Stocks fall on concern for gains in quarter Further decline likely after late warning by Intel on lower earnings

March 05, 1998|By BLOOMBERG NEWS

NEW YORK -- U.S. stocks, led by Walt Disney Co., fell from records yesterday on concern that first-quarter earnings will fall short of forecasts.

Stocks could extend their losses today. Intel Corp., the world's largest computer-chip maker, warned after the market's close that its first-quarter earnings will be below expectations because of fewer orders from personal computer makers.

The warning sent Standard & Poor's 500 index futures tumbling.

The Dow Jones industrial average fell 45.59 to 8,539.24 yesterday, after setting five straight records. Disney fell $3.125 to $106.875 after analysts cut earnings estimates for the entertainment company. An 11-point drop in S&P 500 futures after Intel's warning indicated the Dow may open as much as 95 points lower today.

The S&P 500 index lost 4.69 to 1,047.33 yesterday. The Nasdaq composite index rose 2.56 to 1,759.70, faring better than the other market measures as semiconductor makers rebounded from three days of losses. After yesterday's warning from Intel, the chip makers' rally may prove a brief respite.

Among other broad market indexes, the Russell 2,000 index of small capitalization stocks slid 0.29 to 462.13; the Wilshire 5,000 index of stocks on the New York, American and Nasdaq exchanges lost 29.70 to 9,995.45; the American Stock Exchange composite index gained 0.21 to 709.18; and the S&P 400 midcap index slipped 0.65 to 353.88.

About 1,738 stocks fell and 1,231 rose on the New York Stock Exchange. More than 644 million shares changed hands, above the three-month daily average of 595 million.

American Home Products Corp. fell $2.8125 to $91.75, dragging other drugmakers down with it, after safety concerns caused it to withdraw its application for federal approval of its new hypertension drug. Merck & Co. fell $1.9375 to $124.875.

After the market closed, Intel said it expects first-quarter revenue to fall 10 percent from the fourth quarter. The shares tumbled 12 percent to $77 in trading after the close of the regular Nasdaq trading session. They rose $1.25 to $86.4375 before the announcement, reversing four days of losses.

Other U.S. computer chip makers rose yesterday after the U.S. Commerce Department made a preliminary ruling against two South Korean memory-chip makers, LG Semiconductor Co. and Hyundai Electronics Industries Co., for undercutting their American competition by selling chips below cost to gain market share.

Micron Technology Inc. climbed $2.125 to $35.75, though it fell 62.5 cents to $33 in electronic trading after Intel's warning. Texas Instruments Inc. rose $1.9375 to $55.

Computer makers also regained ground. Dell Computer Corp., which fell more than 3 percent on each of the two previous days, soared $7.9375 to $139.0625.

Microsoft Corp. fell $2.1875 to $82.3125, a day after Chairman and Chief Executive Bill Gates testified at a Senate hearing Tuesday that the world's largest software company somewhat restricts the ability of its Internet partners to use rival Netscape Communications Corp.

Fed Chairman Alan Greenspan said yesterday that the U.S. economy still has considerable momentum, although Asia's slowdown is keeping U.S. prices in check. He also said consumer spending is likely to increase.

Auto companies were among the day's best performers. General Motors Corp. rose $2.3125 to $72.875 and Chrysler Corp. rose 87.5 cents to $40.25. Ford Motor Co. fell 75 cents to $58.1875.

Kmart Corp. rose $1.3125 to $14.75 after the discount retailer reported profit before a charge of 50 cents a diluted share for the fourth quarter ended Jan. 31.

Money Store Inc. rose $4.25 to $31.75 after First Union Corp. said it agreed to buy the home equity lender for $2.1 billion in stock, making the sixth largest U.S. bank the leader in home-equity lending.

Pub Date: 3/05/98

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