DJIA            7784.69   +152.16      (+1.99%) 
 S&P 500         1002.60    +16.21      (+1.64%) 
 Nasdaq          1614.98     +2.65      (+0.16%) 
 Value Line ndx   769.49     +7.61      (+1.00%) 
 30-Year Bond   110 8/30    +19/32  4.85% Yield 
 

HEROES

Managed care provider United HealthCare Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: UNH)") else Response.Write("(NYSE: UNH)") end if %> added $3 7/16 to $36 13/16 after announcing that it will abandon its Medicare business in 86 of the 206 U.S. counties it currently serves in an effort to trim costs. The move, which will impact about 13% of its 440,000 Medicare members, is expected to result in Medicare revenues of $2.2 billion to $2.4 billion in fiscal 1999, which happens to be when United feels its Medicare business will return to "solid profitability." The company did not give Medicare revenue estimates for fiscal 1998, but said that a $120 million charge taken in Q2 to cover this year's expected loss from the program will not be followed by other charges this year. The decision mirrors similar moves away from the Medicare biz by rivals such as Humana <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HUM)") else Response.Write("(NYSE: HUM)") end if %>, Aetna <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AET)") else Response.Write("(NYSE: AET)") end if %>, and Foundation Health <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FHS)") else Response.Write("(NYSE: FHS)") end if %> after Congress decided to trim roughly $20 billion from Medicare reimbursements to HMOs over the next five years in an effort to balance the budget.

Network data storage products and file server developer Network Appliance <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NTAP)") else Response.Write("(Nasdaq: NTAP)") end if %> gained $3 1/8 to $45 1/4 after Tucker Anthony upgraded the firm to "outperform" from "market perform." The rating boost brings all seven analysts listed on the firm's website to the same "buy"-equivalent wavelength, with two analysts going a step further with "strong buy" ratings. While positive words from analysts do not by themselves a good stock make, it's probably only a matter of time until this fast-growing company catches the eye of more folks in the investment community. NetApp can point to a 42% compounded annual revenue growth rate over the past five years to back up its frequent comparisons to the much better known Cisco Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CSCO)") else Response.Write("(Nasdaq: CSCO)") end if %>. Investors may want to take a closer look at the company, or at least a quick glance at our recent StockTalk interview with NetApp founder Dave Hitz for more info.

QUICK TAKES: Banking and brokerage firm Bankers Trust <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BT)") else Response.Write("(NYSE: BT)") end if %> bounced back $2 3/8 to $57 7/16 after sliding yesterday on news that it has an $875 million exposure to hedge funds under existing contracts, although only $25 million of that figure is not collateralized by U.S. Treasury securities or cash. Other banks and brokerage firms rebounded as well. Travelers Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TRV)") else Response.Write("(NYSE: TRV)") end if %> climbed $2 13/16 to $38 9/16, Citicorp <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CCI)") else Response.Write("(NYSE: CCI)") end if %> added $6 3/4 to $95, Chase Manhattan <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CMB)") else Response.Write("(NYSE: CMB)") end if %> gained $3 13/32 to $43 3/4, and Morgan Stanley Dean Witter <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MWD)") else Response.Write("(NYSE: MWD)") end if %> advanced $3 7/8 to $43 7/8... Property and casualty insurer Cincinnati Financial Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CINF)") else Response.Write("(NYSE: CINF)") end if %> rose $1 15/16 to $35 13/16 after saying Hurricane Georges and other storms have resulted in about $21 million in catastrophe losses in fiscal Q3, which is down from the "unusually high" $54.2 million in losses recorded in Q2.

Coffeehouse operator Starbucks Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SBUX)") else Response.Write("(Nasdaq: SBUX)") end if %> perked up $3 7/16 to $36 1/2 after reporting a 4% year-over-year increase in September same-store sales late yesterday, a pickup from the 3% rise reported for August and the 2% gain posted in July... Coca-Cola products bottler and distributor Coca-Cola Enterprises <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CCE)") else Response.Write("(NYSE: CCE)") end if %> moved up $1 15/16 to $24 13/16 after Standard & Poor's said the company would be added to its S&P 500 Index following the merger of current index members Citicorp and Travelers Group... Bleach maker Clorox Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CLX)") else Response.Write("(NYSE: CLX)") end if %> cleaned up with a $4 3/16 gain to $84 1/4 following a Salomon Smith Barney upgrade to "outperform" from "neutral."

