Stocks fall, led by banks with Asia ties J.P. Morgan drops $3.3125 as Dow, other indexes slide

Wall Street

August 11, 1998|By BLOOMBERG NEWS

NEW YORK -- U.S. stocks fell yesterday as investors fretted that no end is in sight for Asia's recession. J. P. Morgan & Co. and other banks that do business internationally led the decline.

The Dow Jones industrial average fell 23.17 to 8,574.85. The Standard & Poor's 500 index dropped 6.31 to 1,083.14, its fifth decline in seven days and the Nasdaq composite index declined 7.56 to 1,839.21.

Among other broad indexes, the Russell 2,000 index of small capitalization stocks fell 4.16 to 411.64; the Wilshire 5,000 index slid 63.32 to 10,102.60; the American Stock Exchange composite index slipped 4.27 to 679.80; and the S&P 400 midcap index lost 3.99 to 336.85.

The Sun-Bloomberg Maryland index, which tracks the top 100 Maryland stocks by market valuation, fell 0.86 to 210.46.

Stocks would have fallen more if not for a rise in drug-makers such as Merck & Co., which made 75 percent of its sales in the U.S. last year. Merck gained $2.25 to $126.125.

Two stocks fell for every one that rose on the New York Stock Exchange. About 574 million shares changed hands, below the three-month daily average of 622 million.

Securities analysts originally forecast profit growth of 15.1 percent for the third quarter. Now they say earnings will be just 6.4 percent above the same period a year ago, according to First Call Corp. In the third quarter of 1997, profit grew 12 percent.

J. P. Morgan fell $3.3125 to $120.1875. About 10 percent of the bank's earnings came from the Asia-Pacific region last year.

Chase Manhattan Corp. fell 68.75 cents to $68.50; Bankers Trust Corp. dropped $3.5625 to $101.375; and BankAmerica Corp. declined $1.25 to $83.3125.

Minnesota Mining & Manufacturing Co. slid $1.8125 to $76.4375. The company gets a quarter of its earnings from Pacific Asia, and has failed to meet its profit goals because of weak currencies there.

Drug-makers gained for the third time in four days on speculation that they will be sound investments even as Asia slumps. Warner-Lambert Co. rose $2 to $73.625 and Schering-Plough Corp. climbed $1.5625 to $94.5625.

McDonald's Corp. rose $2.3125 to $63.4375. The world's biggest fast-food restaurant chain said it expects its per-share earnings to grow 10-15 percent annually for the next five years, excluding the effects of currency exchange rates.

Livent Inc. didn't open for trading, after the theater producer said it expects to restate financial results since 1986. The company said it found "serious irregularities" and suspended founder and Vice Chairman Garth Drabinsky.

Netscape Communications Corp. soared $6.125 to $31.1875 on optimism that Barry Ariko, its new chief operating officer who joined the Internet software maker from Oracle Corp., will boost sales and partnerships. Netscape shares have lost 32 percent in the past year amid fierce competition from Microsoft Corp.

About 17.62 million Netscape shares changed hands yesterday, making the company the second-most active issue on U.S. markets, behind Electronic Data Systems Corp., which traded 18 million shares after the computer services company said Les Alberthal, its chairman and chief executive, is retiring. EDS closed down 81.25 cents at $41.

Transamerica Corp. gained 4.0625 to 118.9375 on speculation the life insurer could be bought. David King, manager of the Putnam New Value fund, told Barron's that a buyer might pay $160 a share for Transamerica because its assets, including its San Francisco headquarters, are undervalued.

Rio Hotel & Casino Inc. of Nevada gained 62.5 cents to $19.50 after Harrah's Entertainment Inc., a casino gaming operator, said it would buy Rio in a one-for-one stock transaction valued at $518 million. The combined company is expected to have 1999 revenue of about $2.9 billion. Harrah's rose 12.5 cents to $20.25.

Pub Date: 8/11/98

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