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Dow soars, broad market sags
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April 14, 1999: 1:49 p.m. ET
Strong earnings from J.P. Morgan help blue chips; Intel hurts techs
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NEW YORK (CNNfn) - The Dow industrials surged in afternoon trading Wednesday after J.P. Morgan became the latest financial giant to report strong earnings. But the rest of the stock market lingered near unchanged levels, kept in check by concerns that not all corporate bottom lines will come in as bullish as Morgan's.
Shortly before 1:30 p.m. ET, the Dow Jones industrial average had overcome a morning downturn and was back exploring new peaks, rallying 99.07 points to 10,494.08. Advances beat declines by a margin of 1,961 to 1,010 as 565 million shares traded on the New York Stock Exchange.
The Nasdaq Composite lingered around unchanged, moving 0.82 points lower to 2,582.68, and the S&P 500 index lost 1.70 to 1,348.12. (Click here for a look at today's CNNfn's market movers.)
Bonds fell as most investors shifted their attention to the stock market. The benchmark 30-year Treasury bond was unchanged in price to yield 5.49 percent.
The dollar traded modestly lower against the euro and sank to near two-week lows against the yen.
Intel gets mixed reviews
In the stock market, technology issues once again put in a mixed performance, following Tuesday night's earnings report by Intel (INTC), which managed to feed both the bulls and the bears.
Although the world's largest PC chip maker reported a 57 percent jump in quarterly profit and beat consensus estimates with per share earnings of 57 cents, the company also said revenue in the second quarter will be flat to lower, dampening an otherwise positive earnings report. Shares of the company fell in after-hours trading Tuesday and on Wednesday traded 2-7/16 lower at 58-1/16.
Intel's revenue forecast reverberated strongly among investors fearing a slowdown in the computer industry, especially in the wake of a dramatic profit warning by leading PC maker Compaq (CPQ).
Investors seized on the negative implications, lightening their holdings of other technology bellwethers. Dell (DELL) fell 2 to 38-7/16 and Microsoft (MSFT) eased 5/8 to 89-1/2, while on the Dow Hewlett Packard (HWP) slipped 5/16 to 70-1/2.
However, fellow Dow computer-maker IBM (IBM) climbed 1-1/8 to 181-1/8, and Compaq (CPQ) edged up 3/16 to 24-1/16.
Intel competitor Advanced Micro Devices (AMD), which is expected to report an operating loss after the closing bell, slipped 1/16 to 14-13/16.
Despite all the red ink, Michael Farr, president of money-management firm Farr, Miller & Washington, called Intel "one of the great companies of our day" and said the market's reaction to the earnings release "scared" him.
"We do like Intel very much," he said. "We think the price today -- if you're going to hold Intel for the next five years -- is a great way to go."
Financials save the day
For the third day in a row, the stock market's hottest gains came from financial shares, as earnings in the sector continued to show solid growth and consistently beat expectations.
Finance and other sectors are now sharing market leadership with the formerly unquenchable technology stocks, said Arthur Hogan, chief market analyst at Jefferies & Co. While he noted that technology would be unlikely to ever give up its leading role entirely, he said funds are now flowing out of the tech sector and into finance, retail, oil and paper.
Bearing the bull's flag Wednesday, shares of Dow component J.P. Morgan (JPM) soared 9-7/16 to 138-3/4 after the venerable Wall Street institution left earnings projections in the dust, reporting per share profit of $3.01, some $1.28 above estimates.
J.P. Morgan's strong results were just the latest in a string of solid quarterly reports from fellow investment bankers Merrill Lynch (MER), PaineWebber (PWJ), Bear Stearns (BSC) and Morgan Stanley Dean Witter (MWD).
Shares of several brokers and financial-services companies traded higher, with online brokerage house E*Trade (EGRP) leading on the way up. E*Trade climbed 1-3/8 to 126-7/8, although leading rivals Ameritrade (AMTD) and Charles Schwab (SCH) retreated in the flood of profit taking.
Elsewhere in the finance sector, J.P. Morgan's good fortune proved contagious for fellow Dow financial Citigroup (C), which added 1-1/4 to 76-1/2.
Earnings in the spotlight
Earnings news dominated the rest of the market as well, after Motorola (MOT) beat expectations and Lucent Technologies (LU) predicted its second-quarter results would meet or exceed projections.
Shares of Lucent rallied 3-15/16 to 60-7/8, while Motorola jumped 1-3/8 to 84-5/16.
Seagate Technology (SEG) climbed 2-5/16 to 28-15/16 after the maker of computer storage drives reported better-than-expected fiscal third-quarter earnings.
Cable Internet-access provider @Home (ATHM) found a chilly response to its own operating loss, which exactly met expectations. Investors, however, proved unforgiving, sending shares down 9-1/2 to 172-11/16.
Outside the technology sector, paper stocks continued to do well, with International Paper (IP) in particular, underpinning the Dow a day after its own strong earnings report. Shares of International Paper climbed 4 to 52-5/8.
Airlines on the climb
Airline stocks soared without benefit of positive earnings news, rallying to catch up with the rest of the market. Unlike other sectors, the airlines still have not completely recovered from their October lows, noted Steve Lewins, Gruntal & Co. analyst.
However, the recent torrent of indications that the U.S. economy continues to expand has given the economy-sensitive sector a boost.
The Dow transportation index leapt 121.84 points, 3.7 percent, to 3,418.28. Shares of AMR (AMR), holding company of American Airlines, rose 3-7/8 to 69-3/16, while United holding company UAL (UAL) climbed 3-5/8 to 82-1/4. Delta Airlines (DAL), which reports its latest earnings Thursday, saw its shares firm 2-1/16 to 70-9/16. 
-- by staff writer Malina Poshtova Zang with Robert Scott Martin
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