Computer issues lead Nasdaq plunge Dow industrials rally from 233-point tumble to end day 58 points lower

Wall Street

October 06, 1998|By BLOOMBERG NEWS

NEW YORK -- U.S. stocks fell yesterday, led by computer shares, as finance officials from industrialized nations failed to provide a remedy for slowing world economic growth. Cisco Systems Inc. and Microsoft Corp. tumbled as the Nasdaq composite index dropped 4.85 percent.

"We're having a crisis of confidence right now," said Cummins Catherwood, a money manager at Rutherford, Brown & Catherwood Inc. in Philadelphia, which manages $570 million. "You don't know what is happening in Japan, you don't know what's happening in Asia, and earnings are coming out and everybody seems to be having problems."

The Dow Jones industrial average, led by International Business Machines Corp., closed down 58.45 at 7,726.24, after climbing back from a 233-point loss.

The Standard & Poor's 500 index lost 14.04, or 1.4 percent, to 988.56. The Nasdaq composite, dominated by computer-related shares, sank 78.29, to 1,536.69.

Russell 2,000 falls 12.91

Among other broad indexes, the Russell 2,000 index of small-capitalization stocks lost 12.91, to 336.80; the Wilshire 5,000 index slumped 166.60, to 9,001.34; the American Stock Exchange composite index skidded 16.26, to 593.21; and the S&P 400 midcap index fell 9.76, to 289.63.

The Sun-Bloomberg Maryland index, which tracks the top 100 Maryland stocks by market valuation, fell 5.99, to 173.84.

Declining issues led advancers by a 3-to-1 ratio on the New York Stock Exchange, where volume totaled 805 million shares, above the daily average of 723 million for the past three months.

Declines in U.S. stocks followed slumps in Europe and Asia. The United Kingdom's FT-SE 100 index dropped 2.1 percent and Germany's Dax index sank 1.2 percent. Japan's Nikkei slumped 2.1 percent to 12,948.12, and Hong Kong's Hang Seng index slumped 4.05 percent to 7,564.54.

Cisco and Dell Computer Corp. plunged on concern that slower economies will trim earnings for computer companies, whose shares have held up amid the global slump. Businesses will spend less on computer networks and other capital equipment next year, said SG Cowen Securities Corp. analyst Christopher Stix, who cut his rating on Cisco to "buy" from "strong buy."

Microsoft, Cisco, Dell fall

Microsoft Corp. dropped $2.9375, to $101.1875; Cisco lost $7.4375, to $48.3125, and Dell dropped $5, to $57.6875. They were the three most-active shares in U.S. trading. Eight of the top 10 most-active shares were computer-related.

Lucent Technologies Corp., another communications-equipment maker, sank $4.125, to $58.875. The stock is still up 47 percent for the year.

IBM fell $4.5625, to $120.25.

J. P. Morgan & Co. slid $3.625, to 79.875; Travelers Group Inc. fell $4.125, to $34.4375; and Citicorp, Travelers' merger partner, fell $9, to $86.

In a report, Merrill Lynch & Co. analysts cut earnings estimates and lowered price targets for securities trading companies, giving investors one more reason to shun these beleaguered stocks. Donaldson, Lufkin & Jenrette Inc. dropped $2.5625, to hTC $22.9375; Lehman Brothers Holdings Inc. dropped $2.375, to $26.625; and Raymond James Financial Inc. slumped $1.625, to $18.375.

Lehman, battered recently by unsubstantiated speculation that the firm was near financial collapse, said yesterday that the most it stands to lose from hedge funds and emerging markets totals $236 million, less than 5 percent of its equity capital.

Avid Technology Inc. tumbled $9.3125, to $13.6875, after the maker of digital editing equipment said a revenue shortfall will hurt third-quarter earnings.

Mobil Corp. rose $3.0625, to $79.8125, and Chevron Inc. added $1.3125, to $88.9375.

Weyerhaeuser Co. gained $1.75, to $44.625.

Pub Date: 10/06/98

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