Dow gains as Nasdaq tumbles again Blue-chip index rises 16 points, to 7,742

computer issues weak

October 07, 1998|By BLOOMBERG NEWS

NEW YORK -- U.S. stocks were mixed yesterday as computer-related shares fell for a second day on concern that profits are dwindling as economies slow.

Wal-Mart Stores Inc. and Aluminum Co. of America gained after saying business was better than expected.

Cisco Systems Inc. and other computer-related shares led the Nasdaq composite index to its sixth decline in seven days. The index fell 25.80, or 1.7 percent, to 1,510.89, adding to Monday's 4.9 percent loss.

The Dow Jones industrial average rose 16.74, to 7,742.98. The Standard & Poor's 500 index fell 3.97, to 984.59.

Among other broad indexes yesterday, the Russell 2,000 index of small-capitalization stocks fell 1.3 percent, to 332.55 -- its ninth consecutive loss; the Wilshire 5,000 index slumped 49.84 to 8,951.50; the American Stock Exchange composite index slipped to 593.09; and the S&P 400 midcap index slid 0.32 to 289.31.

Declining stocks led advancing issues by a 17-to-13 ratio on the New York Stock Exchange. Volume on the NYSE totaled 839 million shares, above the daily average of 727 million shares of the past three months.

Wal-Mart gained $2.25, to $59.50, after the world's largest retailer reported better-than-expected sales in September and said it will open, remodel or relocate 280 stores next year.

Dayton Hudson Corp. rose $1.4375, to $35.8125, and Sears, Roebuck & Co. gained $1.1875, to $43.75.

Alcoa, the world's largest aluminum producer, rose $4.3125, to $72.50, to lead the Dow industrials higher after it reported third-quarter net income that beat analysts' expectations. Cost-cutting offset lower metals prices, the company said.

United Technologies Inc., down 21 percent since July's high, rose $1.875, to $76, after the maker of Otis elevators and Pratt & Whitney jet engines said it will buy back up to 15 million more shares.

Many investors are selling computer stocks because their prices are relatively high, at a time when earnings growth is slowing, analysts say.

Cisco, which sank 13 percent Monday on concern that businesses are cutting spending on computer networking equipment, fell $2.125, to $46.1875. Dell Computer Corp. lost $2.375, to $55.3125, and Microsoft Corp. dropped $3.5625, to $97.625.

Software stocks plunged. Citrix Systems Inc. fell $6.9375, to $56.75, and Legato Systems Inc. lost $8.875, to $31.125. Veritas Software Corp., a maker of storage management programs, plunged $19.1875, to $26.1875, after it agreed to buy Seagate Technology Inc.'s network management software unit for $1.6 billion.

Pfizer Inc. led drug shares lower. The fourth-largest U.S. drugmaker by sales fell $5.50, to $89.25, after IMS Health Inc., an industry consulting group, reported a decline in the number of prescriptions filled for Pfizer's impotence-treatment drug Viagra. Merck & Co. lost $1.125, to $127.625, and Schering-Plough Corp. fell $1.875, to $97.50.

Motorola Inc. gained $3.25, to $41.8125.

The world's No. 3 maker of computer chips said third-quarter earnings fell less than expected as cost cuts began to offset plummeting sales of semiconductors.

OfficeMax Inc., Sports Authority Inc. and others warned yesterday that their earnings will fall short of investors' expectations.

Sports Authority slumped $1.0625, to $5.6875, after the world's largest sporting-goods retailer said it expects a bigger-than-expected fiscal third-quarter loss because of declining sales and slowing earnings growth.

OfficeMax fell 87.5 cents, to $7.875, after the retailer of office products said third-quarter profits will be below the Wall Street consensus of 31 cents a share. The company blamed lower computer and business machine sales.

Among companies reporting earnings, Biogen Inc. rose $3.1875, $68.375, after it said its third-quarter profit almost doubled, buoyed by sales of the drug Avonex, the world's best-selling multiple sclerosis treatment.

Varco International Inc. fell 75 cents, to $6.375, after touching a 52-week low of $6.125. The oil field machinery and equipment company said third-quarter earnings will be below analysts' estimates because of lower-than-expected sales and higher manufacturing costs.

Real estate investment trusts that buy mortgages and mortgage securities plunged after Fitch IBCA said it might cut its ratings on IndyMac Mortgage Holdings Inc. IndyMac plunged $6 to $10 on the news.

Anthracite Capital Inc. fell 75 cents, to $4.5625; Clarion Commercial Holdings Inc. fell $2.3125, to $2.5625; and Ocwen Asset Investment Corp. fell $1.125, to $3.625. Many of these REITs use mortgage assets as collateral for their financing.

Pub Date: 10/07/98

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