Microsoft tumble helps pull Dow down


July 31, 1993|By Bloomberg Business News

NEW YORK -- U.S. stocks slid yesterday as Microsoft Corp. shares plunged and the price of gold soared to a three-year high.

The Dow Jones industrial average closed 27.95 points lower, at 3,539.47, as computer-guided sell orders hit the market. Minnesota Mining & Manufacturing Co., AlliedSignal Inc. and Walt Disney Co., all of which reported second-quarter earnings in the past two days, led the decline.

"This still is a market that takes no prisoners and is very unforgiving" of companies that fail to match expectations, said Alfred Goldman, director of technical research at A. G. Edwards & Sons in St. Louis.

The Dow industrials fell 7.27 points during the entire week after setting a record closing high of 3,567.70 on Monday.

Led by Microsoft, the Nasdaq Combined Composite Index dropped 2.52 points, to 704.74, after falling as low 702.37. The Standard & Poor's 500 was down 2.11 points, at 448.13.

The yield on the benchmark 30-year Treasury bond fell 1 basis point, or hundredth of a percentage point, to 6.56 percent.

Decliners outnumbered advancers by a margin of 8-to-7 among stocks on the New York Stock Exchange. Trading was active, with about 254 million shares changing hands on the Big Board.

Shares of Microsoft tumbled as much as $7, to $72, before closing down $5, at $74, after the software maker told analysts revenue growth would slow in the current year ending June 1994. That caused Wall Street analysts to slash earnings estimates.

"Microsoft is more than all of the Nasdaq decline," said Mr. Goldman.

Computer-driven sell orders came amid concern about earnings at bellwether companies such as Microsoft and 3M and the crisis surrounding Europe's exchange-rate mechanism.

Lingering concern about the prospects for President Clinton's deficit-cutting plan also weighed on the market, traders said.

"People are concerned about what's going on with the price of gold, with the budget compromise, and what's going on in Europe," said Thomas Gallagher, head trader at Oppenheimer & Co.

Gold futures soared $9.10, to $411.30 an ounce, topping $400 for the first time since August 1990 as the potential collapse of the European currency system sparked a flight into hard assets, traders said.

Amid the risk of further currency devaluations in France and elsewhere, "people think it's a good store of value whatever else happens," said Ricky Harrington, senior vice president at Interstate/Johnson Lane in Charlotte, N.C.

Germany's move Thursday to keep its key discount rate unchanged plunged Europe's exchange-rate mechanism into confusion, fueling predictions of an imminent collapse in the 14-year-old system that ties together European currencies.

Currency turmoil in Europe "won't have a dramatic impact on us," said Mr. Goldman, though "the weaker Europe is [economically], the slower the recovery in U.S. multinationals and exports."

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.