Wall Street remained in retreat Wednesday as investors grappled with the deeper meaning of blue-chip stocks reaching record high levels.
The Street was still buzzing about the Dow Jones Industrial Average briefly peeking above the 10,000 mark a day earlier, but there seemed to be a growing acceptance that a number is a number is a number. The real issue here is whether US business performance can support such lofty stock valuations, and the jury's still out on that one.
Clearly, however, if the Dow is going to remain atop the 10K level, traders will have to be unanimous in their confidence about the market's prospects. This will take considerably more positive news than we've seen of late.
The Dow fell 51.06 points to close at 9879.41, and the Wired Index was 3.61 lower at 624.17. The Nasdaq Composite Index shed 10.28 to 2428.99, and the S&P 500 was down 8.56 at 1297.82.
Intel (INTC) stole center stage as the government approved its settlement of antitrust charges against the world's biggest chipmaker. Although Intel wasn't required to acknowledge having monopoly power over the semiconductor industry, it did promise to play nice with the other kids.
Jeff Goverman, research director at Pacific Crest Securities, said federal regulators simply can't move fast enough to police the fast-changing tech business. "The battle they were fighting is already over," he observed. "Intel doesn't have monopoly power. Look at the low end of the chip market, where they've lost like 50 percent of the market."
Intel had been accused of withholding key technical information from business partners unless it received access to patented technology. The settlement with the Federal Trade Commission specifically bars the chipmaker from playing hardball like this in the future.
Still, Goverman doesn't think the tech game's heavyweights are suddenly going to stop throwing knockout punches. "Business is a rough world," he said. "This isn't sitting around singing 'Kumbaya.'"
In a sign that Intel is anything but chastened by its brush with officialdom, the company's stock rose 13 cents to $120.50 as it prepared to unveil its new Pentium III Xeon chip, intended to power high-end servers and workstations. For those who dig specs, the Xeon delivers up to 550 MHz in processing juice, which makes it one muscular little slab of silicon.
In other action, Multex.com (MLTX), an online distributor of Wall Street research reports, more than doubled to $33.63 on its first day of trading. The company debuted with 3 million shares initially priced at $14 apiece, raising $42 million.
This one, naturally, had day trader written all over it. As far as fundamentals go, Multex posted a loss of nearly $10 million last year, and was $8 million in the hole a year before that. But it does have an impressive client base of more than 400 brokerages, and, hey, it is on the Net, right?
One company that wasn't on the Net, at least for a little while, was discount broker Charles Schwab (SCH), which saw the lights go out for about 15 minutes in the morning -- the fifth such system crash this year. Investors were not amused. Schwab's shares dropped $2.06 to $86.44.
America Online (AOL) gained $3.81 to $108.75 after completing its almost $10 billion acquisition of Netscape Communications. Netscape's investors, who voted their approval for the deal, will receive 0.9 of an AOL share for each share of Netscape common stock they own.
RealNetworks (RNWK) jumped $6 to $121 after launching a new directory for online audio and video resources. Separately, The Wall Street Journal reported that RealNetworks had buried the hatchet with Microsoft and would have its software included in the latest incarnation of Internet Explorer. There were conflicting follow-ups as to whether this is actually the case.
Software maker Corel (COSFF) tumbled 30 percent to $2.69 after saying its first-quarter revenue will come in at just over $40 million, well below the $45.4 million seen a year earlier. The company noted that five straight quarters now have passed since it released a major upgrade for one of its products.
AT&T (T) advanced $1.31 to $83.75 after declaring a three-for-two stock split now that its $55 billion buyout of Tele-Communications Inc. is a done deal. The split -- AT&T's first in 35 years -- will affect shareholders of record as of 31 March.
Frontier (FRO), a local and long-distance phone company, climbed 14 percent to $50.69 on news that it would be purchased by rival Global Crossing (GBLX) for $11.2 billion, or $62 a share -- a 40 percent premium over its closing price Tuesday. The acquisition boosts Global Crossing's presence in the US, where it is building a high-speed network. Looked a tad pricey to investors, though, and Global's stock declined $4.38 to $47.13.
Cybertel Communications (CYTP), which is building its own network to carry long-distance calls over the Net, soared 150 percent to $6.25 after reaching an accord to piggy-back its equipment at Level 3 Communications' switching centers in major cities. Cybertel said the cost-saving arrangement will boost its bottom line "by millions of dollars."
DaimlerChrysler (DCX) slipped $1.25 to $92.13 even as it took the wraps off what's claimed to be the first fuel-cell-powered passenger car in the United States. The car, which converts hydrogen gas into electricity, reportedly can travel 280 miles before refueling, and emits water vapor for exhaust.
Lastly, burgermeister Wendy's International (WEN) rose $2 to $29.25 after saying it expects quarterly income to be as high as 24 cents a share, topping the estimated 21 cents. The company said business was booming thanks to its new chicken sandwich and "cafe mocha drink."
Cafe mocha? Wendy's?
