Dow falls 59 points

Nasdaq gains 33

Interest-rate worries jolt financial stocks

Dell and HP strong

Wall Street

May 18, 1999|By BLOOMBERG NEWS

NEW YORK -- U.S. financial stocks, led by Citigroup Inc., fell on concern that the Federal Reserve Board will begin leaning toward increasing interest rates at a policy meeting today. Dell Computer Corp. and Hewlett-Packard Co. gained on earnings optimism.

The Dow Jones industrial average, the Standard & Poor's 500 index and the Nasdaq composite index rebounded in midafternoon trading, as personal computer and software makers gained on anticipation that HP's profit would beat expectations. HP shares ended the day up $1.875 at $86.1875, and climbed to $88.75 in after-hours trading.

Two stocks fell on the New York Stock Exchange for every one that rose yesterday, and 63 of the S&P 500's 89 industry groups declined. NYSE volume was about 679.7 million shares.

"These are fairly dangerous times," said Eric Barden, a money manager at Texas-based First Austin Capital Management, which oversees $100 million. Any increase in interest rates "will cause a derailment from the bull market we have enjoyed since 1990."

The Dow industrials fell 59.85 to 10,853.47, paring a 167-point loss. The S&P 500 rose 1.69 to 1,339.49, and the Nasdaq jumped 33.98, or 1.3 percent, to 2,561.84, erasing a 33-point loss as Microsoft Corp. gained $2.25 to $79.125 and Qwest Communications Inc. jumped $6.125 to $90.875.

Among financial stocks, Citigroup fell $1 to $70; J. P. Morgan & Co. lost $4 to $136.9375; and Merrill Lynch & Co. lost $1.6875 to $79.0625.

The 30-year bond yielded 5.89 percent yesterday, down 0.03 from Friday, but up 79 basis points from the end of last year.

Dell, which gained $2.0625 to $43.25 yesterday, is expected to report fiscal first-quarter profit of 16 cents a share today. The company earned $305 million, or a split-adjusted 11 cents, in the year-earlier period.

Microsoft gained on expectations that it will benefit from rising sales of personal computers.

Qwest and other long-distance companies gained, after U S West, a local phone company, agreed to merge with Global Crossing Ltd. U S West and Global Crossing fell on concern that regulators will closely examine the transaction and because of the complexity of the deal. U S West fell $4 to $58.25 and Global Crossing slipped $1.125 to $60.25.

Qwest, the No. 4 U.S. long-distance company, approached U S West over the weekend and was rejected, said people familiar with the companies.

Sprint Corp. added $4 to $110, and Level 3 Communications Inc. gained $3.9375 to $88.50.

Ford Motor Co. fell $3.1875 to $57.5625 and General Motors Corp. declined $2.8125 to $80.3125 after a Morgan Stanley Dean Witter & Co. analyst said their sales may have peaked.

Gulfstream Aerospace Corp. jumped $6.0625 to $61.6875 after General Dynamics Corp., the fourth-biggest U.S. defense contractor, said it will buy the maker of business jets for $5.3 billion, or $71.44 a share. The price represents a 29 percent premium over Gulfstream's closing price Friday. General Dynamics fell $6.1875 to $65.25.

Medical Manager Corp. rose $14 to $47.75 after the health care software maker agreed to be acquired by Synetic Inc. for $1.4 billion in stock. Synetic fell $4.50 to $91.

Overseas markets were lower yesterday, taking cues from Friday's losses on Wall Street. Japan's Nikkei stock average fell nearly 2 percent. Germany's DAX index closed 1.6 percent lower; Britain's FT-SE 100 was down 2.1 percent; and France's CAC-40 declined 1.7 percent.

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