Stocks continue slide Dow off 61.28

Greenspan's remarks add to profit concerns

Nasdaq down 9.39

July 23, 1998|By BLOOMBERG NEWS

NEW YORK -- U.S. stocks retreated for a third day yesterday, as Computer Associates International Inc. and Hewlett-Packard Co. warned that Asia's slump will slow earnings growth.

Federal Reserve Chairman Alan Greenspan added to the gloom, suggesting the Fed will raise borrowing costs if the U.S. economy doesn't slow.

The Dow Jones industrial average fell 61.28 to 9,128.91, bringing its decline this week to 2.2 percent. The Standard & Poor's 500 index fell 0.99 to 1,164.08, down 1.9 percent at midweek. The Nasdaq composite index dropped 9.39 to 1,969.75, after ending a nine-day record streak Tuesday.

Computer Associates plunged, tumbling $17.75 to $39.25, erasing $10 billion in market value. The software maker reported a 25 percent increase in profit before a charge, but said many companies are deferring purchases to fix their Year 2000 bug problems. It also warned that Asia's economic slump will slow revenue and earnings growth in coming quarters.

Still, several technology companies with extensive Asian interests rose. Microsoft Corp., the No. 1 software company, rallied $3.9375 to $116.75, extending its gains this year to 81 percent. Intel Corp., the No. 1 semiconductor company, rose 75 cents to $82.375. It's up 25 percent since June 3, though still below its all-time high of 100.50 set last Aug. 20.

Among other broad indexes, the Russell 2,000 index of small capitalization stocks fell 5.21 to 450.93; the Wilshire 5,000 index lost 46.54 to 10,883.25; the American Stock Exchange composite index slipped .93 to 733.03; and the S&P 400 midcap index slid 3.51 to 364.94.

The Sun-Bloomberg Maryland index of 100 stocks lost 1.80 to 232.80.

Nineteen stocks fell for every 10 that rose on the New York Stock Exchange in trading of 741 million shares, the fourth-busiest session this year.

Even after this week's declines, the S&P is up 20 percent this year, the Nasdaq is 25 percent higher and the Dow has gained 15 percent.

Hewlett-Packard fell $6.4375 to $55.375 on the New York Stock Exchange, after warning late Tuesday that its quarterly profit won't meet expectations as the No. 3 computer maker struggles with slowing sales of personal computers and printers, especially in Asia. It closed Tuesday on the NYSE at $61.8125, then fell in composite trading.

Dell Computer Corp., which sent computer shares tumbling on Tuesday with a comment about falling computer prices, fell for a second day to finish down $1.4375 to $109.4375.

PeopleSoft Inc. fell for a third day, down $3.875 to $42.375, amid concern that revenue growth may slow.

Kulicke & Soffa Industries Inc. dropped $1 to $14.6875 after the chip-making equipment company said it lost 13 cents a share, 4 cents more than expected.

Walt Disney & Co. fell 56.25 cents to $37.1875 after quarterly profit fell for the first time since the second quarter of 1996, hurt by weak film and video sales. Disney reported third-quarter profit of 20 cents a share, a penny short of forecasts.

Oakwood Homes Corp. tumbled $10.0625 to $20.9375 after the maker of manufactured homes surprised investors late yesterday by taking charges to write down the value of mortgage securities.

United Technologies Corp., one of the 30 Dow industrials, rose $2.0625 to $96.3125 after it reported earnings of $1.44 a diluted share, 6 cents better than forecast. Higher sales at its Pratt & Whitney jet-engine and Carrier air-conditioning units offset declines in other businesses. The stock has risen 13 percent in six weeks.

Analysts who follow the companies in the S&P 500 expect them to post operating earnings growth of 7.5 percent this year and 17.9 percent in 1999, according to First Call Corp.

Earnings growth for the companies in the small-cap Russell 2,000 index, by contrast, could top 20 percent next year, some investors said. Inc. fell $1.9375 to $134.

Pub Date: 7/23/98

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