold more
cash in their portfolios than at any time since April 1997. That's bullish
since the cash represents potential firepower to fuel a further advance.
Volume, though light, was as expected for a Monday session. Technically,
the move in the Dow represented a breakout of an abbreviated seven-day
basing area, something the S&P 500 index had accomplished Friday.
Inside the market, a favorable Barron's article allowed the oil patch to
spurt higher, while technology maintained its position high on investor
shopping lists, paced by a frisky Internet group.
Meanwhile, the transportation sector drove higher amid another day's
worth of outperformance by economically-cyclical stocks. Here, the
airlines impressed. Cyclical stocks have received a shot in the arm after a
recent run of economic numbers showed above-forecast growth,
especially Friday's third-quarter gross domestic product data.
The Standard & Poor's 500 Index rose 1.4 percent.
New York Stock Exchange winners nailed losers by better than 2.5 to 1.
On the Big Board floor, 530 million shares traded.
The Nasdaq Composite advanced 1.4 percent. Advancing issues led
decliners by 5 to 3 in the Nasdaq Stock Market. Volume totaled 714
million shares.
The Russell 2000 Index of small-capitalization stocks gained 1.9 percent.
On the economic front, the National Association of Purchasing
Management reported a drop in its October index to 48.3 from
September's 49.4. Most economists had called for a 49.0 reading. A level
above 50 indicates expansion in the manufacturing sector, while a sub-50
reading corresponds with a contracting manufacturing economy.
In other economic tidbits, the government reported that Americans spent
more than they earned in September. See full story.
In the bond market, prices continued to head south Monday following
Friday's grueling selloff, fearing another round of strong economic data
and an avalanche of new supply.
The 30-year Treasury fell 1 7/32, to yield 5.235 percent. See Bond
Report.
In special situations, Sofamor Danek Group (SDG) picked up 4 7/16
to 101 5/8. Cardiac device manufacturer Medtronic (MDT) will buy the
neurological device maker for $3.4 billion in stock. See full story and
related story
Electric and natural gas utility CMS Energy (CMS) will purchase
Panhandle Eastern Pipe Line Co. from Duke Energy (DUK) for $2.2
billion in cash and assumable debt. CMS stock tacked on 1 5/16 to 45
3/8, while Duke shares dipped 1/2 to 64 3/16. See full story.
Elsewhere on the merger front, a couple of software concerns pledged to
tie the knot. BMC Software (BMCS) will acquire Boole & Babbage
(BOOL) in a $900 million stock swap. Stock of the former eased 2 3/8
to 45 11/16, while shares of the latter ascended 3 3/8 to 30. See full
story.
In earnings news, Baker Hughes (BHI) advanced 1 1/16 to 23 1/8. The
provider of oil & gas drilling equipment reported third-quarter operating
profits of 20 cents a share, 2 cents ahead of most Wall Street estimates.
See full story.
In other specific issues, Kellogg (K) dipped 1/4 to 32 3/4 after CS First
Boston dropped its rating to "sell" from "hold," citing valuation concerns.
Citigroup (CCI) shed 2 1/8 to 44 7/8. President Jamie Dimon, whom
many tabbed as the heir apparent of Citigroup Co-Chief Executive
Sanford Weill, quit. Warburg Dillon Read chopped its opinion of the
stock to "hold" from "strong buy," due to "operational risks" in light of
Dimon's departure.
The favorable article in Barron's moved many oil & gas stocks. Among
sector bellwethers, Schlumberger was ahead 2 1/2 to 55 and Halliburton
2 1/16 to 38 1/16. In the drilling group, Diamond Offshore rose 1 3/8 to
32 1/16, Transocean Offshore 1 1/4 to 38 3/16, Cliffs Drilling 1 5/8 to 24
1/2, Atwood Oceanics 2 1/4 to 30 3/8, Noble Drilling 1 15/32 to 18
21/32, and Rowan 1 3/16 to 15 3/4.
In a hot Internet group, America Online was up 5 3/4 to 133 1/8, CMG
Information Services 4 to 60 7/8, DoubleClick 3 1/8 to 36 1/8,
RealNetworks 2 13/16 to 36 1/2, Amazon.com 3 15/16 to 130 3/8, and
Preview Travel 2 1/8 to 15 11/16.
Semiconductor stocks were a no-show Monday, trading flat to lower
after Morgan Stanley Dean Witter cut its rating on five chip equipment
issues to "neutral" from "outperform." ASM Lithography fell a point to 24
1/2, KLA-Tencor 1 1/4 to 35 5/8, Dupont Photomasks 2 to 34 1/4, Lam
Research 1/4 to 14 3/16, and Silicon Valley Group 15/16 to 11 7/8.
COMMODITIES
New York light sweet crude for December delivery declined 4 cents to
$14.38.
December gold fell 50 cents to $293.20.
CURRENCIES
Dollar/yen was quoted at 114.75 from Friday's 115.50.
Dollar/mark was at 1.6520 from 1.6521. See latest currency rates.
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