Computer stocks help lead market downward Profit worries hit Intel, Dell, Compaq

Dow down 39.11, Nasdaq off 10.76

May 22, 1998|By BLOOMBERG NEWS

NEW YORK -- U.S. stocks fell yesterday, as Intel Corp. and other computer-related shares slumped on concern that profits will suffer this year amid stifling competition. Pfizer Inc. led a drop in drug stocks.

Intel, Dell Computer Corp. and Compaq Computer Corp. slid again amid signs that the industry overproduced personal computers and semiconductors at the year's outset. As a result, companies are forced to cut prices.

The Dow Jones industrial average fell 39.11 to 9,132.37, a day after rallying 116.83 points. The Standard & Poor's 500 index slid 4.42 to 1,114.64. The Nasdaq composite index, heavy on computer shares, dropped 10.76 to 1,820.99.

Pfizer led the S&P 500's decline, dropping $3.6875 to $109.125. The drugmaker reiterated its warning to paramedics and emergency room physicians not to treat heart patients on its impotence pill Viagra with nitrates. Viagra's label already contains the warning.

Seagram Co. was the S&P 500's biggest percentage gainer. The owner of Universal Studios rallied $3.75 to $44.75 after agreeing to buy PolyGram NV, the largest music company, for $10.6 billion. Seagram said it would spin off its Tropicana Products Inc. juice unit in an initial public offering that it expects will generate as much as $4 billion.

Among other broad market indexes, the Russell 2,000 index of small stocks slid 1.35 to 467.19; the Wilshire 5,000 index lost 43.39 to 10,544.66; the American Stock Exchange composite index added 0.14 to 732.36; and the S&P 400 midcap index lost 0.54 to 366.43.

The Bloomberg Maryland index, which tracks the top 100 stocks in Maryland by market valuation, lost 1.25 to 235.63.

Some five stocks fell for every four that rose on the New York Stock Exchange, where 551 million shares changed hands, down from 586 million yesterday. Many investors are getting an early start on the Memorial Day holiday. U.S. financial markets will be closed Monday.

A rally in auto and retailer stocks helped keep the losses from widening. Low unemployment and low borrowing costs are giving consumers confidence to spend more money, helping sales at companies such as General Motors Corp. and Wal-Mart Stores Inc., analysts said.

GM gained 93.75 cents to $74.3125; Wal-Mart rose 87.5 cents to $55.75; and J.C. Penney Co. rose $1.25 to $72.1875.

Ford Motor Co. jumped $1.875 to $51.125 after the automaker said it will report higher second-quarter earnings than analysts expected and disclosed the profits of its parts-making unit.

Intel, the ninth biggest stock in the United States, fell $2.875 to $74.125 and is down 13 percent since May 13. The company told investors in mid-April that it expected sales in the quarter ended June 30 to be "slightly down" from the first quarter's $6 billion.

Dell Computer fell for a second day, losing $4.6875 to $87.0625 after reporting that the average selling price for its personal computer fell more than expected during the latest three months, a sign there are too many computers for sale and too few buyers.

Manugistics Group Inc. tumbled $8.875 to $47.875 after BT Alex. Brown analyst Christopher Mortenson warned that the manufacturing software maker may not meet analysts' expectations in its fiscal first quarter. Manugistics officials confirmed the prediction after the market closed.

Hewlett-Packard Co. and National Semiconductor Corp. said earlier this month, that profits would fall short of estimates. Analog Devices Inc.'s shares tumbled 18 percent yesterday after the integrated-circuit maker reported lower-than-expected profit for the second quarter.

Analog Devices fell 75 cents to $26.875 and Hewlett-Packard fell $1 to $64.875. National Semiconductor, whose stock is down 37 percent this year, gained 25 cents to $16.50.

Texas Instruments Inc. fell $1.25 to $55.0625; PeopleSoft Corp. slumped $1.50 to $44.375; and Electronic Arts Inc. dropped $1.7513 to $45.6875. Compaq Computer fell $1.0625 to $28.50.

Pub Date: 5/22/98

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