Big Tech Can't Be Stopped, and Isn't
By Aaron L. Task
Senior Writer
1/28/99 4:51 PM ET
And the green grass grows all around, all around, the green grass
grows all around.
Intel (INTC:Nasdaq) and America Online (AOL:NYSE) announced
stock splits. Yahoo! (YHOO:Nasdaq) and Ford (F:NYSE) continued
the consolidation of their respective industries. There were no major
disasters either overseas or on the earnings front.
If stocks didn't rise today, there'd be something to worry about.
Technology stocks, as is their wont, rambled further and faster than
blue-chips or small-caps. But all major proxies were up on the
session, while the Nasdaq Composite Index established its 10th
record high of the new year.
The replete-with-tech Nasdaq Comp closed at its intraday high, up
70.20, or 2.9%, to 2477.34. The point gain is the fifth-highest in
Nasdaq history. The close eclipses the previous high of 2433.41 set
Tuesday.
Intel was a major factor in the rise, gaining 3.3% on word of its
amoeba impersonation, while tech bellwethers such as Microsoft
(MSFT:Nasdaq), Cisco (CSCO:Nasdaq) and Dell (DELL:Nasdaq)
also posted sharp gains. The Nasdaq 100 rose 3.7% while the
Philadelphia Stock Exchange Semiconductor Index climbed
3.2%.
Internet names, meanwhile, were inspired by the combo of AOL's
stock split and better-than-expected earnings, plus Yahoo's bid to
acquire GeoCities (GCTY:Nasdaq). AOL rose 5.4%, Yahoo! gained
9.9%, and GeoCities climbed 57.4% on the respective developments.
TheStreet.com Internet Sector index, of which GeoCities is not a
component, rose as high as 552.50 before closing up 17.82, or 3.3%,
to 552.41.
' Now the relative outperformance by big-cap tech
is so far above anything in the market you don't
know when it will end,' said Prime Charter's Scott
Bleier. 'Anytime they dip, it's a one- or two-day
affair and then it's back to the races.'
The fact Internet stocks didn't storm even higher on the news was not
lost on market players. "Believe it or not, there seems to be a little
more selectivity," one trader said. "Just a little bit more."
The evenly weighted DOT was restrained by weakness in
components such as BroadVision (BVSN:Nasdaq) and MindSpring
Enterprises (MSPG:Nasdaq); each reported earnings in line with
First Call estimates last night.
The Dow Jones Industrial Average drifted along in positive territory
for much of the session, trading around the 9250 level. In the final hour
of trading, however, the pace of gain accelerated and the index
climbed as high as 9301.15 before closing up 81.10, or 0.9%, to
9281.33. J.P. Morgan (JPM:NYSE), AT&T (T:NYSE) and General
Electric (GE:NYSE) were the big positive influences on the index.
The S&P 500 rose 22.20, or 1.8%, to 1265.37 while the Russell
2000 gained 2.85, or 0.7%, to 423.97.
'Busy but Uneventful' on the NYSE Floor'
From the floor of the New York Stock Exchange, the action seemed
fairly intense today. But one independent broker kind enough to let a
reporter tail him for a few hours described the scene as "busy, but
pretty uneventful." The broker received a steady stream of orders from
varied clients for varied stocks, but few trades of magnitude. Having
notched gains in recent weeks, some clients may not want to "push
things" with the trading month ending tomorrow, the player suggested.
In NYSE trading, 850.8 million shares traded while gainers led
declining stocks 1,552 to 1,423. In Nasdaq Stock Market activity,
advancers led 2,067 to 1,932 while 1.017 billion shares traded. New
52-week lows led new highs 80 to 64 on the Big Board but new highs
led 111 to 28 in over-the-counter trading.
"It's the 'Lucky Seven' plus the Internet stocks. That's the show," said
Scott Bleier, chief investment strategist at Prime Charter, naming
Microsoft, Dell, AOL, Cisco, Intel, Sun Microsystems
(SUNW:Nasdaq) and Lucent (LU:NYSE). "You have drugs, retailers,
banks, transports and oil sloshing around -- industry groups doing
absolutely nothing. But these major stocks are cap-weighted and they
keep lifting indices higher and higher. Market internals have been
miserable, lackluster at best, but that doesn't seem to matter."
Banks and drug makers were solid performers today, the former
aided by a relatively calm day in Brazil, where the Bovespa rose
3.9% although the real dipped a further 2.1% to 1.95 to the dollar.
Drug stocks were inspired by Pfizer (PFE:NYSE), which rose 4.6%
on news its board will vote on a 3-for-1 stock split on April 22. Still,
both groups lagged the techs once again.
Barring an unforeseen external calamity, the most likely way for the
trend to change is when big-cap tech stocks "go up really big for a
couple of days on really no news," Bleier said. "That will be the
blow-off top in those stocks that marks the ultimate valuation stretch.
Obviously, we're not there yet."
Reading the Internet stocks, the strategist said Federal Reserve
Chairman Alan Greenspan said nothing today regarding the group
that could be construed as a warning to investors.
During the Q&A after testifying before the Senate Budget
Committee, the chairman did liken investing in the Internet to playing
the lottery. But he also said: "It does reflect something good about the
way our securities markets work: mainly that they do endeavor to
ferret out the better opportunities and put capital into various different
type of endeavors prior to earnings actually materializing. ... With all of
this hype and craziness, that is something that at the end of the day is
probably more plus than minus."
The Internet comments are in sync with Greenspan's past
"endorsement" of technology and, thereby, tech stocks, Bleier said.
"Over and over again he's saying how technology is increasing
productivity, [that] tech is getting us where we are today," the strategist
said. "Now the relative outperformance by big-cap tech is so far
above anything in the market you don't know when it will end. Anytime
they dip, it's a one- or two-day affair and then it's back to the races."
Among other indices, the Dow Jones Transportation Average fell
10.77, or 0.4%, to 3078.33; the Dow Jones Utility Average fell 0.63,
or 0.2%, to 303.19; and the American Stock Exchange Composite
Index rose 6.74, or 1%, to 713.93.
The price of the 30-year Treasury bond rose 10/32 to 102 6/32,
sending its yield down to 5.11%.
Market data above are preliminary. Updated numbers and
Thursday's Company Report will follow this story. |
