Blue chips drop another 46 points Most indexes down, but Russell 2,000 rises to new high

Wall Street

October 01, 1997|By BLOOMBERG NEWS

NEW YORK -- U.S. stocks fell on the last day of the third quarter yesterday as a slew of computer-related companies warned that earnings weren't up to snuff in the latest three months.

The gloomy profit forecasts from Ascend Communications Inc., Western Digital Corp. and Zilog Inc. overshadowed good news about interest rates from the Federal Reserve, which elected to keep a key lending rate unchanged.

Investors are exhibiting little tolerance for disappointing earnings, given the 25 percent advance in share prices this year.

The Dow Jones industrial average fell 46.17 to 7,945.26, after gaining 150 points in the previous two days. The 30-stock average rose 3.6 percent in the third quarter, its 11th consecutive quarterly advance.

Among broad stock market indexes, the Standard & Poor's 500 index fell 6.06 to 947.28, and the Nasdaq composite index dropped 9.29 to 1,685.69.

The Russell 2,000 index of smaller stocks was the exception, rising 2.51 to 453.82, its second straight record and its biggest gain in two weeks.

Among other broad indexes, the American Stock Exchange composite index advanced 4.60 to 699.26, a record; the Wilshire 5,000 index, comprising stocks on the New York, American and Nasdaq stock exchanges, fell 35.18 to 9,180.21; and the S&P 400 mid-cap index slid 0.21 to 331.66.

Some 1,644 stocks rose and 1,273 fell on the New York Stock Exchange. About 597.9 million shares changed hands, above the three-month daily average of 529 million shares.

Ascend Communications, which makes products that link groups of computers, dropped $2.875 to $32.375 after reporting that its third-quarter profit would fall short of analyst estimates. The company cited weaker-than-expected overseas sales.

Western Digital fell $8.9375 to $40.0625 after the disk drive maker said it expects fiscal first-quarter earnings of 63 cents to 66 cents a share, less than analyst estimates.

The loss in Western Digital and a slide of $4.125 to $38.3125 in rival Quantum Corp.'s stock sent the American Stock Exchange disk drive index down 16.17, or 5.5 percent, to 276.33, the biggest one-day slide since June 26.

And Intel Corp. slumped $3.0625 to $92.3125 after a Merrill Lynch & Co. analyst said the chip-maker's third-quarter earnings won't meet his estimate of 92 cents a share.

Semiconductor maker Zilog tumbled $2.8125 to $21.8125 after the company said it expects to earn 6 cents to 8 cents a share in the third quarter, far below analysts' predictions.

One beneficiary from earnings news was Lehman Brothers Holdings Inc., which rose $2.4375 to $53.50. The fourth-biggest U.S. securities firm said net income in the quarter ended Aug. 31 rose to $1.30 cents a share from 60 cents in the year-earlier period. Analysts had expected $1.14 a share.

ITT Corp. rallied $5.25 to $67.75 after a federal judge ruled that the company needs shareholder consent to break into three companies, giving new life to Hilton Hotel Corp.'s hostile $70-a-share takeover bid. Hilton rose $1.5625 to $33.6875.

Arbor Health Care Co. jumped $5.125 to $44.125. Extendicare Inc. agreed to buy the company for US$432 million in cash and assumed debt, making it one of North America's largest long-term health-care providers.

Best Software Inc. rallied $1.625 to $14.625 in its first day of trading. On Monday, the Reston, Va.-based provider of software for human resources and payroll management tasks sold 4.15 million shares at $13 each.

Imnet Systems Inc. tumbled $13.5625 to $26.875. The processor of data for the health-care industry said its auditors requested more time to review the company's finances.

Shares of gold companies gained as the precious metal's price jumped $6.50 an ounce to a three-month high of $336.90 an ounce.

Pub Date: 10/01/97

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