Stocks fall with Intel leading the way Dow industrials lose 87 points, to 8,803, as early gain melts away

Wall Street

June 04, 1998|By BLOOMBERG NEWS

NEW YORK -- U.S. stocks fell yesterday in a late-day slump led by Intel Corp., on concern that earnings of the world's biggest chip maker, a proxy for the computer industry, will be disappointing.

Intel slid $3.3125 to $65.9375, dragging the entire computer group down from earlier gains, after Hambrecht & Quist Group analyst Robert Chaplinsky cut his estimates for the company's earnings, citing a slowdown in European sales and reduced demand from computer companies.

For investors, the move was more evidence that, even though the economy is on a roll, stock prices in general may be too high relative to this year's earnings prospects.

The Dow Jones industrial average fell 87.44 to 8,803.80, erasing a 37-point gain. A wave of computer-guided sell orders steepened the decline.

The Standard & Poor's 500 index slid 10.49 to 1,082.73. The Nasdaq composite index, dominated by computer-related stocks, tumbled 19.48 to 1,742.31.

Among other broad market indexes, the Russell 2,000 index of small capitalization stocks slipped 0.54 to 449.16; the Wilshire 5,000 index lost 75.20 to 10,225.57; the American Stock Exchange composite index fell 1.82 to 704.48; and the S&P 400 midcap index slid 1.58 to 353.69.

The Bloomberg Maryland index, which tracks the top 100 stocks in Maryland by market valuation, rose 0.18 to 227.68.

Declining stocks led advancers by an 8-to-7 ratio on the New York Stock Exchange. Volume totaled 584.5 million shares.

Intel closed yesterday at its lowest price since April 15, 1997. It has lost one-third of its value since setting a record Aug. 20.

The S&P 500 is up 12 percent for the year and the Nasdaq composite is up 11 percent. Still, the S&P has fallen 4.2 percent from its high and the Nasdaq is down 9.1 percent. Both peaked April 22.

Ciena Corp. rallied $4.1875 to $61.75 after agreeing to be bought by Tellabs Inc., which fell $2.0625 to $63.8125.

DSC Communications Corp., another communications equipment maker, rose 87.5 cents to $19.6875 after Brown Brothers Harriman & Co. analyst Robert Wilkes said DSC might be sold as Chief Executive James Donald nears retirement.

On Tuesday, Ciena rose $6.1875 to $57.5625, surging $3 in the last 30 minutes of trading -- a sign that some investors may have known the transaction was coming.

Other phone equipment makers rose for a second day after Sprint Corp. said it plans to build a new high-speed network for voice, fax and Internet traffic. 3Com Corp. rose $1 to $25; Ascend Communications Inc. rose 43.75 cents to $41.9375; and Bay Networks Inc. gained 12.5 cents to $27.9375.

Airline stocks rallied after an analyst at Merrill Lynch & Co. made positive comments about Delta Airlines Corp. Delta gained $3.8125 to $116.625; Southwest Airlines Co. rose 81.25 cents to $27.4375; and UAL Corp., parent of United Airlines, jumped $1.75 to $77.8125.

The gains might be short-lived. After the market closed, Northwest Airlines Corp. warned that its second-quarter profit will be "significantly below" last year's second quarter. Northwest shares fell 37.5 cents to $42.625,

Ford Motor Co. fell $1.375 to $55.625 after saying it would build 3.4 percent fewer cars and trucks in North America in the third quarter, year-over-year. General Motors Corp., though, rose $2.125 to $75.125 after reporting a 12 percent jump in U.S. sales during May.

AT&T Corp. gained 93.75 cents to $59.625 after the No. 1 long-distance company said it's a year ahead of schedule in cutting jobs. The company said 14,000 managers will take voluntary retirement, more than expected. The company also reaffirmed that it expects to earn $3.25 to $3.35 a share this year, even though it will take a bigger-than-expected charge of more than $1.2 billion to pay for the early retirements.

Pub Date: 6/04/98

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