To everyone's surprise, Brazil restored some credibility to its currency Friday and sent the Brazilian stock market soaring. This had a predictably positive effect on Wall Street, where share prices finally rebounded after three days of losses.
To absolutely no one's surprise, a new Internet stock, MarketWatch.com, made its trading debut and promptly went through the roof, posting one of the biggest first-day gains ever.
The Dow Jones Industrial Average gained 219.62 points to close at 9340.55, and the S&P 500 was 31.07 higher at 1243.26. The Nasdaq Composite Index rose 71.38 to 2348.20, and the Wired Index was up 28.21 at 616.70.
The key factor here is Brazil's decision not to throw tons of cash at propping up its sagging currency, the real, and to instead allow it to settle wherever the market deems appropriate. This will permit Brazil to devote its scarce dollar reserves to much-needed efforts to restructure the country's economy, not to mention keep mailing off checks to cover international debt obligations.
Brazilian stocks surged more than 33 percent higher, and Wall Street followed suit, with share prices up pretty much across the board. The sense of relief among traders was readily apparent as the market headed toward a strong finish prior to the long holiday weekend. US financial markets will be closed Monday for Martin Luther King Jr. Day.
For day traders and other individual investors, Brazil was merely a blip. The big news instead was the arrival of financial-news provider MarketWatch.com (MKTW), which started trading in the early afternoon at an initial price of US$17 a share. By the closing bell, the stock was up $80.50, or 474 percent, at $97.50 -- not quite matching the 600-percent leap made by Theglobe.com in November, but pretty darn close.
Lise Buyer, an analyst with Credit Suisse First Boston, shrugged off the notion of yet another Net IPO going stratospheric. "The entire Internet space is going to be really volatile for the near term," she said.
Part of the reason, Buyer added, is because Net stocks have little if no exposure to overseas turmoil, providing an extra lure for investors. "I would hate to use the term 'safe haven' considering these valuations," she said. "But most of these stocks are insulated from immediate risk."
In MarketWatch's case, it has all the qualifications for a superior Internet play: strong content, millions of visitors to the site each month, and millions of dollars in losses. Why shouldn't this company have a market value of more than $1 billion?
Jumping on the bandwagon, online car dealer autobytel.com said it's now ready to make another stab at going public. The company told the Securities and Exchange Commission that it plans to sell 4.5 million shares to raise as much as $82.5 million. On Thursday, software startup Healtheon said it too is keen to try another splash in the IPO pool.
Speaking of things that go bump in your portfolio, eBay (EBAY) shed $1.94 to $223.38 after saying it's going to crack down on fraud and other such shenanigans at its online auction house. CEO Margaret Whitman declared that "eBay has zero tolerance for fraud."
Not good enough?
Video software maker RealNetworks (RNWK) jumped $4.94 to $55 on news that it will team up with cable-based Net access provider At Home Network (ATHM) to promote a new generation of streaming video clarity. Anyone watching the marionette shows now passing for online video will appreciate the importance of such a development. At Home was down 63 cents at $102.
CS First Boston's Buyer called attention to finance-software maker Intuit (INTU), which she upgraded to "strong buy" from "buy." With tax season around the corner, and with the company set to launch an online tax-preparation service next week, Buyer said Intuit represents a solid Net-related investment.
"It's one of those peripheral names that has significant Internet exposure," she observed. "And it's been out of the limelight for a while." Intuit ended the day up $6.50 at $85.19.
Among other Net notables, Yahoo dropped further from its earlier record-high level, slipping $26.94 to $317. But Amazon.com gained $2.38 to $140.38, and America Online was $2.13 higher at $146.63.
Inktomi (INKT), the provider of technology for several leading search engines, fell $10 to $148.50 after reporting a quarterly loss of 24 cents a share. This was better than the 30 cents expected by analysts, but investors are nevertheless mulling the company's future prospects.
The bidding war for AirTouch Communications (ATI) looked to be rekindling as the Financial Times reported that Bell Atlantic (BEL) will top the $55 billion on the table from Britain's Vodafone Group (VOD). Vodafone in turn may boost its bid, the paper said.
AirTouch rose $4.56 to $83.38, while Bell Atlantic slid 44 cents to $53.38, and Vodafone was up $1.44 at $176.
Tech shares were broadly higher. Dell Computer (DELL) gained $1.38 to $79, and Intel (INTC) was $1.63 higher at $135.38. Cisco Systems (CSCO) climbed $5.31 to $101.69, and Microsoft (MSFT) was up $8 at $149.75.
Lastly, Friendly Ice Cream (FRND) melted 16 percent to $5.19 after warning that increased operating costs may result in a fourth-quarter loss of as much as $1.15 a share -- a considerably bigger hit than the 13 cents anticipated by the Street.
Friendly Ice Cream -- how can anyone knock an outfit with a name like that? The only merrier construction that comes to mind is Warm Fuzzy Kittens.
Hello, trademark office?
