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A late-afternoon rally pushed Wall Street back into record territory, with the Dow Jones Industrial Average briefly cracking the 10,000 mark for a second time.
But the blue-chip index couldn't hang on to the milestone, and slipped back under the bar by the time the closing bell rang.
As some see it, a first-ever close above 10K this week is crucial to giving the market sufficient momentum for a prolonged rally.
"The failure to close above 10,000 will lead to a real loss of confidence," warned Bill Meehan, chief market analyst at Cantor Fitzgerald. "The fundamentals are very, very stretched, and the technical underpinnings are horrible."
Yow.
The market sure gave it a good try. The Dow rose 118.21 points to close at a record 9997.62, and the Wired Index was 7.52 higher at 631.51. The Nasdaq Composite Index gained 33.99 to 2462.96, and the S&P 500 was up 18.73 at 1316.55.
Sentiment on the Street was boosted by word from the US Labor Department that consumer prices increased a minuscule 0.1 percent last month, indicating that mean old Mr. Inflation is nowhere to be found. At the same time, the Commerce Department raised a red flag by reporting that America's trade deficit jumped 21 percent in January.
Another factor at work is Friday's so-called triple witching, when contracts for options and futures expire. This usually means the market is a little bumpier than usual, although lately it's encouraged investors to go on a buying spree.
One stock high on everyone's shopping list is investment firm CMGI (CMGI), which advanced US$9.44 to $184.81 after announcing a two-for-one split. The move caught traders by surprise. Just a few days ago, CMGI's head honcho, David Wetherell, was saying he didn't foresee a stock split any time soon.
The sudden about-face raises all sorts of interesting possibilities, not least that CMGI is filling its war chest for a stab at acquiring Lycos. CMGI has made no secret of its discontent over Lycos' pending merger with USA Networks, and, as the portal's single biggest shareholder, has been seeking new suitors for an alternative deal. CMGI now might see itself as the most likely candidate.
But any such maneuvering will have to wait. The terms of Lycos' marriage with USA Networks include giving USA the option to buy as much as 17.5 percent of the portal even if somebody else ends up purchasing the company in a rival bid. On the other hand, if Lycos shareholders vote down the USA merger without a separate deal waiting in the wings, then all bets are off and USA is left out in the cold.
CMGI says that's its plan, and it will refrain from introducing new suitors into the equation until Lycos' shareholders have their say. CMGI is assuming, naturally, that the portal's investors will favor any deal that places a higher premium on their shares. Lycos (LCOS), soon-to-be parent of Wired News, slid $4 to $97.75, while USA Networks (USAI) was $1.06 higher at $38.56.
Another hot stock was Barnes & Noble (BKS), which climbed 19.3 percent to $34.44 after saying it will aim to raise as much as $200 million by selling a portion of its online service, barnesandnoble.com, to the public. The number of shares to be offered and their price have yet to be disclosed.
If Amazon.com (AMZN) was troubled by this prospect, it didn't show. Amazon rose $7.43 to $138.44 after Salomon Smith Barney initiated coverage of the company with a "buy" rating. And online auctioneer eBay (EBAY) was up $5 at $160.75 as the brokerage handed it an "outperform" rating.
For its part, Books-A-Million (BAMM) fell 68 cents to $10.63 after posting quarterly income of 36 cents a share, a penny shy of estimates. The company has gone for quite a little ride since surging as high as $47 last November by repositioning itself as an Internet play. Turns out it wasn't such a daunting competitor for the likes of Amazon and Barnes & Noble.
Cantor Fitzgerald's Meehan credits the tech side of the fence with lifting the overall market. "The brief correction that we had in technology likely has run its course," he said. "They're participating again."
Well, not all of them. Compaq Computer (CPQ) declined $1.37 to $31.88 after Piper Jaffray analyst Ashok Kumar said weakness in the PC industry could cut into Compaq's bottom line. Dell Computer (DELL) was caught in the downdraft, slipping 68 cents to $42.25, and International Business Machines (IBM) was 43 cents lower at $177.63.
Microsoft (MSFT), on the other hand, advanced $5.31 to $172.44 as it released the latest incarnation of its Internet Explorer browser to generally favorable reviews. Redmond said an updated version of Windows 98 should be available in the fall.
In telecom, MCI WorldCom (WCOM) rose $3.81 to $93.75 after saying it expects to hit the Street's earnings estimates both this year and next. Analysts are looking for profit of $1.97 a share in '99, and $2.83 in 2000. "We are more comfortable than we've ever been with the targets we've put out," CEO Bernard Ebbers said at an investment conference in New York.
FDX (FDX), parent of Federal Express, gained $5.18 to $98.13 after reporting better-than-expected earnings and announcing a two-for-one stock split. The company's quarterly profit came in at 52 cents a share, well ahead of the anticipated 41 cents. FDX cited an increase in online shopping as a key factor in bolstering revenues.
Lastly, AMR (AMR), parent of American Airlines, saw its stock hit turbulence after warning that a recent sick-out by pilots will result in first-quarter income of no more than 35 cents a share, or about half the amount analysts had been estimating. After plummeting on this news, AMR's shares rebounded sharply on word that the company plans to repurchase $500 million more in stock over the next year, bringing its total buyback since '97 to $2.6 billion.
AMR closed $4.62 higher at $62.13. Investors can put away their barf bags now.
