Once again, the blue chips were chomping at the bit trying to gallop forward, but tech stocks were pulling back on the reins and saying, "Whoa."
The Dow Jones Industrial Average jumped more than 50 points early Friday to a high of 9958.77 and looked to be making its long-awaited run at 10,000. But a profit warning from Caterpillar, coupled with more earnings disappointments from the tech camp, put the brakes on the Dow's advance. In mid-afternoon trading, the index was 21.36 lower at 9876.08.
"Ten thousand is a significant barrier," said George Koo, associate director of Burnham Securities. If history is any judge, he added, the Dow first will have to establish a toehold at 9900 before taking a serious stab at 10,000.
"At every century mark, the market reaches the point and then sells off," Koo observed. "Then you have investors looking for bargains a few days later." And the process begins anew.
The Wired Index shed 6.99 points to 614.26, and the Nasdaq Composite Index was down 37.62 at 2374.63. The S&P 500 was 5.80 lower at 1291.88.
The Dow's party was crashed in the morning by component Caterpillar (CAT), which fell US$5.75 to $45.13 after warning that its first-quarter earnings probably will be about half what analysts had been expecting, which was 84 cents a share. The heavy-machinery maker said its bottom line had been bulldozed by a slowdown in overseas sales.
Then came grim tidings from the tech crowd. Oracle (ORCL) reported quarterly income of 20 cents a share, topping estimates by a penny, but spooked investors with lower-than-expected revenue. A half-dozen brokerages promptly downgraded the company's stock, sending Oracle's share price tumbling 21 percent to $29.25.
Fueling traders' anxiety, National Semiconductor (NSM) dropped 56 cents to $10.13 as it reported a quarterly loss of 16 cents a share -- not quite as bad as analysts had been expecting -- and said it's taking a cautious stance regarding future earnings due to shaky personal-computer sales. Needham & Co., for one, was pleased with Nat Semi's performance, upgrading the chipmaker's stock to "strong buy" from "buy."
Microsoft (MSFT) was attracting attention amid reports that the company is set to announce a reorganization that will break it into four divisions centered on customer needs instead of product lines. Meanwhile, Microsoft's shares slid $2.44 to $159 as the company said product revenue for the current quarter would come up short by about $400 million as it offers coupons for free upgrades from Office 97 to Office 2000.
Venture-capital firm CMGI (CMGI) fell $21.13 to $161 after reporting a quarterly loss of about 40 cents a share, excluding gains from recent stock sales. This was considerably worse than the anticipated 22 cent setback.
But investors seem more interested in CMGI's intentions concerning Lycos (LCOS). CMGI chief exec David Wetherell insisted once again that the terms of Lycos' merger with USA Networks are "inadequate" for the portal's shareholders (among which CMGI is the biggest), and the Boston Globe reported that an alternative suitor may step forward "within several days."
For its part, Lycos, soon-to-be parent of Wired News, was $7.75 lower at $101.25 as another class-action lawsuit was filed against the company charging that it misled investors by saying it was "committed to an independent strategy" when in fact it was negotiating a tie-up with USA Networks. The suit seeks an unspecified amount in damages.
