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Wall Street blasted further into record territory Thursday, boosted by a rally among oil stocks and some more upbeat economic stats. But the rise was too far too fast, and share prices retreated in the late afternoon from their earlier highs.
The Dow Jones Industrial Average closed 124.60 points higher at 9897.44, topping 9800 for the first time. The index earlier blew right past the 9900 mark as well, and for a while looked to be gearing up for a run at the 10,000 milestone. It was not to be.
Along with a nasty case of altitude sickness, the market found its confidence challenged by profit warnings and weaker earnings in the tech sector. The blue chips may be rarin' to go, but won't be able to hold on to higher ground until the rest of the gang is feeling equally energized.
The Wired Index rose 4.98 to 621.30, and the Nasdaq Composite Index was up 6.24 at 2412.25. The S&P 500 was 10.84 higher at a record 1297.68.
Dow components Chevron (CHV) and Exxon (XON) advanced as representatives of major oil-producing nations gathered in Amsterdam to discuss reducing output to cope with an oversupply of fuel on world markets. The matter will be taken up as well when the Organization of Petroleum Exporting Countries meets later this month.
The Dow received an additional boost from Coca-Cola (KO), which gained US$3.63 to $66.31 as Donaldson, Lufkin & Jenrette Securities upgraded the company's stock to "buy" from "market perform." Analyst Skip Carpenter said Coke can be expected to swipe some worldwide market share from rival PepsiCo this year, and should see its share price increase to $79 within 12 months.
Early in the session, The broader market found heart in word from the US Commerce Department that retail sales were up 0.9 percent last month to $236.5 billion. Similarly, the Labor Department reported that first-time claims for unemployment checks remained under 300,000 for the sixth straight week.
"There's a lot of liquidity out there," said Rao Chalasani, chief investment strategist at Everen Securities. "It's finding its way back into financial markets. Given the high level of liquidity, the Dow could go well above 10,000."
But what about all that carping just a few weeks back about frighteningly high stock valuations? Aren't investors feeling spooked as share prices reach unprecedented heights?
"When the market is down, people have many concerns," Chalasani replied. "When the market is up, people forget those concerns. Now the market is up."
Ah, well, that explains it.
Tech stocks held the rally in check, ending well off their highs. Communications services provider Brightpoint (CELL) set the tone, plunging 54 percent to $6 after saying it expects first-quarter and full-year revenue to come in well below estimates. The firm now says it will merely break even in the present quarter. Analysts had been looking for profit of 22 cents a share.
For its part, computer distributor Ingram Micro (IM) rose $1.13 to $19.75 even as it said first-quarter profit probably won't top 30 cents a share. The Street had been anticipating earnings of 42 cents. Ingram also said it will cut its worldwide workforce by about 1,400 as part of restructuring moves.
But it wasn't all gloom and doom on the tech side of the fence. 3Com (COMS) climbed $1.50 to $26.13 on news it will join forces with Microsoft to market a new breed of networking products aimed at accelerating Web access in homes. Microsoft (MSFT) was 6 cents higher at $161.44.
Intel (INTC) rose $1.25 to $118.13 after BancBoston Robertson Stephens reiterated a "strong buy" rating for the chipmaker's stock. Analyst Daniel Niles said recent speculation that Intel would issue a profit warning was "pretty unfounded," and that sales appear to be improving this month.
So how were the day traders passing their time? They were crawling all over a software developer called Infosys Technologies (INFY), which surged 38 percent to $46.88 after making its debut as the first Indian company to list on a US exchange. Infosys had profit of 41 cents a share in fiscal 1998, compared with income of 23 cents a year earlier.
General Magic (GMGC) tumbled 20 percent to $3.81 after reporting a quarterly loss of 51 cents, significantly worse than its 34-cent setback a year earlier. The maker of voice-recognition software optimistically said it expects revenue to rise in coming months.
Netwise, America Online (AOL) gained $2.56 to $95.38 after saying it will unite with SBC Communications to offer high-speed access to members in western and southern states. The move is an attempt to fend off a growing challenge from cable-based access provider At Home, whose largest shareholder is now AT&T.
Charles Schwab (SCH) was $1.88 higher at $82.88 as it settled claims from customers who said they got burned in Theglobe.com's high-flying IPO last November. Nearly 1,500 customers tried to cancel their orders for the stock before trading began, but about 300 didn't have their cancellations processed in time. The stock subsequently went through roof when it hit the market, leaving many buyers with unexpectedly high price tags.
Barnes & Noble (BKS) jumped 12 percent to $30.50 after posting quarterly earnings of $1.47 a share, way ahead of the 95 cents expected by analysts. The bookseller said its results were buoyed by German media giant Bertelsmann purchasing a stake in the barnesandnoble.com online service.
Service provider Internet America (GEEK) advanced 25 percent to $35.63 as Ameri-First Securities upgraded the company's stock to "buy" from "accumulate." Analyst Jim Chatham pointed to Internet America's recent acquisition of 15,000 new customers in arguing that the ISP is undervalued.
In telecom, Global Crossing (GBLX) rose 15 percent to $44.38 after announcing construction of a new phone network connecting North and South America. The $1 billion project is slated to be completed by early 2001.
Lastly, here's cigar retailer 800-JR Cigar (JRJR) plummeting 45 percent to $8.31 as it reported quarterly income of 15 cents a share, compared with 37 cents a year ago. Could this mean that one of the least attractive habits characterizing the '90s is finally on the way out?
Let's hope so.
