NASDAQ losses drag market down

WALL STREET

December 11, 1992|By Bloomberg Business News

NEW YORK -- A decline in over-the-counter NASDAQ issue led stocks lower yesterday as the market lost ground for a second straight day.

The Dow Jones industrial average fell 11.62, to 3,312.19, as 1-point declines in Goodyear Tire & Rubber and Philip Morris accounted for much of the slump. The fall in the Dow was minimal compared with the drop of 4.99 points, or 0.75 percent, in the NASDAQ Combined Composite index, to 658.93.

"A number of NASDAQ issues are falling apart, and that's a telltale sign that the market is running out of steam," said Bill Beise, a partner at Wessels, Arnold & Henderson in Minneapolis.

Microsoft played a big role in the NASDAQ's decline. Microsoft declined $3, to $89, after an analyst at Donaldson Lufkin & Jenrette Securities lowered his rating of the stock, citing concerns about the stronger dollar, a recession in Europe and sluggish sales of Windows for Workgroup.

"Microsoft characterizes today's market," said Thomas Callahan, senior vice president of U.S. equities at Yamaichi International America. "Some stocks have had a big run in the past three weeks, and they need a breather."

Trading was active, with 242 million shares changing hands on the New York Stock Exchange. Declining common stocks outnumbered advancing issues by about 3-to-2 on the Big Board. The Standard & Poor's 500 index declined 1.01, to 434.64, and the American Stock Exchange Market Value index fell 0.59, to 392.39.

Economic news was mixed yesterday. The Labor Department said first-time claims for unemployment benefits fell to the lowest level in three years in the week that ended Nov. 28. The government also said wholesale prices declined 0.2 percent in November, indicating that inflation was under control.

But the drop in producer prices raises some concern that corporate profits won't meet investors' expectations because companies are having trouble passing on price increases to customers.

"The decline in producer prices is a double-edged sword," said Daniel Marciano, senior vice president in charge of equity trading at Dillon, Read & Co.

First Chicago, National Semiconductor, Borland International, Micro Warehouse and International Business Machines Corp. were the five most active stocks.

First Chicago slid 12.5 cents, to $33.125. The nation's 11th-biggest bank set up a partnership with the investment banking firm Chicago Corp. to provide investment banking and underwriting services to its corporate clients.

National Semiconductor fell $2.625, to $10.625, on disappointment about the company's fiscal second-quarter earnings. An analyst at Smith Barney, Harris Upham & Co. removed the stock from his "buy" list.

National Semiconductor earned $35.3 million, or 27 cents a share, in the quarter, up from $5.9 million, or 3 cents, last year.

The second-quarter earnings included a pretax gain of $31.7 million for patent licensing fees, among other things.

Borland declined 75 cents, to $20.75. The company announced plans to take a $35 million charge to reduce its work force by 15 percent. The restructuring charge was being taken in response to a software price war initiated by Microsoft, the company's chief executive said. Analysts at Merrill Lynch & Co. and Bear Stearns Cos. lowered their ratings on Borland.

Micro Warehouse, an initial public offering, closed $5.75 above its initial offering price. Montgomery Securities priced 2.85 million common shares of the computer software maker at $18 a share.

IBM slumped 87.5 cents, to $61.75, amid concerns that the company will slash its dividend. The company is expected to take billions of dollars in charges against fourth-quarter earnings to eliminate thousands of jobs.

Hospitality Franchise closed $2.75 above its initial offering price of $16. Merrill Lynch priced a 6-million-share offering of the hotel company late Wednesday.

QVC Network Inc. surged $2.25, to $33, on reports that Barry Diller, former chief of Fox Inc., agreed to acquire a large stake in QVC.

Imcera Group Inc. slumped $5.75, to $33.75. The company said 1993 earnings will be below investors' expectations because of problems in its animal health care division.

Adolph Coors Co. dropped $6, to $16.375. The company's non-beer business, known as ACX Technologies Inc., started trading on a when-issued basis yesterday.

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