Blue-chip stocks finally returned to positive territory in mid-afternoon trading Tuesday, resuming their run into the record books. Tech shares continued going strong.
Wall Street was mixed for much of the day as investors mulled a profit warning from Gillette, not to mention the latest headlines out of Yugoslavia. Tech and Internet stocks are currying favor with traders, but there's a feeling of uncertainty as to how much higher valuations can climb.
The Dow Jones Industrial Average rose 6.67 points to 10014, and the Wired Index was 10.88 higher at 677.15. The Nasdaq Composite Index gained 16.17 to 2576.23, and the S&P 500 was up 3.61 at 1324.73.
Investors took their time in regaining a sense of confidence.
"There was some profit-taking," said Bill Meehan, chief market analyst with Cantor Fitzgerald. "People were taking some money off the table." This was hardly surprising considering that the Dow posted its second close above the 10K mark on Monday, and both the Nasdaq and S&P 500 hit record highs.
"Even the most bullish of the bulls was surprised by the magnitude of the gains," Meehan observed. "It's amazing how much money is chasing stocks. We seem to have become a nation of momentum investors."
Still, the slightest of rustling of grass will unnerve the herd. Blue-chip stocks lost ground after Gillette said it expected to come up about a penny shy of first-quarter earnings estimates. The company's shares were promptly downgraded by Morgan Stanley Dean Witter and Donaldson, Lufkin & Jenrette.
As Gillette (G) tumbled 13 percent to US$50.38, investors grew nervous about the prospects for other leading lights in the household-goods sector. The Dow headed south in the morning as two of its components, Procter & Gamble (PG) and Johnson & Johnson (JNJ), slipped into the minus column.
At the same time, International Business Machines (IBM) limited the Dow's decline by rising $1.56 to $185.50 as it unveiled "the world's fastest" 64-bit, four-way Web server, intended as a mainstay for Internet service providers and e-commerce concerns. IBM also cut prices for other server models.
For its part, Dell Computer (DELL) advanced $1.69 to $45.75 as it voiced strong support for the Linux operating system. Not only will Dell offer Linux on certain PCs and servers, but it has bought a stake in Red Hat Software, which is spearheading development of a commercial version of the otherwise free-to-all operating system.
This, of course, was bad news for Microsoft (MSFT), which slid 63 cents to $94.31. Although Linux's growing popularity may be a factor in Redmond's efforts to settle its antitrust trial with the government, any threat to the dominance of Windows is a threat to Microsoft's market value.
Speaking of market value, raise your hand if you think Yahoo (YHOO) just isn't worth enough. The portal papa rose another $8 to $227.13, giving it a market capitalization of more than $45 billion. Cutting yet another brand-enhancing deal, Yahoo said it had reached an accord with Micron Electronics for the firm's Millennia PCs to feature Yahoo online services.
The portal's shares have climbed more than 30 percent this week, due mostly to its $6 billion acquisition of Broadcast.com. Yahoo is expected to surpass profit estimates of 8 cents a share when it reports its first-quarter results on Wednesday.
