Profit warnings send stocks downward But rebound in oil shares helps Dow close only 4 points lower

January 08, 1998|By BLOOMBERG NEWS

NEW YORK -- U.S. stocks fell as companies including Atmel Corp. warned that fourth-quarter profits will disappoint. A rebound in oil stocks from a two-day slump helped the Dow Jones industrial average pare a 129-point loss to 4 points.

The Dow closed at 7,902.27, down 3.98. The Standard & Poor's 500 index lost 2.58 to 964.00 and the Nasdaq composite index dropped 18.44 to 1,561.70.

Among other broad market indexes, the Russell 2,000 index of small capitalization stocks lost 3.31 to 429.79; the Wilshire 5,000 index, comprising stocks on the New York, American and Nasdaq stock exchanges, dropped 35.43 to 9,213.10; the American Stock Exchange composite index slid 0.74 to 674.29; and the S&P 400 midcap index slipped 2.75 to 325.78.

Atmel, which depends on Asia for 45 percent of its sales, led a retreat in computer shares.

The specialty chip maker fell $2 to $17.375, after saying some of its customers in the region couldn't find financing to buy its products.

Teledata Communications Ltd., a maker of telecommunications equipment, dropped $8.125 to $11.9375 after forecasting "moderate" growth for 1998 because of a slowdown in Southeast Asia.

Other companies also warned of earnings shortfalls, for other reasons. HCC Insurance Holdings Inc. fell $3.4375 to $16.50 after the company told analysts to trim profit estimates for 1998. Rainforest Cafe Inc. plunged $12.1875 to $18.5625 after warning of disappointing results, and was the most actively traded stock.

About three stocks fell for every two that rose on the New York Stock Exchange.

About 676 million shares changed hands on the Big Board, 16 percent above the three-month daily average.

Oil stocks rose after a two-day slide that shaved about 3 percent from the value of the S&P international oil stock index. Chevron Corp. gained $2.625 to $76.375 and Exxon Corp. jumped $1.875 to $60.875, helping spur the Dow industrials. Mobil Corp. rose $2.25 to $69.75 and Amoco Corp. added $1.875 to $83.25.

Morgan Stanley, Dean Witter, Discover & Co., the largest U.S. securities firm by equity capital, fell $1.50 to $58.50 after it reported a profit of $1.30 a share, 27 cents better than estimates. Lehman Brothers Holdings Inc., the fourth-biggest firm, fell $1.50 to $50.125 after it reported a fourth-quarter profit of $1.30 a share, topping forecasts of $1.04.

Stocks fell as the yield on the benchmark 30-year Treasury bond rose to 5.78 percent from a record low of 5.72 percent Tuesday.

Banks dropped for a second day amid concern that a three-month slide in Asian currency markets, coupled with slowing economies throughout that region, will hurt overseas profits. So far this month, bank shares have lost 4 percent, making them the tenth-worst performers of 90 groups in the S&P 500.

Yesterday, Citicorp fell 87.5 cents to $122.125; BankAmerica lost $1.50 to $67.625; BankBoston dropped $2.4375 to $92.1875; Bankers Trust New York Corp. fell $3.5625 to $108.3125 and Wells Fargo & Co. slid $6.625 to $321.375.

Centura Banks Inc. lost $1.3125 to $65.3125 although the Rocky Mount, N.C.-based bank beat analyst earnings estimates. Centura said it earned 91 cents a share in the fourth quarter, up from 72 cents a year earlier and above the 85-cent forecast.

Most Asian stocks dropped after Indonesian, Malaysian, Thai and Philippine currencies fell for a fourth day to record lows.

Hong Kong's Hang Seng index fell 5.89 percent; a 5.8 percent decline in the index triggered a global market rout in October.

Yesterday's most active stocks in U.S. trading were Oracle Corp., Rainforest Cafe, Intel Corp., Ascend Communications Inc. and Cisco Systems Inc.

Pub Date: 1/08/98

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