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Wall St. on Internet alert
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May 26, 1999: 6:43 a.m. ET
After big tech slide, investors watching where sector will head
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NEW YORK (CNNfn) - Wall Street was watching the tumultuous Internet sector warily and assessing some new online issues scheduled to debut Wednesday, after a big selloff in Web-related stocks a day earlier.
Early indications suggested that U.S. stocks looked set to open higher. S&P futures on the Globex exchange system were up 7.30 points at 1,291.80. Typically, one point on the futures index equals eight points on the Dow Jones industrial average as trading begins. Fair value for the S&P futures -- which takes into account interest and dividend effects -- was estimated by London traders at 1,287.20.
On Tuesday, the Dow industrials slid 123.58 points, or 1.2 percent, to 10,531.09, dragged down by technology and financial components and continuing fears that higher interest rates may be on the way. The tech-rich Nasdaq Composite, pulled down by the weak Internet sector, fell 72.77 points, or nearly 3 percent, to 2,380.89. The S&P 500 index lost 22.25 points to 1,284.40.
In Asia on Wednesday, shares of Internet companies in Japan also fell, but blue chips managed to pull out a barely positive close. Hong Kong staged a late-day rebound to finish higher.
In Europe, meanwhile, indications of a higher opening on the Dow helped boost the major markets in early trading. In London, the FTSE 100 was up 31 points at 6,280.7, a rise of 0.5 percent, while Germany's Xetra Dax recovered from an early selloff to trade 21 points higher at 5,186.97.
In London, pharmaceutical giant SmithKline Beecham (SBH) got a boost after it announced late Tuesday it has received regulatory approval to sell its advanced diabetes drug, Avandia, in the United States. The stock was up 1.15 percent.
In the Treasury market early Wednesday, the price of the benchmark 30-year U.S. Treasury was down 10/32 for a yield of 5.765 percent. The dollar was down 0.16 at 122.09 Japanese yen, while the dollar was up at $1.0574 against the euro.
U.S. investors were focused squarely on the Internet sector after Tuesday's slide. But investors in this volatile sector need to be prepared for ups and downs in the market, Ryan Jacob, manager of The Internet Fund, told CNNfn.
Investors have been thinking "that these stocks are going straight up, and that is clearly not going to be the case," he said.
As the Internet sector stumbles, a number of online companies are slated to debut on Wall Street on Wednesday. Investment bank Donaldson Lufkin & Jenrette (DLJ) is offering a tracking stock of its DLJdirect online brokerage, with shares priced at $20 apiece - the high end of its price range. The 16-million-share offering will raise $320 million. The stock will trade on the New York Stock Exchange under the symbol "DIR."
Also scheduled to go public Wednesday is Internet services provider Juno Online Services Inc. It has priced 6.5 million shares at $13 each and will trade under the symbol "JWEB" on the Nasdaq. Meanwhile, StarMedia Network Inc., which provides Internet services in Latin America, is offering 7 million shares priced at $15 each. The Nasdaq stock will trade under the symbol "STRM."
In another possible cable deal, Charter Communications is expected to buy Los Angeles-based Falcon Cable Holdings in a $3.6 billion stock swap, according to published reports Wednesday. The deal would give Charter, owned by Microsoft founder Paul Allen, a major presence in California.
Wall Street will get its first chance Wednesday to react to earnings reports issued late Tuesday by two big software firms. Intuit Inc. (INTU), a maker of personal finance and tax software and a partner with CNNfn.com, reported pro forma net income of $47.2 million, or 73 cents a share, for its fiscal third quarter, compared with Wall Street's consensus estimate of 70 cents a share.
Second-quarter profits at Novell Inc. (NOVL) doubled as the network management software maker saw revenue climb 20 percent. Novell said net income rose to $38.7 million, or 11 cents a share, topping analyst expectations by a penny.
In earnings reports due out Wednesday, do-it-yourself retailer AutoZone (AZO) is forecast to post results of 40 cents per share for its third quarter, while mining and paper equipment company Harnischfeger Industries Inc. (HPH) is anticipated to lose 13 cents in its second quarter. The beleaguered company announced late Tuesday that it has replaced its chairman and chief executive, a move prompted by its dismal share performance and shareholder pressure.
On the economic front, the U.S. Commerce Department is scheduled to release the April report on durable goods orders before the market opens. The consensus estimate of analysts surveyed by Reuters is for a rise of 0.3 percent, compared with a March increase of 2.9 percent. 
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