Solid, but quiet rally on Wall Street

Solid, but quiet rally for markets

NEW YORK (CBS.MW) — U.S. stocks moved higher Monday in a broad-based but low-volume rally.

The Dow Jones Industrial Average ($INDU) gained 60.21 points, or 0.5 percent, to 11,252.84. Decliners narrowly led advancers by 14 to 13.

The Nasdaq Composite ($COMPQ) added 28.42 points, or 0.7 percent, to 4,071.10, finally bringing the index above its level at the beginning of the year. Advancers led decliners 21 to 19.

The S&P 500 index ($SPX) increased 7.71 points, or 0.5 percent, to 1,514.17.

Volume was low. On the New York Stock Exchange, 727.7 million shares were traded and 1.35 billion shares were traded on the Nasdaq.

“I’m bored to tears here,” said Ned Collins, head of trading at Daiwa Securities. “We’ve done nothing since 10 o’clock this morning.”

“There’s a near-term bias against technology,” said Brian Belski, fundamental market strategist for US Bancorp Piper Jaffrey. Belski said the market is continuing to move toward sectors like capital goods, utilities and oil.

But some big tech winners are still in favor, Belski said, pointing to Juniper (JNPR), Intel (INTC) and General Electric (GE), all of which hit all-time highs on Monday.

Some other large-cap stocks, like Lucent (LU), Verizon (VZ) and Citigroup (C), had healthy gains on solid volume.

Takeover targets were among the best gainers. MMC Networks (MMCN) added 31 3/4 to 1110 on volume of more than 7.8 million shares after Applied Micro Circuits (AMCC) said it would offer $4.5 billion in stock for the company. Applied Micro fell 4 3/4 to 183 13/16. Both issues were among the most actively traded stocks.

GetThere (GTHR) added 5 1/16 to 17 3/16 on news that Sabre Group would offer $757 million for the company. Sabre Group (TSG) fell 15/16 to 28 13/16.

SpectraSite Holdings (SITE) gained 2 15/16 to 23 15/16 after it said it would lease 4,700 communications towers from SBC Communications (SBC).

Loews Cineplex (LCP) tumbled more than 30 percent after delivering a profit warning.

IBM (IBM) boosted the Dow, rising 1 9/16 to 130 9/16 after CS First Boston raised its price target on Big Blue to $150. Analyst Amit Chopra said the company is on track to beat his expectations for earnings of $1.07 a share.

Internet stocks suffered a bit from an analyst’s pessimism about Web giant Yahoo (YHOO), which fell 12 3/16 to 122 1/16. Lehman Bros.’ Holly Becker said the market is still not discounting “the difficult environment Yahoo is facing.”

Lehman also reiterated its neutral rating on Amazon.com (AMZN), saying it’s worried about top-line growth. The online retailer dipped 13/16 to 39 1/8. The Goldman Sachs ($GIN) Internet index dropped 1.3 percent to 454.14.

Transition begins

The markets were taking advantage of the traditionally slow week at the end of summer to begin limited trading in decimals rather than in fractions.

Eventually, all equities will be traded, settled and quoted in decimals.

A total of 13 issues on the New York Stock Exchange and Amex were being traded and quoted in increments of cents beginning Monday. The switchover was adding to confusion for some providers of stock quotes. A few outlets, such as CNBC, were quoting all issues in pennies rather than in fractions.

A computer glitch at Dow Jones Indexes contributed to confusion near the end of the NYSE trading day. A spokeswoman at Dow Jones said the Financial Information Distribution System had to be taken offline at 3:43 p.m. Eastern because of a computer problem that was delaying real-time data on the various Dow indexes.

The result was that the Dow Jones Industrial Average appeared to be stuck at 11,285.39 for about 20 minutes.

The data feed was restored fully at 4:05 p.m., she said.

Long view

With both major indexes above psychologically important levels and investors confident the Fed will not raise interest rates any time soon, investors may be tempted to take some profits off the table and start the U.S. Labor Day holiday weekend early.

The Dow is its highest level since mid-April. The blue-chip barometer climbed 1.3 percent last week and is now off just 1.4 percent for the year. At one point in mid-March, the Dow had fallen nearly 15 percent.

The Nasdaq rose 2.8 percent last week and is now break-even for the year with Monday’s gains. The tech-laden index managed to close above the 4,000 mark for four straight sessions, a feat that hadn’t been achieved since mid-July.

The Fed’s statement following last week’s policy-setting meeting — which extolled the productivity miracle and its key role in containing inflation — indicates the central bank is comfortable with how the economy’s performing.

European markets were subdued Monday as a holiday in the U.K. kept order volumes low and as telecom stocks rallied for a third day boosted by takeover news.

The market will get a few economic releases of relevance this week, including the important employment report for August on Friday.

However, these reports aren’t likely to generate much anxiety as markets are convinced the Federal Reserve won’t make a move on interest rates ahead of the presidential election.

Headline deals

VoiceStream Wireless (VSTR), which is being acquired by Deutsche Telekom (DT), said late Sunday it will buy Powertel (PTEL) for $7.1 billion in stock and assumed debt. Powertel fell 5 9/16 to 81 1/16 while VoiceStream lost 1 1/8 to 117 1/16. Deutsche Telekom sank 3/16 to 40 1/8.

The U.S.’s eighth largest wireless phone carrier will offer approximately $5.9 billion in stock and assume $1.2 billion in debt for Powertel in a complex deal that will likely result in Deutsche Telekom owning both companies.

In the tech sector, integrated circuit maker Applied Micro Circuits will acquire semiconductor company MMC Networks in a stock deal worth $4.5 billion, the two companies announced on Sunday.

Under the terms of the deal, AMCC will issue 0.619 shares of its stock for each MMC share.

The PSE Technology Index ($PSE) gained 0.5 percent to 1,147, while the Philadelphia Semiconductor Index ($SOX) tumbled 0.8 percent.

Earnings watch

Among the few companies reporting their quarterly results this week: Dycom Industries, Comverse Technology, Genesco, Zale, Cooper, Quanex, Pall, Neiman Marcus, Rex Stores and Casey’s General Stores.

Projected earnings growth for S&P 500 companies in the third-quarter of 2000 currently stands at 17.3 percent, First Call said. That’s down from 17.6 percent at the start of last week due to a string of downward revisions among the retailers. Estimates stood at 18.8 percent at the beginning of the third quarter.

Projected earnings growth for the fourth-quarter now stands at 15.9 percent, climbing from the 15.6 percent growth rate expected in the previous week but down from the 16.8 percent increase predicted on July 1, First Call said.

Treasury focus

Treasury prices were lower Monday after the Commerce Department reported a larger-than-expected 0.6 percent gain in consumer spending in July.

Incomes rose 0.3 percent as the personal savings rate hit a record low.

The 10-year Treasury note fell 11/32 to yield ($TNX) 5.78 percent and the 30-year bond sank 17/32 to yield ($TYX) 5.71 percent. Traders cited strong competition from stocks and worry about higher oil prices.

Traders are already looking at Friday’s jobs report for fresh evidence on the economy. and view Economic Preview, economic calendar and forecasts and historical economic data.

The CRB-Bridge commodity index gained 1.34 to 223.79, while October crude oil futures added 84 cents to $32.87. September heating oil futures added 2.94 cents to settle at 99.88 cents per gallon, the highest in 10 years.