Amazon Powers Nasdaq to New Record as Other Indexes Edge Up
The Nasdaq Composite Index rose to a record in the busiest day ever on the Nasdaq Stock Market, led by Amazon.com on optimism for holiday sales. Amazon shares rose $15.06 to close at $103.63.
“Amazon.com is having an amazing day,” said Tim Ghriskey, who helps oversee about $120 billion at Dreyfus Corp. “We have been saying all along it will be a good seasonal shopping season and that the e-commmerce segment of the consumer dollar would skyrocket.”
Although a record day for Nasdaq, major indexes barely nudged upward. The Nasdaq rose 0.2%, Standard & Poor’s 500 Index rose 0.3% and the Dow Jones industrial average rose 0.6%, with Home Depot contributing most to the Dow gain.
The rising market was not broad--in fact, three stocks fell for every two that rose on the New York Stock Exchange, as the Big Board had its eighth-busiest session ever.
Shares of VA Linux Systems Inc. rocketed as high as $320 before settling at $239.25, making the company that’s challenging Microsoft Corp. the best performing U.S. IPO in one day this decade.
“It looks like people are taking some money out of the previous tech champions to buy some of the highfliers like VA Linux,” said Eric Barden, a money manager at Texas-based First Austin Capital Management.
Amazon.com gained after J.P. Morgan Securities analyst Thomas Wyman said sales could more than double to $569.2 million in the fourth quarter and rise 68% to $2.6 billion next year. He initiated coverage Thursday with a “buy” rating and said the stock could reach $160 in a year.
The Nasdaq Stock Market reported its busiest day ever, with 1.76 billion shares changing hands. The NYSE reported its eighth-biggest day ever, with 1.11 billion shares traded. Both figures were preliminary.
“There really is no weakness in the market, there is volatility,” said Michael Lyons, listed equity trader at Morgan Stanley Dean Witter. “Investors run stocks up and then run them down.”
Among Thursday’s market highlights:
* IBM fell $4.91 to $113.38 after the world’s largest computer company repeated a forecast that fourth- and first-quarter earnings will be lower because of concerns about 2000.
The warning, given during a closed-door meeting with analysts, is similar to one the company made Oct. 20, when it said earnings will be crimped as customers delay purchases of mainframe computers as they address millennium issues. Thursday’s statements eased concerns that the company would forecast bigger declines, analysts who attended the meeting said.
“The market had a knee-jerk reaction to the IBM news and that was part of the cause of the sell-off during the day,” Ghriskey said.
* Tyco International, the most-active U.S. stock., fell $8 to $28.25 after disclosing that the U.S. Securities and Exchange Commission is conducting an informal inquiry relating to reserves and charges it takes for acquisitions.
* Baker Hughes fell $3.25 to $19.25. The third-largest U.S. oil field services company said it discovered “accounting issues” at its Inteq oil-exploration unit that hurt results and could cost as much as $50 million and force it to restate earlier results.
* Home Depot rose $2.99 to $87.25 after the No. 1 home-improvement retailer said it would begin selling large appliances such as refrigerators and dishwashers at most U.S. stores next year.
* Sony rose sharply early Friday in Tokyo trading, after the world’s second-largest consumer electronics maker said it plans to start an online banking service in 2001, boosting its earnings prospects.
“Sony’s news is very positive. Entering the banking business will create a synergy effect with their Internet business,” said Minoru Tada, manager at World Nichiei Securities Co.’s products department. “Sony’s management vision is very clear, and that’s what investors like the most about the company.”
Sony, which accounts for almost 10% of Japan’s benchmark Nikkei-225, sent that index higher early Friday.
Sony said it would enter the banking business in 2001 with Internet-based services for individuals, would provide at least half the capital for the new bank and may ask financial companies to participate in an equity alliance, said Masayoshi Morimoto, a Sony senior executive vice president.
“The Internet business will become big,” Morimoto said. “We believe Internet banking has a bright future.”
* Woodland Hills-based Vertel Corp., a maker of equipment that runs telecommunications networks, more than doubled after it said it will sell software to Tellium Inc., a closely held maker of fiber-optic switches.
Shares of Vertel rose $5.78 to $9 in trading of more than 24.4 million shares, more than 31 times the three-month daily average. Earlier, Vertel rose as high as $14, a 52-week high.
Tellium’s optical switches will use Vertel’s software, which lets incompatible network equipment, such as routers and switches, communicate with each other.
“We were a little surprised ourselves that the market would react so positively to this announcement,” said Bruce Brown, chief executive and president of Vertel. “The market is very, very big.”
Brown declined to detail sales projections or say who the company’s other customers are, and said Vertel expects to be profitable sometime next year. The company had $18.4 million in revenue last year, and had a loss in two of four quarters.
Tellium’s investors include Cisco Systems Inc., the No. 1 Internet-equipment maker.
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Market Roundup, C8
