Stocks fall with Dow tumbling 143 points Nasdaq sinks 2.5%

Russell 2,000 and Md. index hit 1998 lows

August 01, 1998|By BLOOMBERG NEWS

NEW YORK -- U.S. stocks fell yesterday as concern that Asia's recession will hurt corporate profits overshadowed an economic report showing a growing economy with low inflation. Procter & Gamble Co. led the decline.

The Dow Jones industrial average sank 143.66, or 1.6 percent, to 8,883.29. The Standard & Poor's 500 index declined 22.28, or 2.0 percent, to 1,120.67, and the Nasdaq composite index dropped 47.23, or 2.5 percent, to 1,872.39.

Among other broad indexes, the Russell 2,000 index of small capitalization stocks fell 9.75 to 419.75, its low this year; the Wilshire 5,000 index sank 201.91 to 10,420.26; the American Stock Exchange composite index lost 7.21 to 706.26; and the S&P 400 midcap index dropped 6.69 to 345.76.

The Sun-Bloomberg Maryland index, which tracks the top 100 Maryland stocks by market valuation, lost 2.61 to 216.87, its low of the year.

Volume on the New York Stock Exchange totaled 640 million shares, 5 percent above the daily average for the past three months. Declining stocks outnumbered advancers by a ratio of to 1 on the NYSE. On all exchanges, 618 stocks sank to 52-week lows, and 94 reached 52-week highs.

Procter & Gamble Co. dropped $3.9375 to $79.6875, adding to Thursday's 5.1 percent drop. Analyst Constance M. Maneaty at Bear, Stearns & Co. lowered her investment opinion on the top U.S. consumer products company, saying earnings growth will slow in coming months amid price competition and weak demand in Asia. About half of P&G's sales occur outside the United States.

Kellogg Co. slumped $2.1875 to $33.25 after the company said second-quarter earnings fell 17 percent and warned of further declines, as the world's largest cereal maker lost sales to cheaper supermarket brands.

Ascend Communications Inc. plunged $7.3125, or 14 percent, to $44.4688 on concern that the company plans to buy Stratus Computer Inc. in an acquisition that would hurt Ascend's earnings. Stratus rose 87.5 cents to $28.875. Stratus, which makes computers that run nonstop for companies such as banks and telephone companies, rose 21 percent Wednesday on news of the possible deal, and is up for the fifth straight day.

Cyberian Outpost Inc. rose $2.50 to $20.50 in its first day of trading, after it sold 4 million shares at $18 each. The company, which sells computer hardware and software over the Internet, has yet to earn a profit.

Starbucks Corp. fell $5.625 to $41.875 on concern that sales growth is slowing for the largest U.S. seller of gourmet coffee.

Anheuser-Busch Co. rose after Merrill Lynch & Co. analyst Douglas Lane raised his rating on the world's largest brewer and on No. 3 U.S. brewer Adolph Coors Co. to "accumulate" from "neutral." The stocks should rise more than the market as investors seek steady earnings growth, Lane said. Anheuser-Busch, rose $1.1875 to $51.8125, but Coors fell 3.125 cents to $37.7188.

Cigna Corp. rose $1.3125 to $66.0625 after the health insurer said it earned $1.27 a diluted share in the second quarter, excluding gains on investments. That's above the $1.20-a-share average estimate of analysts polled by First Call Corp and above the $1.21 Cigna earned a year earlier.

For the week, the Dow industrials fell 0.6 percent, the S&P 500 lost 1.8 percent and the Nasdaq composite fell 3.0 percent. All three lost about 1 percent in July, after a rush to records petered out in the middle of the month.

The Dow is up 12 percent on the year and the Nasdaq is up 19 percent. Many investors say gains that big aren't justified by the outlook for profit growth.

With 84 percent of the S&P 500 companies having reported second-quarter earnings, operating profits are on target to rise 2.9 percent from last year's quarter, according to First Call. For the year, analysts now expect the companies in the S&P 500 to post operating earnings growth of 7.1 percent, down from the double-digit gains of recent years.

Pub Date: 8/01/98

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