Oracle's tumble leads stocks downward Dow slides 61.18

Nasdaq has its worst decline in two weeks

December 10, 1997|By BLOOMBERG NEWS

NEW YORK -- U.S. stocks fell yesterday, led by Oracle Corp. after it reported lower-than-expected sales and profit, heightening concern that Asia's slowing economies and weakening currencies will undermine the 15-year bull market.

" 'Below expectations' are the most horrendous words on Wall Street," said John Bogle, chairman of the Vanguard Group of Valley Forge, Pa., the nation's second-largest mutual fund company, which oversees $325 billion.

The Dow Jones industrial average fell for a second day, sliding 61.18 to 8,049.66. The Standard & Poor's 500 index dropped 6.59 to $975.78.

The Nasdaq composite index lost 30.99, or 1.9 percent, to 1,620.55, its worst decline in two weeks. Oracle fell $9.44 -- 29 percent -- to $22.94 in trading of 171.8 million shares, the most traded in a single day among U.S. stocks valued at $1 or more at the close.

Among other broad market indexes, the Russell 2,000 index of small capitalization stocks lost 3.87 to 438.16; the Wilshire 5,000 index, comprising stocks on the New York, American and Nasdaq stock exchanges, dropped 69.34 to 9,341.99; the American Stock Exchange composite index slipped 1.94 to 671.55; and the S&P 400 midcap index slid 3.24 to 331.57.

About 544 million shares changed hands on the New York Stock Exchange, 5 percent below the recent daily average. Decliners led advancing stocks by a ratio of 3 to 2 on the New York Stock Exchange.

Oracle, a software company, said sales of its key database programs rose 3 percent in the second quarter that ended Nov. 30. Analysts were expecting growth of 20 percent. Moreover, rising costs trimmed profit margins. Oracle lost almost $10 billion in market capitalization yesterday, almost a third of its value.

Cisco Systems Inc., the largest maker of computer networking equipment, fell $2.3125 to $87.4375. Houston's Compaq Computer Corp., the biggest maker of personal computers, declined $2.125 to $63.1875.

Mortgage, insurance and bank shares were also among the day's big losers, and some investors said they may be close to selling some bank positions because of their recent surge. "Valuations have moved up tremendously" among financial stocks, said Robert Sanborn, a money manager in charge of the $6.3 billion Oakmark mutual fund.

Fannie Mae, a mortgage finance company, fell 62.5 cents to $54.0625, even after it was added to Merrill Lynch & Co.'s global stock picks for 1998. Freddie Mac lost $1.1875 to $40.5625 and American General Corp. dropped $1.125 to $53.625.

"Frankly, a lot of our financial service companies are closer to 'sells' than 'buys,' " in part because their price-to-earnings ratios have risen closer to the rest of the market's, said Sanborn, who has about a quarter of Oakmark's assets in financial stocks.

Bucking the trend, Tele-Communications Inc. rose $2 to $26.375, after the Wall Street Journal reported that AT&T Corp. is rumored to be in talks about investing in TCI so it could use the cable company to expand its data services and break into the U.S. local phone market.

Dow Jones & Co. fell 75 cents to $53.875 after it and General Electric Co.'s National Broadcasting Co. said they agreed to merge their Asian and European business TV operations and jointly produce news in the U.S. GE rose $1.0625 to $74.625.

Philip Morris Cos. lost 31.25 cents to $44.5625 after the No. 1 tobacco company said it is streamlining its international food unit by taking a $630 million charge and firing 2,500 employees.

H.J. Heinz fell $1.0625 to $55.4375 after it reported net income of 51 cents a share, below analysts' expectations.

Hasbro Inc. rose $1.25 to $31.25 after the maker of Tonka trucks and Milton Bradley games said it will cut about 2,500 jobs, or 20 percent of its work force, exit some toy markets, close at least one factory and buy back $500 million of its stock to boost its share price.

Pub Date: 12/10/97

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