Blue Chips Up, Techs Down

Nagging profits concerns relegated the technology sector to the doghouse Wednesday, though a buoyant financial sector slung the Dow Jones Industrial Average deeper into record territory.

The Dow advanced 121.82 points, or 1.2 percent, to 10,085.31. The barometer's financial components led the way, with Citigroup up 4 9/16 to 71 9/16, J.P. Morgan rising 3 1/2 to 127 7/16, and American Express 3 3/16 better to 126 7/16.

The Nasdaq Composite fell 18.74 points, or 0.7 percent, to 2,544.43.

"Something is not good in this market right now," said Gary B. Kaltbaum, chief technical analyst at J.W. Genesis Securities Inc. "The market's breadth every day has been getting thinner and thinner while the averages hold up.

"Despite all this talk about the Internets, all it's going to take for this market to be in big trouble is for the big-caps to top."

"While the secondary stocks have underperformed, the large-cap averages continue to look good and we see no reason why the Dow won't reach our 11,500 target by year-end," Ralph Acampora, director of technical research at Prudential Securities, said in a research brief.

The session had started off on the right foot, with technology shares marching higher for the fourth day. But cautious words from Merrill Lynch tugged computer-related shares lower, where they stayed for the rest of the session.

Hewlett-Packard (HWP) declined 1/4 to 69 3/4 and Compaq Computer (CPQ) dipped 9/16 to 30 5/16. Merrill cautioned that the companies' upcoming quarterly results might show less-than-expected revenue tallies.

Merrill also served up comments on other computer-related companies and technology segments. The broker believes EMC (EMC) and IBM (IBM) might better Wall Street forecasts of first-quarter profits. Stock of the former tacked on 3 3/16 to 134 3/8, while shares of the latter were ahead 3 1/2 to 186 1/2.

But Merrill panned the prospects for enterprise software developers. It sees corporate spending on the year 2000 problem dampening demand for the companies' products. On the plus side, the broker said the semiconductor industry has seen its darkest days.

Network Associates (NETA) skidded 5 15/16 to 16. The software interest said it expects first-quarter operating earnings of 30 cents to 32 cents a share. Analysts surveyed by First Call Corp. had estimated net of 48 cents. Network blamed a general slowdown in software sales as well as a longer selling cycle for the lower-than-expected results. Separately, the company posted fourth-quarter operating profits of 50 cents, 4 cents richer than the First Call Corp. consensus.

Internet stocks were the day's big losers as players booked profits ahead of Yahoo!'s (YHOO) first-quarter earnings release. After the close of Wednesday's activity, the Internet powerhouse registered pro forma operating net of 11 cents a share. Most analysts had forecast 8 cents per a survey by First Call Corp., while the "whisper number"> of a dime circulated among trading rooms.

Page views, a measure of traffic to the Yahoo! site, averaged 235 million a day in March vs. December's 167 million. In regular-hours activity, the stock retreated 6 7/16 to 208 7/16.

"The movement on the Internet-related stocks is nothing short of astounding," said Robert Dickey, managing director of technical research at Dain Rauscher Wessels, echoing the sentiment of nearly everyone on Wall Street. "These stocks are the cutting edge of speculation, and indicate that there is still more feeding frenzy ahead of us.

Brokerage stocks, leaders since the Oct. 8 market lows, saw richer quotations in the wake of recent blowout earnings reports from Morgan Stanley Dean Witter and Lehman Brothers. A number of the companies report quarterly results next week. Donaldson, Lufkin & Jenrette picked up 5 11/16 to 78, Charles Schwab 8 3/4 to 116, Merrill Lynch 5 3/8 to 96 1/2, and Ameritrade 11 to 94 3/4.

In Wednesday's market indicators:

• The Standard & Poor's 500 Index rose 0.7 percent.
• New York Stock Exchange losers outran winners by 8 to 7.
• On the Big Board floor, turnover came to 828 million shares.
• Declining issues toppled risers by 23 to 18 in the Nasdaq Stock Market.
• The Russell 2000 Index of small-capitalization stocks sank 0.8 percent.
• The 30-year Treasury rose 4/32, to yield 5.515 percent.

Among the companies in the news:

• Aluminum Co. of America (AA) rose 2 15/16 to 44. It recorded first-quarter net of 60 cents a share, handily dispensing with Wall Street expectations of 54 cents according to First Call Corp. Alcoa netted 62 cents in the same quarter a year ago.
• Revlon (REV) drove ahead 3 9/16 to 23 9/16. The cosmetics heavyweight is mulling strategic options that might involve the sale of one or more of its businesses.
• Seagram (VO) put on 3 11/16 to 58 5/8. Seagram's Universal Music and Bertelsmann's BMG announced a joint venture to create Internet sites to promote and sell music.
• On the IPO front, Rhythms Netconnections (RTHM) priced 9.37 million shares at $21 apiece. Stock of the provider of high-speed access networking solutions bolted 48 1/8 to 69 1/8. It had originally expected to price between 15 and 17 before subsequently upping its anticipated range.
• CBS Corp. (CBS) was unchanged at 43 11/16 on volume twice its average as speculation of a potential bid by America Online (AOL) continued to envelop the media giant. AOL shares sagged 10 1/2 to 157 after running up more than 90 percent in the past month. CBS Corp. is a significant owner of CBS.MarketWatch.com Inc. (Editor's note: America Online is the broadcast news provider for America Online.)
• Saville Systems (SAVLY) crumbled 3 13/16 to 6 1/4. The Irish software developer warned that a first-quarter deficit of between 5 cents and 9 cents a share is in the cards. The First Call Corp. survey of analysts had caled for a 24-cent profit. Saville said it closed significantly less business than anticipated in the quarter.