Wall Street was clawing its way back to higher ground in mid-afternoon trading Wednesday after plunging earlier, on news that the head of Brazil's central bank had abruptly quit, and that his successor had effectively devalued the country's currency. A wave of panic selling subsided as bargain hunters returned to the fray.
Meanwhile, Lucent Technologies announced a US$20 billion buyout of Ascend Communications. The much-anticipated deal is intended to bolster Lucent's data networking capabilities, making it a more formidable rival to Cisco Systems.
The Dow Jones Industrial Average shed 93.97 points to 9380.71, while the S&P 500 was 0.59 higher at 1240.10. The Nasdaq Composite Index rose 12.53 to 2333.28, and the Wired Index was down 1.86 at 614.92.
The doings in Brazil caught US traders off-guard, and it's a sign of the market's fragile sentiment that the initial response, especially among the institutional big boys, was to unload stocks as fast as they could punch the sell button. But not everyone is convinced that Brazil's woes merit full blame for the sell-off.
"It's just an excuse for the big professional investors to dump their stocks," said George Koo, associate director of Burnham Securities. "They got in early this morning and pounded the market. Then we saw the individual investors come to the rescue."
Current valuations are scaring the hell out of institutional heavyweights, he added, and they were simply awaiting a convenient moment in which to retreat from many big-ticket holdings. This is especially true for once-mighty Internet stocks, which are now in free-fall as traders realize there was nothing but wishful thinking holding up those ridiculously high share prices.
Yahoo (YHOO) is an excellent example of the uncertainty now overshadowing Net outfits. Although the company dazzled the Street Tuesday with better than expected quarterly profit of 21 cents a share, disappointment subsequently set in that this amount wasn't even higher.
Analysts reflected the mixed reaction to Yahoo's performance. While Credit Suisse First Boston, Goldman Sachs, and Wheat First Union upheld high ratings for the company's stock, BT Alex Brown downgraded the portal to "buy" from "strong buy." By mid-day, Yahoo was $7 lower at $395 after earlier plunging to $332.
Broadcast.com (BCST) remained on the descent, falling another $30.81, or 14 percent, to $192.19. Amazon.com (AMZN) slid $5.19 to $158.19, and eBay (EBAY) was $7.50 lower at $233.
America Online (AOL) slipped $4 to $149.63 even as it unveiled an accord with Bell Atlantic to offer high-speed Net access via Bell's lines. AOL already has similar pacts with MCI WorldCom and GTE. Separately, software maker ViaGrafix (VIAX) soared $4.44, or 77 percent, to $10.19 after cutting a marketing deal with the world's biggest online service.
Traders were pleased that Lucent (LU) and Ascend (ASND) at last had tied the knot after more than a year of on-again, off-again courtship -- at least as far as Ascend is concerned. Ascend's stock gained $5.25 to $80.19 on word of its $20 billion sale price. But there was some concern about how the deal would affect Lucent's bottom line, sending the telecom-equipment maker down $3.50 to $104.38.
Intel (INTC) was a hot pick after reporting an 18 percent hike in quarterly earnings, handily whipping analysts' expectations with profit of $1.19 a share. With prospects for the chip industry improving, Intel rose $3.63 to $139.19.
Elsewhere in tech, Dell Computer (DELL) slipped 38 cents to $80.06, and International Business Machines (IBM) was up $1.19 at $186.25. Cisco Systems (CSCO) fell 31 cents to $97.81, and Microsoft (MSFT) was $2.44 higher at $144.63.
Lastly, Michael Jordan made it official. He's history. But Madison Avenue is taking heart that Jordan will remain a ubiquitous presence as a corporate shill. As such, Nike (NKE) rose 19 cents to $42.19.
