A wary mood prevailed on Wall Street during mid-afternoon trading Wednesday. While blue-chip stocks were gaining momentum, tech shares lost the wind from their sails after Merrill Lynch warned that Hewlett-Packard and Compaq may come up short in the earnings department.
Internet stocks, meanwhile, basked in the limelight as a heavyweight alliance, a sky-high IPO, and pending results from Yahoo captured traders' attention.
The Dow Jones Industrial Average rose 48.01 points to 10011.50, and the Wired Index was 2.67 higher at 675.12. The Nasdaq Composite Index shed 20.37 to 2542.80, and the S&P 500 was up 1.91 at 1319.80.
Much of the Dow's strength stemmed from component Alcoa (AA) advancing US$1.81 to $42.88 after topping estimates with a first-quarter income of 60 cents a share. The world's largest aluminum producer had been expected to come through with 54 cents.
Seagram (VO) gained $3.56 to $58.50 as its Universal Music Group teamed with Bertelsmann's BMG Entertainment to promote and sell music online. Not only are the two companies hoping to pose a more credible challenge to the likes of CDNow and Amazon.com, but they are looking to protect their copyrights by coming up with industry standards for downloading tunes from the Web.
"The jury's still out on that," said Scott Appleby, an analyst with ABN AMRO. Indeed, the free-and-easy nature of the Internet will make it tough, if not impossible, for recording companies to eliminate online piracy. Playboy, after all, has been struggling in vain to keep tabs on its, um, product. As more Net users become comfortable with technology like MP3, recording companies will find their task all the more difficult.
That said, Appleby believes that a partnership involving a couple of powerhouses like Universal and BMG could go a long way in setting -- and enforcing -- industry standards for online music. "If they can do it," he said, "this is a call to short all music store stocks."
Day traders were hearing sweet music themselves, but it was the sound of Rhythms NetConnections (RTHM) more than tripling on its first day of trading to $72.25. The high-speed access provider debuted with nearly 9.4 million shares initially priced at $21 apiece. Rhythms posted a loss of more than $36 million last year.
Like that would stop anyone from throwing money at the company. It didn't stop Qwest Communications International (QWST), which announced a $15 million investment in Rhythms. The move will allow Qwest to offer warp-speed digital subscriber lines in 31 major US markets. Qwest climbed $2.69 to a record $84.88.
All eyes will be on Yahoo (YHOO) after the closing bell. The company is expected to report a quarterly profit of 8 cents a share, although most analysts think the number will be higher, perhaps as much as 12 cents. Such anticipation kept a lid on Yahoo's gains: The portal's stock was up just $2 at $216.88.
And proving that it pays to have friends in high places, or at least with deep pockets, Internet software maker Spyglass (SPYG) surged 64 percent to $14.56 after landing a three-year, $20 million contract from Microsoft (MSFT). Spyglass will license its connectivity technology and provide services for Windows CE gadgets, which Redmond hopes will become a booming part of its business.