Internet portal firm Yahoo! <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: YHOO)") else Response.Write("(Nasdaq: YHOO)") end if %> gained $14 1/16 to $127 after Bear Stearns raised its rating on the company to "buy" from "neutral." Online bookseller Amazon.com <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AMZN)") else Response.Write("(Nasdaq: AMZN)") end if %>, which Bear Stearns started with a "buy" rating this morning, rose $7 5/8 to $110 1/4. Other Internet-related firms also gained, as Excite <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: XCIT)") else Response.Write("(Nasdaq: XCIT)") end if %> tacked on $4 1/16 to $39 5/8, Infoseek <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SEEK)") else Response.Write("(Nasdaq: SEEK)") end if %> picked up $1 1/8 to $23 5/8, and Lycos <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: LCOS)") else Response.Write("(Nasdaq: LCOS)") end if %> added $2 1/16 to $31 3/4... Telecommunications operation support systems provider Architel Systems Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ASYCF)") else Response.Write("(Nasdaq: ASYCF)") end if %> jumped $1 3/8 to $7 7/8 after entering into a licensing agreement with integrated communications provider ICG Communications <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ICGX)") else Response.Write("(Nasdaq: ICGX)") end if %>.

Discount retailer TJX Cos. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TJX)") else Response.Write("(NYSE: TJX)") end if %> moved up $2 3/4 to $18 1/2 after announcing it has completed its previously announced $250 million stock buyback plan, which will be followed by a $750 million stock repurchase plan spanning the next two years... Office supplies retailer Staples <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SPLS)") else Response.Write("(Nasdaq: SPLS)") end if %> tacked on $1 to $27 1/16 after being chosen to replace General Signal Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GSX)") else Response.Write("(NYSE: GSX)") end if %> on the S&P 500 Index. General Signal is merging with fellow auto components maker SPX Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SPW)") else Response.Write("(NYSE: SPW)") end if %>... Drug store operator Rite Aid Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: RAD)") else Response.Write("(NYSE: RAD)") end if %> gained $2 to $36 after announcing an 8.1% rise in year-over-year same-store sales for September... Coronary stent maker Arterial Vascular Engineering <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AVEI)") else Response.Write("(Nasdaq: AVEI)") end if %> pumped out a $2 3/4 gain to $36 after acquiring the coronary catheter lab business of C.R. Bard <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BCR)") else Response.Write("(NYSE: BCR)") end if %> for about $550 million in cash.

Chevron Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CHV)") else Response.Write("(NYSE: CHV)") end if %> gained $3 5/8 to $87 5/8 after Brown Brothers Harriman raised its long-term rating for the oil, gas, and industrial chemical company to "buy" from "neutral"... Vehicle emissions testing programs operator Envirotest Systems Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: ENR)") else Response.Write("(AMEX: ENR)") end if %> drove $5 1/8 higher to $14 3/4 after investment firm Stone River said it had secured financing from the likes of Credit Suisse First Boston and Donaldson, Lufkin & Jenrette to back up its previously announced $17.25 per share cash buyout bid for Envirotest... Refractive eye surgery lasers maker Autonomous Technologies Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ATCI)") else Response.Write("(Nasdaq: ATCI)") end if %> is autonomous no more and gained $7/8 to $5 after agreeing to merge with Summit Technology <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: BEAM)") else Response.Write("(Nasdaq: BEAM)") end if %> in a cash and stock deal.

Gryphon Holdings <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: GRYP)") else Response.Write("(Nasdaq: GRYP)") end if %> added $2 to $16 after fellow specialty insurer Markel Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MKL)") else Response.Write("(NYSE: MKL)") end if %> adjusted the terms of its unsolicited bid for the company to $18 per share in cash, rather than the previous offer of $18 per share in cash and notes... Defense contractor Lockheed Martin <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LMT)") else Response.Write("(NYSE: LMT)") end if %> picked up $7 1/4 to $105 5/16 after reportedly winning a seven-year, $2.05 billion maintenance contract from the U.S. Air Force for its F-117 stealth strike fighter... TRW Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TRW)") else Response.Write("(NYSE: TRW)") end if %> tacked on $1 13/16 to $45 5/8 after CEO Joseph Gorman told Bloomberg News that the company is considering a split of its space and defense unit from its auto parts business in an attempt to increase shareholder value... Electric utility FirstEnergy Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FE)") else Response.Write("(NYSE: FE)") end if %> charged ahead $1 9/16 to $32 5/8 after BT Alex. Brown raised its rating to "buy" from "market perform"... Oil exploration and production firm Triton Energy Ltd. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: OIL)") else Response.Write("(NYSE: OIL)") end if %> climbed $3/4 to $10 1/16 after Hicks, Muse, Tate & Furst's Tom Hicks was installed as chairman of Triton's board. Hicks Muse also announced a plan to buy up to 5 million Triton shares in the open market.

