Wall Street was careening higher and lower Friday, whipping investors around like a run-amok thrill ride. More than a few market players are finding their endurance -- and stomachs -- being put to the test.
The Dow Jones Industrial Average shed 5.34 points to 10457.38 in midafternoon trading after earlier finding strength in better-than-expected earnings from Eastman Kodak (EK) and Caterpillar (CAT). It's uncertain whether the blue-chip index will end the week with a fifth straight record high.
Tech stocks, meanwhile, returned to the doghouse after briefly coming back to life on Thursday. A warning from Sun Microsystems that the computer market faces tougher times ahead sent a chill through the entire sector, and scared off those few traders who had been brave enough to start picking through the debris in search of bargains.
The Wired Index fell 3.93 to 655.45, and the Nasdaq Composite Index was 17.07 lower at 2504.70. The S&P 500 slid 5.42 to 1317.44.
"We're seeing market movements in a single day that, in older, prehistoric times -- five years ago -- would have taken weeks or months," said Bill Meehan, chief market analyst with Cantor Fitzgerald. "I feel a lot more comfortable with having cash than with excessive exposure to the equity market."
Sun (SUNW) dropped US$3.94 to $56.50 even as the company topped estimates with quarterly profit of 71 cents a share. Investors were more interested in CEO Scott McNealy comparing the months ahead to "heartbreak hill" as Y2K worries take a greater toll on computer sales. Sun's Chief Financial Officer, Mike Lehman, echoed this sentiment when he said he was approaching future quarters "a bit more conservatively" than analysts.
With Intel having said pretty much the same thing earlier this week -- although the chip maker is almost always conservative in making earnings forecasts -- traders feel that the message has come across loud and clear: no growth in tech.
It could be, of course, that leading hardware makers are simply laying the groundwork for pleasant surprises in the next earnings season (it wouldn't be the first time). But most investors are playing it safe and shifting their money to "cyclical" stocks like energy and heavy industry, which are seen as finally coming into their own after years in the shadow of their more glamorous tech and Internet cousins.
Not that Net shares have totally lost their luster. Amazon.com (AMZN) climbed 13 percent to $189.38 as Donaldson, Lufkin & Jenrette upgraded the company's stock to "top pick" from "buy," and raised its 12-month price target to $280. Analyst Jamie Kiggen is especially entranced with Amazon's new auction service, which he thinks could generate more than $20 million in revenue this year, and as much as $65 million next year.
Similarly, Inktomi (INKT) surged 12 percent to $133 after posting a smaller-than-expected quarterly loss of 9 cents a share. But Excite (XCIT) declined $6.94 to $140 as it revealed a pro forma setback of 4 cents a share.
Looking to head off the rumor mill, Lycos (LCOS) slipped 13 cents to $94.44 after quickly weighing in with an announcement that its own quarterly loss won't be any worse than anticipated, and that its revenue should more than double in the period. Lycos, soon-to-be parent of Wired News, wants to put out any smoldering brush fires as it pushes ahead with its merger with USA Networks. Disenchanted shareholders are looking for any excuse to scotch the deal, which places a minimal premium on Lycos' market value.
