IBM leads drop amid concerns about Asia Computer-maker's shares fall $2.1875 as Dow declines 16.45 points

June 19, 1998|By BLOOMBERG NEWS

NEW YORK -- U.S. stocks declined yesterday, led by International Business Machines Corp., amid skepticism that Asia is on a quick road to economic recovery.

The Dow Jones industrial average fell 16.45 to 8,813.01. The Standard & Poor's 500 index slid 0.73 to 1,106.37, and the Nasdaq composite index lost 3.70 to 1,772.70.

Among other broad market indexes, the Russell 2,000 index of small capitalization stocks fell 4.29 to 439.79; the Wilshire 5,000 index dropped 23.53 to 10,363.45; the American Stock Exchange composite index lost 3.93 to 691.34; and the S&P 400 midcap index fell 2.66 to 350.26.

The Bloomberg Maryland index, which tracks the top 100 stocks in Maryland by market valuation, rose 0.63 to 228.72.

Declining stocks led advancing issues on the New York Stock Exchange by a 19-to-11 ratio.

Volume on the New York Stock Exchange totaled 591 million shares, down from 722 million Wednesday and below the daily average of 608 million shares for the past three months.

IBM led the Dow's decline, falling $2.1875 to $108.8125. The world's biggest computer company had 13 percent of its revenue from Japan and 5 percent from the rest of Asia in the first quarter, said Goldman, Sachs & Co. analyst Laura Conigliaro, who lowered her rating and earnings estimates for the company.

Conigliaro also cut her earnings estimates on Hewlett-Packard Co., which fell $1.8125 to $56.6875, and Sun Microsystems Inc., down $1.50 to $42.125. She said the yen will continue to be weak.

The dollar rose 1.10 yen to 137.85. On Wednesday, the Japanese currency rose almost 5 percent against the dollar.

Philip Morris Cos., one of the 30 Dow industrials, rose $1.125 to $39.5625 yesterday in the wake of Senate rejection of a tobacco bill that would have raised federal cigarette taxes more than fourfold in less than five years, which could have led to declines in smoking.

RJR Nabisco Holdings Corp. dropped 75 cents to $25.0625, and Loews Corp. fell 43.75 cents to $89.625.

McDonald's Corp., the world's largest fast-food restaurant chain, rose $2.4375 to $67.875 on signs that its domestic business is improving. McDonald's posted a "double-digit" percentage increase in same-store U.S. sales for May, Morgan Stanley Dean Witter & Co. analyst Howard Penney said.

Drug stocks kept the S&P 500 from falling as much as other indexes as investors sought companies that will report steady earnings regardless of Asia's economic slowdown. Pfizer Inc. rose $2.25 to $114.50; Merck & Co. gained $1.125 to $128.875; Abbott Laboratories rose 93.75 cents to $40.875; and Schering-Plough Corp. rose $1.625 to $92.25.

Lehman Brothers Holdings Inc. rose 50 cents to $76 after reaching $77.6875. The fourth-largest U.S. investment bank said it earned $2.12 a share in the second quarter, beating analysts' estimate of $1.69 a share from a First Call Corp. survey.

Morgan Stanley Dean Witter & Co. fell 18.75 cents to $78.75 after climbing to $80.1875. The largest U.S. securities firm based on equity capital said it earned $1.37 a share, beating analysts' estimates of $1.18 a share.

Lehman is up 49 percent for the year and Morgan Stanley is up 33 percent, putting them both ahead of the market.

With the end of the second quarter approaching, the parade of companies warning about disappointing earnings kept pace.

Andrew Corp. fell $1.375 to $18.25 after the maker of cable and antennas for the telecommunications industry said earnings this quarter will fall as much as 10 percent below the year-earlier period. The company cited slow U.S. and Asian sales.

Stratus Computer Inc. tumbled $7.75 to $24.75 after the seller of computers and software that help telephone companies manage networks said it will lose money this quarter. Analysts expected earnings of 73 cents a share.

Pub Date: 6/19/98

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