Disney tugs Dow to a loss of 45 points Russell 2,000 and Nasdaq both gain, however

Wall Street

July 01, 1998|By BLOOMBERG NEWS

NEW YORK -- U.S. stocks fell yesterday, on the last day of the second quarter, led by Walt Disney Co., on concern that 1998 earnings may not measure up to forecasts.

The Dow Jones industrial average fell 45.34 to 8,952.02. Disney accounted for 70 percent of the drop. Standard & Poor's 500 index fell 4.65 to 1,133.84 after setting a record Monday, and the Nasdaq composite index rose 3.66 to 1,894.74.

Stocks briefly erased their losses in midafternoon trading, reflecting some investors' optimism that a growing economy and low interest rates will boost the market in the second half.

Even after the rally failed, small shares, which have lagged behind the market all year, ended with gains.

The Russell 2,000 index rose 3.56 to 457.39. Among other broad market indexes, the Wilshire 5,000 index lost 17.93 to 10,663.62; the American Stock Exchange composite index added 0.47 to 721.28; and the S&P 400 midcap index slid 0.49 to 360.08.

The Bloomberg Maryland index, which tracks the top 100 stocks in Maryland by market valuation, gained 3.10 to 2237.18.

Advancing stocks led decliners on the New York Stock Exchange by a 17-to-13 ratio. Some 752 million shares changed hands on the Big Board, the most since Dec. 19. Volume surged in the last hour of the session, largely because of portfolio management strategies, analysts said.

Disney sank $8.125 to $105.0625, its biggest drop since Dec. 20, 1989, after analysts at six brokerages cut 1998 and 1999 earnings estimates for the entertainment company.

Prudential Securities Inc. analyst Melissa Cook cited weak sales of Disney's home videos in the United States and of its international film releases, particularly "Flubber" and "Starship Troopers."

Johnson & Johnson fell $3 to $74 after regulators said its heartburn drug may cause heart problems in some patients.

Investors continued to pile into Internet stocks in search of the companies that will benefit the most from the huge growth in the new medium. Yahoo! Inc. gained $3.0625 to $157.50, giving it a 127 percent gain for the year. Excite Inc. rallied $7.625 to $93.50 for a 212 percent gain this year.

For the quarter, the S&P 500 rose 2.9 percent, marking its 14th consecutive quarterly gain. The streak stretches back to the last quarter of 1994, when the index fell 0.74 percent.

The Dow industrials rose 1.7 percent in the quarter and the Nasdaq composite gained 3.2 percent. The Russell 2,000 fell 4.8 percent -- a reflection of the preference among investors for the large, easily traded stocks that dominate the other indexes.

This year, the Dow has climbed 13 percent, the S&P 500 has gained 17 percent, and the Nasdaq has added 21 percent.

General Motors Corp. fell $1.4375 to $66.8125 yesterday, after the world's largest automaker said the strikes crippling its North American production cost it $1.18 billion, or $1.79 a share, in the second quarter. That's more than analysts expected.

Hambrecht & Quist Group surged $6.4375 to $36.3125 on talk that Credit Suisse First Boston would offer to buy the San Francisco investment bank, traders said.

Firstar Corp. soared $4.50 to $38.1875 after the Wall Street Journal reported that Star Banc Corp. was close to a merger with Firstar. Star Banc fell 50 cents to $63.875.

Union Carbide Corp. rose $1.9375 to $53.375 on speculation that the maker of chemicals and plastics will be acquired.

General Semiconductor Inc. fell 62.5 cents to $9.875 after the company said second-quarter earnings are expected to be as much as 25 percent lower than the first quarter's as orders have slowed, reflecting economic problems in Southeast Asia. General Semiconductor makes products that protect electrical circuits against power surges.

Pub Date: 7/01/98

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