Stocks tumble Dow down 125 points

Hong Kong weakness again ignites sell-offs around the globe

October 31, 1997|By BLOOMBERG NEWS

NEW YORK -- U.S. stocks fell yesterday, led by computer companies and banks, on concern that their profits will suffer as growth slows in Asia.

The Dow Jones industrial average fell 125.00, or 1.7 percent, to 7,381.67. The Dow closed at a record 8,259.31 on Aug. 6. It is still up 14 percent for the year.

Hong Kong's 3.7 percent decline in the Hang Seng index early yesterday triggered declines in stocks from Tokyo to Paris, setting the stage for the Dow's tumble.

J. P. Morgan & Co. led the 30-stock average lower, skidding $3.875 to $110.375. The company earned 15 percent of its profit from Asia last year.

Latin American markets fell prey to currency attacks such as those seen in Thailand, Hong Kong and elsewhere. Brazil said it spent $5 billion yesterday defending its currency, the real. Its benchmark index tumbled 9.8 percent, and U.S. companies with large Brazilian operations sank in sympathy.

BankBoston Corp. fell $4.6875 to $79.6875.

The benchmark Standard & Poor's 500 index slid 15.48, or 1.7 percent, to 903.68.

Intel Corp. paced computer stocks lower after UBS Securities cut its investment rating. Intel fell $4.50 to $75.75.

The Nasdaq stock market, home to some of the biggest computer stocks, dropped 32.34, or 2 percent, to 1,570.41.

Dell Computer Corp. lost $5.50 to $78 after the top direct-mail seller of personal computers was cut to "buy" from "strong buy" by Philip C. Rueppel, an analyst at BT Alex. Brown. Rueppel lowered his five-year expected growth rate for Dell to 25 percent from 30 percent.

Analysts at Deutsche Morgan Grenfell and Salomon came to the defense of Dell, reiterating their buy ratings.

Dell's stock tripled this year, even with a 15 percent decline in the past three days.

Texas Instruments Inc., a chip maker, tumbled $11.5625 to $102.875.

Compaq Computer Corp. fell $2.1875 to $61.25. Compaq dominates the market for sub-$1,000 PCs, though Rueppel of BT Alex. Brown said he expects International Business Machines Corp. and Hewlett-Packard Co. to enter the market.

Waste Management Inc., a trash hauler, tumbled $5.75 to $23.25 as three top executives resigned, including Chairman Ronald LeMay, who left after three months to return to Sprint Corp. The company also said earnings would be hurt by more conservative accounting practices.

Oil service companies rallied. Schlumberger Ltd. gained $1.875 to $87.8125. Diamond Offshore Drilling climbed 75 cents to $61.6875.

Among retailers, Gap Inc. gained $1 to $52.5625; Nordstrom Inc. jumped $2.25 to $60.375; and Dayton-Hudson Corp. rose $1.25 to $62.25.

Pegasystems Inc. plummeted $9.375 to $18.375 after the developer of management software said it will delay announcing third-quarter earnings, and may restate second-quarter results after its auditor changed its advice on how to account for certain contracts with a customer.

Electronic Data Systems Corp. was among those that rose after the computer-services company said third-quarter profit fell to 50 cents a share, excluding a charge, from 55 cents a year earlier. Though lower than year-earlier results, they beat analysts' forecasts of 45 cents. EDS rose $5.25 to $37.875.

MedPartners Inc. dropped 68.75 cents to $25.75 after PhyCor Inc. said it will buy MedPartners for $8 billion in stock and assumed debt, forming a nationwide physician-management company with more than $8.4 billion in revenue.

Analysts at Needham & Co. and Credit Suisse First Boston cut their investment ratings after the announcement.

PhyCor shares slumped $5.5625 to $24.

Pub Date: 10/31/97

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