Dow slides 174 points

Nasdaq falls 2.6%

Yahoo! tumbles $13.4375

IBM and banks weak, but utility issues gain

May 25, 1999|By BLOOMBERG NEWS

NEW YORK -- Stocks tumbled yesterday, as investors shed Internet and bank shares, fearing that profits will be hampered in coming months by threats as diverse as higher interest rates and the Year 2000 bug.

The Dow Jones industrial average fell 174.61, or 1.6 percent, to 10,654.67. The Nasdaq composite index, the biggest basket of software, computer and semiconductor makers' shares, posted its biggest loss in five weeks.

"Worry about interest rates going up is sucking money out of the high price-to-earnings stocks," said Charles Henderson, chief investment officer for Chicago Trust Co., which manages $10 billion.

Yahoo! Inc. and Cisco Systems Inc. dragged the Nasdaq composite to a loss of 66.48, or 2.6 percent, to 2,453.66.

Contributing most to the Dow industrials' decline were International Business Machines Corp., which slumped $6.625 to $223.75, and Hewlett-Packard Co., down $3.875 at $90.

The Standard & Poor's 500 index declined 23.64, or 1.8 percent, to 1,306.65.

Elsewhere on the broad market, the Russell 2,000 index, a benchmark of small-cap stocks, lost 8.75 to 440.39; the Wilshire 5,000 index tumbled 236.98 to 12,016.45; the American Stock Exchange composite index dropped 9.96 to 7,895.41; the New York Stock Exchange composite sank 10.82 to 626.05; and the S&P 400 midcap index fell 6.38 to 396.63.

The Sun-Bloomberg Maryland index of the top 100 Maryland stocks dropped 2.23 to 191.53.

More than twice as many stocks fell as rose on the New York Stock Exchange, where 754.7 million shares were traded.

Yahoo!, the No. 1 Internet search service, skidded $13.4375 to $137.875; Charles Schwab Corp., the No. 1 discount and online broker, fell $9 to $106.375; Inc., which lets consumers bid online for hotel and airline tickets, fell $13.5938 to $125.34.38; and Cisco Systems, the leading maker of Internet equipment, fell $3.875 to $109.375.

Financial services shares fell after analyst Michael Mayo at Credit Suisse First Boston cut recommendations on Citigroup Inc., Chase Manhattan Corp., J. P. Morgan & Co. and Bank One Corp. to "sell" from "hold" on concern that their profits may suffer from problems related to Year 2000.

Citigroup fell $2.6875 to $65.125; J. P. Morgan slid $1.9375 to $136.75; Chase lost $3.0625 to $75.875; Bank One dropped $1.3125 to $58.50; and Bank of America Corp. dropped $1.8125 to $65.625.

UAL Corp.'s United Airlines, the world's largest airline; AMR Corp.'s American Airlines, the No. 2 carrier; Delta Air Lines Inc.; and other airline shares fell on concern that profits could be hurt by overcapacity in the industry, higher jet-fuel costs and the possibility of new legislation to protect passengers.

The number of available seats for sale in the airline industry this year is expected to rise 5 percent from a year ago, according to a report by BT Alex. Brown Inc. analyst Susan Donofrio.

UAL fell $2.25 to $72.125; AMR declined $2.1875 to $64.1875; and Delta dropped $2.50 to $58.

The Dow Jones utilities average gained 2.28 to 327.43, its fourth straight record, as investors sought shares that carry relatively high dividends.

Peco Energy Inc., with a dividend yield of 2 percent, rose $1.50 to $50; Consolidated Natural Gas Co., which has a yield of 3.3 percent, rose 68.75 cents to $58.50; and Duke Energy Corp., which yields 3.7 percent, climbed $1.25 to $59.375.

Pfizer Inc. fell $4 to $106.25; Merck & Co. slid $1.4375 to $69.875; and Schering-Plough Corp. fell $2.625 to $45.875, leading drug stocks lower.

Avis Rent A Car Inc., the No. 2 U.S. car-rental company, fell $7.375 to $28 after it agreed to buy Cendant Corp.'s vehicle fleet.

Overseas, Japan's Nikkei stock average rose 0.6 percent. Britain's FT-SE 100 fell 0.5 percent. Stock markets in Germany and France were closed for a holiday.

Pub Date: 5/25/99

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.