Stocks fall on fears of lower earnings Dow off 13 MARKETS

WALL STREET

June 08, 1993|By Bloomberg Business News

NEW YORK -- Stocks declined yesterday on concern that companies like Cooper Tire & Rubber Co. and Apple Computer Corp. would report lower-than-expected earnings.

The Dow Jones industrial average declined 13.01, to 3,532.13, closing just above the session low of 3,527.70. The Dow's decline was led by shares of Goodyear Tire & Rubber Co. and International Business Machines Corp.

The Standard & Poor's 500-Stock Index lost 2.37, to 447.69, and the American Stock Exchange's Market Value Index declined 0.05, to 440.90. The Nasdaq Combined Composite Index slumped 7.40, or 0.5 percent, to 694.61.

Declining common stocks led advancing issues by about 5-to-3, with auto-part manufacturers among the biggest losers.

"Cooper Tire is the latest earnings debacle to shake the market," said Peter Da Puzzo, senior managing director at Cantor Fitzgerald & Co. Cooper Tire said second-quarter net income will be below prior-year levels, prompting its stock to fall $7.50, to $25.375.

"The market is getting to be a lot like Russian roulette," Mr. Da Puzzo said. "First, 3Com Corp. gets destroyed on earnings concern, and now it's Cooper Tire. We're starting to see even the most bullish investors standing near the door just in case the market starts to crack."

3Com's stock dropped more than 30 percent in the past seven trading sessions, to below $26, after analysts raised questions about the company's earnings prospects. 3Com closed 87.5 cents lower yesterday, at $25.625.

Apple Computer's stock slumped $4.125, to $50.75, after the company told analysts at Bear Stearns & Co. and Dean Witter Reynolds Inc. that 1993 and 1994 earnings estimates are too high.

Concern about earnings are increasing just as investors are beginning to think that short-term interest rates will rise, Mr. Da Puzzo said.

As interest rates climb, stocks become less attractive relative to fixed-income securities like government bonds.

"The rise in short-term interest rates definitely is starting to get some people worried," Mr. Da Puzzo said.

Not everyone agrees.

"It's too early to be too concerned about interest rates," said Gail Dudack, market analyst at S. G. Warburg & Co.

Trading on the New York Stock Exchange was moderate, with about 237 million shares changing hands.

Intel Corp., LTV Corp., Cooper Tire, Bally Manufacturing Corp. and Advanced Micro Devices Inc. were the five most actively traded issues on the U.S. Composite.

Intel gained $1.75, to $58.125, after the California 6th District Court of Appeal reversed an arbitrator's award that gave Advanced Micro Devices Inc. permanent royalty-free rights to clone Intel's popular 386 computer chip. The decision appears to be a victory for Intel. Advanced Micro's stock tumbled $4.25, to $23.75.

Bank stocks were weaker, led by BankAmerica Corp. and Citicorp. BankAmerica, which was lowered to a "sell" investment rating at Prudential Securities, was down $1, at $42. Citicorp declined $1.375, to $26.375.

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