New high for Nasdaq as Dow, S&P drop Intel to buy back 100 million shares

price jumps $2.125

March 27, 1998|By BLOOMBERG NEWS

NEW YORK -- The Dow Jones industrial average and Standard & Poor's 500 index fell yesterday on continued concern that corporate earnings don't justify record share prices.

Sensormatic Electronics Corp., the world's largest maker of electronic security systems, declined after warning that quarterly earnings will fall short because of slow growth in Europe and Asia.

The Dow fell 25.91 to 8,846.89. The S&P 500 fell 1.12 to 1,100.80. The Nasdaq composite index, heavy with computer industry shares, rose 4.03 to a record 1,828.54, led by Intel Corp.

Among other broad market indexes, the Russell 2,000 index of small capitalization stocks rose 0.67 to 477.81; the American Stock Exchange composite index gained 2.50 to 739.39; and the S&P 400 mid-cap index added 0.48 to 368.99, all records.

The Wilshire 5,000 index lost 5.58 to 10,482.20, and the NYSE composite index fell 0.55 to 572.21.

The Bloomberg Maryland index, which tracks the top 100 stocks in Maryland by market valuation, rose 1.02 to 236.76.

About eight stocks fell for every seven that rose on the New York Stock Exchange in trading of 606.7 million shares, down from 664.6 million yesterday.

Intel rose $2.125 to $78.1875 after saying it would buy back 100 million shares for up to $7.8 billion. The world's largest chip maker also said Craig Barrett, the company's president and chief operating officer, would succeed Andrew Grove as chief executive.

Economic news driving the market came from the Commerce Department, which said profits of all corporations fell 2.3 percent from the third quarter to the fourth, the first decline in more than a year.

A drop in earnings from international affiliates of U.S. companies led the decline, hurt by economic chaos in Asia and the strength of the U.S. dollar against Pacific Rim currencies, the government said.

Sensormatic Electronics fell 37.5 cents to $16.6875 after it said it expects fiscal third-quarter earnings and sales to be "slightly lower" than analysts' estimates. Sensormatic sells plastic security tags for clothing at retail stores, as well as video surveillance and other products.

Komag Inc. fell 56.25 cents to $15.0625 after the maker of thin-film disks for computer disk drives said it expects a first-quarter loss that will "significantly" exceed forecasts."

Morgan Stanley Dean Witter & Co. fell $2.5625 to $73.125, even after its earnings beat estimates for the fiscal first quarter. The biggest U.S. securities firm said net income rose to $1.10 a diluted share, better than the $1.06 forecast by analysts.

Philip Morris Cos. fell $1.25 to $42.625. RJR Nabisco Holdings Corp., which makes Camel cigarettes, lost 68.75 cents to $32.9375.

Chevron Corp. rose 43.75 cents to $84.3125 and Mobil Corp. rose 87.5 cents to $78.50. Rowan Cos., an oil driller, jumped $1.1875 to $31.125.

Delta Air Lines Inc. slumped $2.25 to $117.5625 and US Airways Group Inc. fell $1.125 to $71.4375.

Echlin Corp. rose $3 to $51.9375 after the Connecticut House of Representatives defeated a bill backed by the auto-parts maker that would have strengthened its efforts to block a takeover by rival auto-parts maker SPX Corp. SPX made a hostile $3 billion offer for the company last month.

American Express Co., one of the 30 Dow industrials, fell $2 to $93.125 after proposing to give stock to more employees. It plans to issue 35 million new shares.

Sumitomo Bank of California fell $12.25 to $38.25 after Zions Bancorp said it will buy the bank for $546 million. Sumitomo shareholders are to get $38.25 a share.

As in the U.S., European investors are concerned that stock prices are higher than justified by prospects for corporate profits. Benchmark indexes fell more than 1 percent in the United Kingdom, Germany, Belgium, Sweden and Spain, after reaching records this month on optimism for low interest rates.

Pub Date: 3/27/98

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