Consumer stocks lead markets downward

Coca-Cola, Gillette, 3M expect overseas ventures to be drag on profits

April 07, 1999|By BLOOMBERG NEWS

U.S. stocks fell from records yesterday as Gillette Co. led consumer companies lower after the world's largest maker of razors said earnings won't meet expectations because of slow Latin American sales.

Gillette joined Coca-Cola Co. and Minnesota Mining & Manufacturing Co. in warning that business abroad is a drag on profits.

"There's no room for error" with stocks near record highs, said James Weiss, head of stock investments at Boston's State Street Research & Management Corp., which oversees $54 billion. "Any misstep" will send shares lower.

The companies in the Standard & Poor's 500 index are selling for 26 times this year's anticipated operating earnings per share, the highest in 50 years, according to First Call Corp.

The Dow Jones industrial average fell 43.84, or 0.4 percent, to 9,963.49. The Standard & Poor's 500 index slipped 3.23, or 0.2 percent, to 1,317.89. The Nasdaq composite index eked out a 3.11-point gain to a record 2,563.17.

Elsewhere on the broad market, the Russell 2,000 index, a benchmark of small-cap stocks, fell 1.21, to 401.08; the Wilshire 5,000 index fell 26.13, to 11,963.73; the American Stock Exchange composite index fell 6.03, to 715.21, and the S&P 400 midcap index fell 2.69, to 367.20.

The Sun-Bloomberg Maryland index of the top 100 Maryland stocks fell 1.66, to 175.26.

Declining stocks outnumbered gainers on the New York Stock Exchange by a 17-to-11 ratio. Gillette declined $7.75, to $50, after it said first-quarter profit will be a penny less than analysts forecast because of weak sales in Latin America and for its line of Braun appliances. The company expects per-share profit of about 24 cents.

Before yesterday's decline, Gillette was priced at 41 times this year's estimated earnings, according to First Call.

Coca-Cola, which gets two-thirds of its sales and three-quarters of its profits abroad, fell 68.75 cents, to $59.8125. 3M, which garners half the sales from its 50,000 products abroad, fell $1.0625, to $71.9375. The Morgan Stanley Consumer Index, which groups shares of 30 U.S. consumer companies, fell 1.1 percent.

Intel Corp. led semiconductor shares higher with a gain of $2.9375, to $130.4375, after an analyst at Lehman Brothers said the industry's recovery from its worst recession ever is picking up steam.

"A multi-year bull market is under way in semiconductor stocks," analyst James Barlage at Lehman Brothers Inc. said in a report to clients. Semiconductor companies shipped $10.9 billion in goods in February, up 3.5 percent from a year earlier, according to the Semiconductor Industry Association. Applied Materials Inc. rose $2.1875, to $67.9375, LSI Logic Corp. gained $3.50, to $36, and Micron Technology Inc. climbed $2.0625, to $53.5625.

Other computer stocks also rallied. Dell Computer Corp. rose $2.75, to $46.8125. The third-largest personal computer maker is set to brief analysts tomorrow.

Sun Microsystems Inc. surged $10.625, to $140.625, after the maker of computers that run Internet sites unveiled products that work with a rival operating system from Microsoft Corp. Sun hopes to profit from the sales growth of Microsoft's Windows NT, analysts said.

Individual investors pushed some online stocks higher for a second day as the TheStreet.com Internet index climbed 5.3 percent. DoubleClick Inc. rose $20, to $115.625. Investors sent Yahoo! Inc. on a wild ride. It closed $4.25 lower at $214.875, having risen as high as $244.

The average trade in Yahoo! was 339 shares, indicating that individual investors were behind the moves. Institutional investors typically trade in blocks of thousands or tens of thousands of shares.

General Motors Corp., the world's largest automaker, surged $3.50, to $91.0625, amid optimism about car sales. Ford Motor Co., the second-biggest car company, said yesterday that U.S. car and light-truck sales rose 14 percent in March, beating expectations. Ford set record truck sales as rising incomes boosted consumer confidence.

Alpha Industries Inc. rose $7.50, to $25.875, after the maker of semiconductors for wireless phones said it received increased production orders from Motorola Inc.

Liberty Media Group rose $3.125, to $59. The cable TV programming company will acquire an 8 percent stake in News Corp., the world's No. 5 media company, for about $2.1 billion, the companies said.

Pub Date: 4/04/99

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