GOATS

Revlon Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: REV)") else Response.Write("(NYSE: REV)") end if %> was creamed for a $12 3/8 loss, or 44.49%, to $15 7/16 after the cosmetic and personal care company warned that it expects third quarter earnings to come in around $0.22 a share -- including a $0.15 gain on the sale of a small non-core business. The company also revised its outlook for the fourth quarter and now anticipates EPS of $0.10 to $0.15, excluding $50 million in restructuring costs. The forecasts for Q3 and Q4 are ridiculously low compared with analysts' mean EPS estimates of $0.73 and $1.09, respectively. Revlon blamed its problems on lower-than-expected growth in its domestic mass market color cosmetics business, retailer inventory reductions, and weak international economies. Shockingly, the company had the gall to say that although the second half of the year has been "disappointing," its longer-term outlook "continues to be extremely positive." Hmmm, then why is the company forecasting 1999 EPS of $1.80 to $2.00, including $0.25 in restructuring benefits, when analysts' estimates range from $2.25 to $2.45? Paine Webber downgraded its rating on the cosmetics company to "unattractive" from "attractive."

Georgia-based Scientific-Atlanta <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SFA)") else Response.Write("(NYSE: SFA)") end if %>, which makes broadband communications systems, satellite-based video, and voice and data communications networks, tanked $7 11/16 to $12 11/16 after announcing that continued weakness in international markets will result in fiscal Q1 EPS of $0.02 to $0.05 -- far short of analysts' mean estimate of $0.21. The company saw exports drop almost 54% to an estimated $54 million in the quarter from $116 million in the same period last year. On a percentage basis, this means that international sales now account for about 21% of revenues down from 40%. Situations specific to Scientific-Atlanta, such as the delay of an important cable license in Brazil, are partly to blame for the shortfall, but much of the weakness can be attributed to the same economic woes plaguing other U.S. companies with substantial international operations.

QUICK CUTS: McDonald's <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MCD)") else Response.Write("(NYSE: MCD)") end if %> dropped $1 7/8 to $58 after Morgan Stanley Dean Witter cut its rating on the fast food giant to "outperform" from "strong buy"... Ford Motor Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: F)") else Response.Write("(NYSE: F)") end if %> skidded $1 to $43 1/8 after saying it will suspend production of its Ford Escorts and Mercury Tracers at its Wayne Assembly Plant for two weeks beginning Monday "to help maintain inventories... at reasonable levels." The No. 2 automaker also will offer financing for as low as 1.9% or cash rebates of $500 on its 1999 models... Life sciences company Monsanto Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MTC)") else Response.Write("(Nasdaq: MTC)") end if %> lost $2 1/8 to $52 on rumors that its proposed merger with drug giant American Home Products <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AHP)") else Response.Write("(NYSE: AHP)") end if %> might not go through. The company's stock dropped as low as $46 3/16 and recovered later in the afternoon as the rumors subsided.

Enterprise application software developer PeopleSoft Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PSFT)") else Response.Write("(Nasdaq: PSFT)") end if %> plunged $8 3/16 to $24 5/16 as Morgan Stanley Dean Witter downgraded the company's shares to "neutral" from "strong buy." Goldman Sachs released a research note saying that spending on enterprise resource planning applications will slow due to lower capital spending because of an economic slowdown and as companies divert resources to fix Year 2000 problems. Enterprise software company Oracle Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ORCL)") else Response.Write("(Nasdaq: ORCL)") end if %> also shed $1 to $26 in heavier than usual trading. BMC Software <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: BMCS)") else Response.Write("(Nasdaq: BMCS)") end if %> fell $6 1/8 to $51 7/8, and Compuware <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CPWR)") else Response.Write("(Nasdaq: CPWR)") end if %> tumbled $3 11/16 to $50 3/16... Web- and server-based business applications company Infinium Software <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: INFM)") else Response.Write("(Nasdaq: INFM)") end if %> sank $3 29/32, or 43.4%, to $5 3/32 after warning it expects Q4 EPS of $0.20, compared with $0.19 a year ago and analysts' expectations of $0.30.

