Stocks fall, with Dow dropping 129 points Nasdaq plunges 2.3% as computer shares falter

Wall Street

December 12, 1997|By BLOOMBERG NEWS

NEW YORK -- U.S. stocks tumbled for a third day yesterday, after declines in markets worldwide, amid growing concern that economic turmoil in Asia will undermine U.S. corporate profits. Applied Materials Inc., Quantum Corp. and other computer-related companies led the decline.

The Dow Jones industrial average fell 129.80, or 1.6 percent, to 7,848.99, and the Nasdaq composite index tumbled 38.07, or 2.3 percent, to 1,558.54, their biggest losses in a month. The Standard & Poor's 500 index sank 14.85, or 1.5 percent, to 954.94.

The losses came after Asian stock markets and currencies plunged.

Applied Materials tumbled $4.4375 to $27.3125. The Santa Clara, Calif., manufacturer of chip making equipment gets almost 60 percent of its sales from the Pacific Rim. With 37.6 million shares traded, it was the most active stock in U.S. markets.

The Philadelphia semiconductor index fell 6.3 percent, and is off 36 percent since Aug. 20.

Intel Corp., which dominates the market for chips -- the engines of personal computers -- fell $2.875 to $71.8125. It traded as high as $100.50 during the summer.

Companies in the semiconductor equipment business declined on signs of slowing demand in South Korea, the world's third largest maker of memory chips. Kulicke & Soffa Industries Inc. plunged $6.75 to $18.125, after the maker of semiconductor production equipment said its net income for its fiscal first quarter ending Dec. 31 will fall short of analysts' estimates. It said the financial crisis in South Korea is causing delays in orders.

Lattice Semiconductor Corp. dropped $3.1875 to $55.3125 after the maker of programmable logic chips said its Korean distributor was declared insolvent. Lattice said its backlog to Korean customers of about $3.5 million is at risk.

NationsBank Montgomery securities analyst Brett Hodess cut his earnings estimates for Applied Materials, as well as chip making equipment companies Lam Research Corp., down $5.125 to $26 and KLA-Tencor Corp., down $3.0625 to $36.25.

Hewlett-Packard Co., which sells products in South Korea, fell $2.6875 to $61.0625, bringing its loss for the week to 9.8 percent.

Quantum fell $3.875 to $19.9375, after it warned earnings for its fiscal third quarter will be lower than expected because prices for the hard disk drives it makes for personal computers are plummeting.

Oracle Corp., whose disappointing profits triggered the three-day rout in computer shares that began Tuesday, fell $1.50 to $21.9375.

Federal Express Corp. lost $5 to $62.375 after the Wall Street Journal reported that the package-delivery service company is expected to post almost-unchanged earnings for its fiscal second quarter, partly reflecting a weaker market for air-cargo services in Asia. The newspaper cited analysts.

J. P. Morgan & Co. fell $1.875 to $116, a day after it said fourth-quarter earnings would be hurt by the turmoil in global financial markets.

General Electric Co., the largest company in the S&P 500, fell $1.25 to $72.50 on news that the industrial and media company would take a pretax charge of $2 billion in the fourth quarter to pay for a restructuring of its industrial businesses.

Green Tree Financial Corp. plummeted $3.0625 to $23.9375. The finance company said President and Chief Operating Officer Robert Potts resigned, less than a month after Green Tree said it would take a $150 million charge related to accounting problems.

Reebok International Ltd. sank $3.8125 to $29 after saying 1997 earnings will be far less than analysts expected.

New York Times Co. rose $2.25 to $62.5625. The newspaper company said it expects annual per-share profit to be between $2.47 and $2.57. Analysts expected earnings of $2.46.

U.S. bonds rose, driving the benchmark 30-year yield down to 6.00 percent from 6.07 percent yesterday, as investors bought Treasury securities as a refuge.

Pub Date: 12/12/97

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