Stocks fall amid worry about Asia Dow industrials slide 31 points, to 7,660

Disney down $2.50

December 25, 1997|By BLOOMBERG NEWS

NEW YORK -- U.S. stocks declined yesterday for a second day as an agreement by major industrialized nations to help South Korea pay its debts failed to persuade investors that U.S. corporate profits will be unscathed by a slowdown in Asia.

Walt Disney Co. and other companies that derive much of their earnings internationally led the decline.

In an abbreviated trading session, the Dow Jones industrial average fell 31.64, or 0.4 percent, to 7,660.13. The Nasdaq composite index fell 10.38, or 0.7 percent, to 1,499.53, and the Standard & Poor's 500 index dropped 6.42, or 0.7 percent, to 932.70.

Even with aid from other nations, "this is still going to be a long-term, painful workout, and the implications for earnings of U.S. companies are just beginning to be seen," said Wayne Nordberg, a money manager and partner at Lord, Abbett & Co. in New York, which oversees $26 billion.

Traders and investors attached little significance to yesterday's ups and downs. Many investors were at home celebrating the Christmas holiday, and many mutual funds are waiting until 1998 to place new bets.

"Right now, this is a trader's market," Nordberg said.

Seven stocks fell for every six that rose, in trading of 266 million shares on the New York Stock Exchange.

The United States, Japan and other nations and the International Monetary Fund will speed $10 billion in new loans to South Korea, a move aimed to encourage foreign banks to roll over their loans to Korean borrowers.

While concerns about South Korea's economic crisis helped knock 7 percent off the Dow since August, the stock market this year has beat almost every analyst's expectations.

The Dow is up 19 percent in 1997, while the Nasdaq has gained 16 percent and the S&P has soared 26 percent.

Roadway Express Inc., the fast-growing trucking company, has been one of the laggards. It fell $3.69 to $21.38 after the trucking company said it expects "only modest improvement" in fourth-quarter earnings from a year ago as it spends more to keep up with demand for its shipping services. The stock is up 10 percent in 1997.

Merrill Lynch & Co. fell $1.38 to $67.19. It is among 30 brokerage firms that agreed to pay $910 million to settle an investor class-action lawsuit alleging that they colluded to fix prices on the Nasdaq stock market, said an attorney for the plaintiffs.

Among other companies that participated in the settlement, Travelers Group Inc. fell 94 cents to $51.50; Morgan Stanley, Dean Witter, Discover & Co. lost $1.50 to $52.25; and Lehman Brothers Holdings Inc. dropped 63 cents to $47.75.

Disney declined $2.50 to $95. Among others dragging down the Dow, Merck & Co. fell $3.19 to $101.25, J. P Morgan & Co. lost $1.13 to $110.75 and Goodyear Tire & Rubber Co. lost 88 cents to $61.31.

Microsoft Corp. fell to a six-month low amid concern that the software publisher's battle with the U.S. Department of Justice will pinch profits. In a report this week, Goldman, Sachs & Co. foresees "a cloud over the stock over the next several months." Microsoft fell $4.38 to $118.94, its sixth straight decline.

In Asia, the South Korean KOSPI index of 775 companies fell 4 percent. Hong Kong's Hang Seng index fell 0.3 percent, while Japan's Nikkei 225 index gained 0.9 percent. In Europe, Britain's FT-SE 100 index fell 0.7 percent, France's CAC 40 rose 0.6 percent and Germany's DAX index rose 0.2 percent.

"Our markets are going to be moving back and forth with any news that's coming out of Asia," said Mike McEneaney, head of equity trading at First Albany Corp.

Pub Date: 12/25/97

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