Cruise ship operator Carnival Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CCL)") else Response.Write("(NYSE: CCL)") end if %> sank $3 1/16 to $25 15/16 after Salomon Smith Barney lowered its rating on the company to "neutral" from "buy" and its EPS estimate to $1.55 from $1.60 for 1999 and to $1.70 from $1.85 for 2000 on concern that the company's business will suffer as the economy slows... Department store operator Elder-Beerman Stores Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: EBSC)") else Response.Write("(Nasdaq: EBSC)") end if %> was marked down $5 1/4, or 31.58%, to $11 3/8 after saying it expects Q3 EPS of $0.21 and Q4 EPS of $1.00 versus analysts' forecasts of $0.40 and $0.84, respectively. The company said it is "comfortable" with analysts' EPS estimates of $1.30 to $1.35 for the year... Year 2000 and information technology consulting company Syntel Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SYNT)") else Response.Write("(Nasdaq: SYNT)") end if %> shed $2 1/8 to $18 1/2 as Prudential Securities downgraded its rating on the company to "hold" from "accumulate," adding that the stock is fairly valued at current levels and isn't likely to climb much in the near term.

Consumer credit products, fee-based products, and extended service plans direct marketer Metris Cos. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MTRS)") else Response.Write("(Nasdaq: MTRS)") end if %> tanked $14 7/8 to $27 7/8 on worries of a recession, that credit card securitizations will grind to a halt, and that the company may have to change its accounting practices to the detriment of its top line... Specialty consumer finance company Delta Financial Corp. (NSYE: DFC) slid $1 7/16 to $4 7/8 after Moody's Investors Service downgraded its senior debt rating on the company to B3 from B1 while maintaining a negative outlook... Automated inspection systems manufacturer Vivid Technologies <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: VVID)") else Response.Write("(Nasdaq: VVID)") end if %> dropped $7/8 to $6 1/16 after pre-announcing fiscal Q4 EPS of $0.11 to $0.13 compared with $0.20 last year and analysts' mean estimate of $0.23.

FOOL ON THE HILL
An Investment Opinion
by Paul Larson

A Yield Curve Primer

With all the attention being given to interest rates the past few weeks, I thought it would be appropriate to touch on a topic very thinly covered here in The Fool -- the yield curve. Interest rates are of importance to all of us, whether you are discounting cash flows for analytical purposes or looking to buy a house using a mortgage for financing. Of course, the stock market is also very sensitive to changes in interest rates, as can be seen from the action over the past several weeks. The yield curve is important because looking at and knowing how to read it can often give insights into where interest rates are headed in the near future.

First, let's talk about what exactly the yield curve is. Maybe you're new to investing, heard it mentioned on CNBC or at a cocktail party, but never really understood what it was. The yield curve is simply a graph showing bond yields on the vertical axis and different length maturities of government bonds and notes on the horizontal axis.

A table of the current yields looks something like this:

(As of the close of trading 9/30/98)

Security        Yield 
 3-month Bill     4.25% 
 6-month Bill     4.32% 
 1-year Bill      4.20% 
 2-year Bond      4.29% 
 3-year Bond      4.38% 
 5-year Bond      4.24% 
 10-year Bond     4.42% 
 30-year Bond     4.98%

CONFERENCE CALLS

Please see the Motley Fool's Conference Calls page for call information and links to synopses.

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Contributing Writers Yi-Hsin Chang (TMF Puck), a Fool Brian Graney (TMF Panic), Fool Two Alex Schay (TMF Nexus6), Fool, too Dale Wettlaufer (TMF Ralegh), Final Fool Editing Brian Bauer (TMF Hoops), another Fool Bob Bobala (TMF Bobala), a Fool's Fool Jennifer Silber (TMF Amused), Fool at last