Wall Street went ballistic Monday as investors returned from the long holiday weekend and embraced the latest economic stats out of Washington. The Dow Jones Industrial Average posted its second five-digit close, and the Nasdaq Composite Index and S&P 500 both hit record highs.
A Labor Department report issued Friday, when the market was closed, showed that job growth in February was fairly low. While this might not be the best of news to those without work, it suggests that the US economy isn't set to boil over, and that the Fed thus will be less inclined to raise interest rates as a means of turning down the heat.
The Dow gained 174.82 points to close at 10007.33, and the Wired Index was 25.30 higher at 666.15. The Nasdaq rose 66.73 to 2560.10, and the S&P 500 was up 27.40 at 1321.12.
While the overall market looked sunny, an icy wind was blowing through the software sector. A slew of profit warnings from mostly second-tier companies shows that the Y2K-related sales slump experienced by big guys like PeopleSoft and SAP has spread to more niche-oriented players.
"My thinking had been that you wouldn't see anything hit the smaller companies until the second half of the year," said Frank Sparacino, an analyst with Barrington Research. "Now it looks like things are going to be much worse for a lot of them."
Among the biggest losers was Aspect Development (ASDV), a maker of manufacturing-procurement applications, which tumbled 65 percent to US$7.94 after saying its first-quarter earnings will be "significantly" below estimates. The company's stock was promptly downgraded by several brokerages.
Axent Technologies (AXNT), a maker of computer-security programs, plunged 60 percent to $8.06 as it warned of an expected quarterly loss due to a slowdown in orders. Analysts had been looking for profit of 18 cents a share.
Database-software developer Object Design (ODIS) fell 44 percent to $3.03, manufacturing-program maker Aspen Technology (AZPN) dropped 25 percent to $9.94, and mainframe-application provider Software AG Systems (AGS) shed 30 percent to $5.19 after each issued similarly glum forecasts. Infinium Software (INFM) was the only one of the pack to limit the damage, declining a relatively modest 25 cents to $4.13.
Corporate clients are refraining from big-ticket software purchases until safely past the Y2K threshold. While most software makers insist their products are now up to code to handle the glitch, few customers see much benefit in rolling the dice with just months to go until the moment of truth.
"The smaller companies can get through it," Sparacino said. "But they want to grow as quickly as possible to get market share. If they can't do it, it makes things tough."
For this reason, he added, don't be surprised if there's some make-or-break merger activity among software makers in future months. In a possible sign of things to come, enterprise-application maker Mosaix (MOSX) vaulted 28 percent to $10.75 on news of its approximately $145 million purchase by Lucent Technologies (LU).
Netwise, electronic brokers received a shot in the arm after Credit Suisse First Boston said online trades surged as much as 35 percent in the first quarter. ETrade Group (EGRP) climbed 19 percent to $72.63, and Ameritrade (AMTD) was up 46 percent at $91.63. Charles Schwab (SCH) advanced $9.13 to $103.38.
People aren't just trading online -- they're banking there as well. Net.B@nk (NTBK) rose 34 percent to $101.69 as it announced that a record 8,000 new accounts were opened in the first quarter, bringing the electronic institution's total number of customers to almost 25,000.
Amazon.com (AMZN) gained $15.75 to $186.75 after settling a lawsuit filed by Wal-Mart Stores alleging that the bookseller been stealing away employees to get the inside dope on Wal-Mart's computer system. Amazon agreed to reassign former Wal-Mart execs to positions that don't directly concern their knowledge of Wal-Mart's technology. Wal-Mart (WMT) was up $2.13 at $95.38.
Yahoo (YHOO) jumped 22 percent to $219.13 on continued enthusiasm for the portal's $5.7 billion acquisition of Broadcast.com. Separately Yahoo unveiled a tie-up with Online Anywhere to extend the Yahoo brand to hand-held gadgets and next-generation, Net-friendly TVs.
In tech, Dell Computer (DELL) advanced $2.88 to $44.06 as investors looked ahead to some rosy news when the PC maker holds a briefing for analysts later in the week. "We expect the company to be upbeat about the industry and its own prospects in particular," said Michael Kwatinetz, an analyst with Credit Suisse First Boston.
Accordingly, International Business Machines (IBM) rose $6.94 to $183.94, and Intel (INTC) was $6.63 higher at $127.50. Microsoft (MSFT) gained $2.25 to $94.94.
On the telecom side of the fence, GTE (GTE) slid 56 cents to $60.19 after saying it will buy about half of Ameritech's wireless phone operations in the Midwest for more than $3 billion in ready cash. Ameritech (AIT) climbed $2.38 to $62.63, and Bell Atlantic (BEL), which is acquiring GTE, was up 13 cents at $51.88. When all is finally said and done, Bell Atlantic will boast approximately 13 million wireless customers, making it the top US provider.
Qwest Communications International (QWST), meanwhile, advanced $3.56 to $78.06 after securing a $1 billion credit line to help pay the construction tab on its fast-growing fiber-optic network. Qwest also is looking to expand overseas.
Lastly, SkyTel Communications (SKYT) soared 26 percent to $19.03 amid speculation that the wireless messaging provider may be gobbled up by MCI WorldCom (WCOM). The rumor was fueled by an item in Business Week magazine, which said another heavy-duty telco also may be giving SkyTel the eye.
Not surprisingly, none of the players named in the report had any comment on its validity. Like that would stop traders from crawling all over such a juicy prospect.
