Stocks fall again as Dow sheds 81 points Banks and autos weak

Merrill Lynch downgrade sends Intel lower

August 21, 1998|By BLOOMBERG NEWS

NEW YORK -- U.S. stocks fell yesterday for a second day, as earnings concerns swept through banks, computer-chip makers and auto companies.

Tumbling Latin American markets and threats of currency devaluations hurt bank stocks and shares of Ford Motor Co. and General Motors Corp.

Intel Corp. dropped after Merrill Lynch & Co. analyst Thomas Kurlak cut his outlook for the world's biggest semiconductor company, dragging down its rivals.

The Dow Jones industrial average fell 81.87 to 8,611.41. The Standard & Poor's 500 index lost 6.46 to 1,091.60, and the Nasdaq composite index, dominated by large computer-related companies, fell 10.24 to 1,832.45.

Among other broad indexes, the Russell 2,000 index of small capitalization stocks shed 4.11 to 401.73; the Wilshire 5,000 index dropped 69.50 to 10,113.03; the American Stock Exchange composite index fell 1.99 to 663.60; and the S&P 400 midcap index lost 3.18 to 332.59.

The Sun-Bloomberg Maryland index, which tracks the top 100 Maryland stocks by market valuation, slid 1.18 to 204.76.

Declining issues led advancers by almost a 2-to-1 ratio on the New York Stock Exchange. Volume on the Big Board was 616 million shares, below the average of 632 million shares over the last three months.

Mexico's benchmark Bolsa index lost 2.9 percent; Argentina's Merval index tumbled 6.1 percent; and Brazil's Bovespa index slumped 6.4 percent, helping to trigger the fall in U.S. bank stocks, along with a 4 percent fall of the Russian Trading System index.

Venezuelan bonds fell 18 percent; Argentine bonds lost 4 percent; and Brazilian bonds lost 5.5 percent. Venezuela led the declines on concern that the country may be forced to devalue the bolivar to cover its mounting budget deficit.

J. P. Morgan & Co. shares lost $3.6875 to $122.8125; Citicorp fell $4.9375 to $139.0625; Chase Manhattan Corp. dropped $2.50 to $65.375; and BankBoston Corp. fell $1.25 to $44.375.

General Motors Corp. lost $2.0625 to $66.50, and Ford Motor Co. dropped $2.125 to $48.875. Both companies have big operations in Latin America.

Intel fell $3.5625 to $86. Merrill's Kurlak cut his long-term rating on Intel to "neutral" from "accumulate," citing falling prices and ample supply of high-end computer chips. He correctly anticipated a decline in Intel shares a year ago, when the stock peaked at $100.50.

Kurlak also downgraded Texas Instruments Inc. to long-term "accumulate" from long-term "buy." TI fell $1.625 to $58.875.

National Semiconductor Corp. lost $2.0625 to $11.5625 after warning that its losses will widen in coming quarters because of weak demand for chips that go into computers and mobile phones. The company lost 42 cents a share before charges in the fourth quarter ended May 31.

LSI Corp., which this week also reported disappointing earnings news, fell 68.75 cents to $15.125, bringing its drop to 20 percent in three days. Applied Materials Corp., the world's largest maker equipment used to produce computer chips, slid $1.4375 to $31.25.

Most insurance stocks gained after American International Group Inc. agreed to acquire SunAmerica Inc. at $74.81 a share, a premium of 16 percent to yesterday's closing price. SunAmerica soared $7.125 to $71.375. AIG fell $7.125 to $87.50.

Allmerica Financial Corp. gained $3.1875 to $72.125; Marsh & McLennan Cos., an insurance broker and owner of Putnam Investments Inc., rose $1 to $58.0625; Lincoln National Corp. gained $1.125 to $93.6875; and American General Corp. rose 25 cents to $67.875.

Lycos Inc., the fourth most-popular Internet search service, added $3.6875 to $73.0625 after it reported a smaller-than-expected fourth-quarter loss of 9 cents a share in the quarter ended July 31, compared with a loss of 4 cents in the year-earlier period. Analysts expected Lycos to lose 13 cents a share.

Dominick's Supermarkets Inc. soared $6.375 to $45.875 after the retail chain said it hired an investment bank to help it evaluate strategic alternatives.

Pub Date: 8/21/98

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