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Stocks fight profit jitters
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April 8, 1999: 11:50 a.m. ET
Finance sector takes over from techs, pushing Wall Street out of early gloom
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NEW YORK (CNNfn) - Stock bulls got a sudden burst of inspiration late Thursday morning, allowing the market to overcome several profit warnings to focus on encouraging strength in the finance and oil sectors.
Shortly before 11:30 a.m. ET the Dow Jones industrial average climbed 18.04 points to 10,103.35. On the New York Stock Exchange, losers outnumbered gainers 1,347 to 1,302 as 301 million shares changed hands.
The Nasdaq Composite recovered its balance after a 1.1-percent opening plunge, trading up a narrow 0.36 point at 2,544.79. The S&P 500 index edged up 3.02 points to 1,329.91. (Click here for a look at today's list of CNNfn's market movers.)
The bond market was mixed, getting little impetus from an interest rate cut in Britain, or a lackluster dollar. The bellwether 30-year Treasury bond traded 7/32 of a point higher in price for a yield of 5.49 percent.
The dollar rose slightly against the yen but remained lower against the euro and the British pound, as investors who had bought the greenback in anticipation of the British rate easing took time to cash in their gains.
Earnings season heats up
Much of the stock market's early tentativeness was brought on by profit taking after Wednesday's record setting blue chip rally, as well as consolidation in the wake of the latest quarterly reports from benchmark companies like General Electric (GE) and Yahoo! (YHOO).
General Electric, which was the second of the Dow 30 companies to deliver its earnings report, showed record profit of 65 cents a share, in line with market expectations. The stock fell 3/4 to 113-3/4.
However, Yahoo!, the leading Web portal, which late Wednesday reported earnings that beat market expectations, saw its shares climb a weak 13/16 to 209-1/4.
Yahoo!'s competitors fared slightly better, with Infoseek (SEEK) rising 1-5/8 to 78-15/16 and Lycos (LCOS) trading 3-1/8 higher at 101-1/4.
A profit warning also knocked the wind out of managed health care provider Humana (HUM). The company's stock lost more than 33 percent of its value, sliding 5-3/4 to 10-7/16 after Humana said it would report first-quarter operating profit of 20 to 24 cents a share, sharply below consensus expectations for 34 cents a share.
Brokers on the rise
Shares of Wall Street brokerages swam upstream, inspiring the blue chips to break with the morning's otherwise cautious tone.
Arthur Hogan, chief market analyst at Jefferies & Co., called the finance sector "undervalued" after the last 18 months of global market turmoil and hedge fund worries. He said money is flooding back into broker stocks after Morgan Stanley (MWD) "blew away" earnings forecasts with its first-quarter profits, catapulting finance into the leadership role formerly played by technology.
Citigroup (C) shares added 5/8 to 72-5/16 after ING Baring Furman Selz stated coverage of the Dow component with a "buy" rating and a price target of $77. Analyst Ernest Jacob cited improvements at the financial giant's brokerage arm Salomon Smith Barney for the favorable outlook, saying the brokerage is "poised for a rebound."
Fellow Dow financiers also were higher, with American Express (AXP) gaining 2-3/4 to 129-3/16 and J.P. Morgan (JPM) edging up 1/8 to 127-9/16.
Smith Barney, in turn, gave a boost to fellow broker Merrill Lynch (MER) by raising its price target on the stock to $110 and reiterating its "buy" recommendation. Merrill Lynch shares climbed 1-15/16 to 98-7/16.
Elsewhere in the sector, Morgan Stanley (MWD) climbed 13/16 to 109-3/8 and Donaldson, Lufkin & Jenrette (DLJ) surged 5-1/4 to 83-1/4. Internet broker Ameritrade (AMTD) leapt 12-5/16 to 107-1/16 and rival E*Group climbed 8-3/4 to 90-1/16.
Oil stocks also were higher as traders leapt back into black-gold blue chips. On the Dow, Exxon (XON) gained 1-1/16 to 74-1/4 and Chevron (CHV) surged 2-7/16 to 92-3/8.
Profit scare from chip maker
On the other hand, the technology sector hung back amid concerns that profits among the fastest growing blue chip high-tech companies could be disappointing.
These worries were caused by chip maker Advanced Micro Devices (AMD), which late Wednesday warned first-quarter revenue would fall short of market expectations by at least 10 percent. AMD blamed tough competition and slow shipments of its K6-2 processors for its disappointing quarter. The stock slipped 15/16 to 15-1/8.
AMD's biggest rival, Intel (INTC), shed 1-3/16 to 130-15/16 in sympathy.
Elsewhere in the technology sector, computer makers also suffered declines as earnings concerns crept into that part of the high-tech industry as well. Shares of Dell (DELL) eased 7/8 to 45-9/16 as a two-day meeting between the company and Wall Street analysts continued.
Dell competitor Gateway (GTW) dropped 1-1/8 to 75-9/16 and Compaq (CPQ) lost 9/16 to 29-11/16.
Among the Dow components, IBM (IBM) fell 1-1/2 to 185, but Hewlett Packard (HWP) edged up 5/16 to 70-1/16.
Microsoft (MSFT) traded 13/16 lower at 92-1/2 and Cisco Systems (CSCO) moved down 2-5/8 to 116-1/8. Separately, Cisco announced the purchase of two privately held network services providers for a total of $445 million. 
-- by staff writer Malina Poshtova Zang with Robert Scott Martin
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