Stocks fall as profit outlook falters Nasdaq's record streak halts at 9 days

Dow index loses 105 points to 9190

July 22, 1998|By BLOOMBERG NEWS

NEW YORK -- U.S. stocks fell yesterday, led by Merck & Co., after the biggest U.S. drug maker warned that 1998 profit would be at the low range of analysts' estimates.

The Nasdaq composite index suffered its biggest decline in seven weeks, ending a nine-day record streak, as Dell Computer Corp. slumped.

Stocks weren't helped by Federal Reserve Chairman Alan Greenspan, who signaled in congressional testimony that the central bank is unlikely to lower interest rates.

The Dow Jones industrial average fell 105.56 points, or 1.1 percent, to 9,190.19, its biggest drop since June 15. The Standard & Poor's 500 index fell 19.03, or 1.6 percent, to 1,165.07.

The Nasdaq tumbled 35.11, or 1.7 percent, to 1,979.14, hurt by a late-day drop in Dell Computer, which finished down $5.125 to $110.875.

Dell slid during a conference call with company executives and investors, sponsored by PaineWebber Inc. Tom Meredith, the company's chief financial officer, said average selling prices for personal computers fell during the past three months.

Among other broad indexes, the Russell 2,000 index of small capitalization stocks slid 5.78 to 456.14; the Wilshire 5,000 index dropped 161.49 to 10,929.79; the American Stock Exchange composite index lost 4.68 to 733.96; and the S&P 400 midcap index fell 6.69 to 368.45.

The Sun-Bloomberg Maryland index, which tracks the top 100 Maryland stocks by market valuation, slipped 1.38 to 234.60.

Seven stocks fell for every three that rose on the New York Stock Exchange. About 659 million shares changed hands, above the three-month daily average of 606 million.

Other computer-related shares fell with Dell, reversing early gains. Despite applause from analysts, Microsoft Corp. lost $4.1875 to $112.8125, after Chairman Bill Gates promoted Executive Vice President Steve Ballmer to President.

Internet stocks turned around after setting records during the day. Yahoo! Inc. lost $7.3125 to $189, and America Online Inc. lost $6.5625 to $129.5625.

After the NYSE closed, Hewlett-Packard Co., one of the 30 Dow industrials, said profit and revenue for the third quarter, which ends July 31, is likely to be below analysts' expectations because of weak sales in struggling Asian-Pacific countries.

Walt Disney Co. also cited weak demand in Asia as it reported fiscal third-quarter earnings of 20 cents per diluted share, missing the average estimate by a penny.

Merck dropped $9.8125 to $128.5625 after telling analysts that earnings for the year would be about $4.28 per share, the low end of their projections.

Pfizer Inc. lost $3.8125 to $114.125, and Schering-Plough Corp. dropped $3.1875 to $99.75. Bristol-Myers Squibb Co. fell $5.875 to $119.9375, after reporting earnings that matched expectations.

International Business Machines Corp., the biggest gainer in the Dow, rose $6.125 to $128.125, even as other computer shares declined. IBM reported flat earnings after markets closed Monday but was upgraded yesterday by analysts at Morgan Stanley Dean Witter & Co., Merrill Lynch and Prudential Securities.

Texas Instruments Inc. rose $2 to $60.9375. The world's largest maker of semiconductors for mobile phones said second-quarter profit fell by a third and reported earnings of 35 cents a share, 2 cents below forecasts. The shortfall came from slumping prices for memory chips, a business it is selling. Sales of digital signal processors, which go into everything from mobile phones to cars, rose 25 percent.

Carnival Corp. fell 87.5 cents to $40.625 after the world's largest cruise operator said yesterday's fire aboard its MS Ecstasy will shave about 1 cent a share from earnings for the third quarter, which ends Aug. 31. The biggest financial repercussion for Carnival will be the revenue lost as the ship sits in dock during the busy summer cruising season.

Citicorp fell $8.875 to $172, after reporting net income that was a penny ahead of the average estimate, as some analysts said Citicorp used one-time gains from its investments to meet estimates.

Banc One Corp. slumped $5.125 to $55.8125 after beating earnings estimates by 2 cents.

Credit Suisse First Boston cut its investment rating on the stock, saying the bank had poor expense control and took excessive gains from the sale of securities.

Wells Fargo & Co. fell $10.375 to $369.625 after reporting second-quarter earnings of $3.87 per diluted share, 9 cents better than estimates.

Pub Date: 7/22/98

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