Stocks tumble, Dow falls 237 points Worst quarter in 8 years leaves blue-chip index down 0.8% for the year

Wall Street

October 01, 1998|By BLOOMBERG NEWS

NEW YORK -- U.S. stocks fell yesterday, closing the worst quarter in eight years.

Lucent Technologies Inc. and other telecommunications equipment makers led the decline, on concern that economic slowdowns abroad may prompt phone companies to cut spending.

The Dow Jones industrial average slumped 237.90, or 2.9 percent, to 7,842.62. The Standard & Poor's 500 index lost 32.01, or 3.1 percent, to 1,017.01. The Nasdaq composite index declined 40.21, or 2.3 percent, to 1,693.84.

In the past three months, the Dow average has lost 1,105 points, or 12 percent. The S&P 500 dropped 10 percent, and the Nasdaq declined 11 percent.

On July 17, the Dow average was up 18 percent for the year. At the end of August, that had turned into a 5 percent decline. The blue-chip average is now down 0.8 percent for 1998.

Among other broad indexes yesterday, the Russell 2,000 index of small-capitalization stocks lost 2.21, to 363.59; the Wilshire 5,000 index slumped 253.58, to 91,346.81; the American Stock Exchange composite index lost 7.35, to 621.00; and the S&P 400 midcap index dropped 5.989, to 307.02.

The Sun-Bloomberg Maryland index, which tracks the top 100 Maryland stocks by market valuation, fell 2.24, to 184.17.

Decliners outpaced advancers by a 2-to-1 ratio on the Big Board. While some investors and traders took yesterday off to observe Yom Kippur, 798 million shares changed hands, more than the three-month average of 715 million.

Telecommunication equipment makers fell after Northern Telecom Ltd., the No. 2 seller of phone equipment in North America, said its second-half revenue growth will be less than expected because of disappointing demand in Europe and Asia, according to analysts briefed by the company. The warning echoed a similar forecast by France's Alcatel SA.

Lucent Technologies, which said it is not undergoing a slump, fell $5.25, to $69.25. Northern Telecom Lt. fell $3.625, to $32.25, and Cisco Systems Inc. slid $2.8125, to $61.8125.

Delta Airlines Inc. tumbled $7.0625, to $97.25; US Airways Group Inc. slid $5.125, to $50.625; and AMR Corp. slipped $3.625, to $55.4375.

RJR Nabisco Holdings Corp., maker of Winston, Salem and Camel cigarettes, fell $1.5625, to $25.1875. The second largest U.S. tobacco company said declining profit from cigarette sales in Russia and other former Soviet states will push third-quarter profit well below forecasts.

Wal-Mart Stores Inc. fell $3.50, to $54.625. The world's largest retailer suffered one of the biggest declines among the stocks in the Dow average, accounting for 10.6 points of the index's decline. Home Depot Inc. dropped $1.875, to $39.50.

Healthsouth Corp. plunged $4.0625, to $10.0625, after the biggest U.S. operator of outpatient surgery centers said it may have to revise its expectations for earnings amid pricing pressure from managed health care companies. About 24.2 million Healthsouth shares traded, making the stock the most active on U.S. exchanges.

Unocal Corp. fell 50 cents, to $36.25, after the 15th largest U.S. oil company said its third-quarter profit from operations will fall below 10 cents a share, amid lower oil prices and higher exploration costs. Analysts expected the El Segundo, Calif.-based oil and natural gas producer to earn 19 cents a share.

Schlumberger Ltd. fell $1.875, to $50.625, after the world's largest oil field services company said late Tuesday that it cut about 700 jobs, or 1 percent of its work force, in June and July, and will trim more staff as falling oil prices reduce demand for its services and products.

America Online Inc. slumped $6, to $111.375. CNBC reported that Goldman Sachs & Co. traded a 1 million-share block of AOL stock early yesterday at $114 a share.

Citicorp dropped $4.8125, to $92.9375, and NationsBank Corp., which completed its merger with BankAmerica Corp. yesterday, declined $2.0625, to $53.50.

Bankers Trust Corp. fell $1.8125, to $59. A person familiar with the situation said Bankers Trust has $1 billion in exposure to hedge funds, all of it fully backed by cash and U.S. Treasury bonds.

Arch Coal Inc., the second largest U.S. coal producer, fell $2.3125, to $14.875, after warning that third-quarter earnings will be below analysts' expectations.

Pub Date: 10/01/98

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