Stocks fall as rate jitters mount

Dow industrials drop 52 points, to 10,655

Nasdaq, S&P 500 weak

August 11, 1999|By BLOOMBERG NEWS

NEW YORK -- U.S. stocks fell on concern that the Federal Reserve will raise interest rates more than once in coming months. Three stocks dropped for every one that rose on the New York Stock Exchange, the broadest decline since May.

Telecommunications-equipment shares such as Lucent Technologies Inc. led the decline, along with computer-related and financial stocks, and 76 of the 89 industry groups in the Standard & Poor's 500 index tumbled.

The Dow Jones industrial average dropped 52.55 to 10,655.15, after having been down as much as 159 points. J. P. Morgan & Co. dipped $3 to $121.9375, leading the Dow's decline; Chase Manhattan Corp. lost $1.3125 to $74.3125; and Bank One Corp. fell $1.3125 to $51.5625.

The S&P 500 fell for the eighth time in nine sessions, losing 16.37, or 1.3 percent, to 1,281.43. And the Nasdaq composite index declined 28.87, or 1.2 percent, to 2,490.11, only recovering from a 76-point loss as Internet shares rebounded late in the day led by Yahoo! Inc. and eBay Inc.

The Nasdaq stands 13 percent below its July 16 record, more than the 10 percent Wall Street considers a "correction." The S&P 500 has fallen 9.7 percent from its high and the Dow average 4.9 percent. Like the Nasdaq, they reached their highs July 16.

Elsewhere on the broad market, the Russell 2,000 index, a benchmark of small-cap stocks, fell 3.07 to 422.82; the Wilshire 5,000 index slumped 136.44 to 11,663.97; the American Stock Exchange composite index lost 7.10 to 770.77; the New York Stock Exchange composite index dropped 7.09 to 603.37; and the S&P 400 midcap index sank 5.52 to 398.18.

The Sun-Bloomberg Maryland index of the top 100 Maryland stocks tumbled 2.65 to 188.93.

Declining issues outnumbered advancers by a 3-to-1 margin on the NYSE, where about 836.3 million shares traded.

Lucent, the world's No. 1 phone-equipment maker, agreed to buy International Network Services, a computer network integrator, for $3.61 billion, or $52.11 a share, to boost Lucent's efforts to compete with rival Cisco Systems Inc. in data networking. Lucent fell $2 to $61.625, and Cisco, the most active stock, dropped $1.0625 to $58.75. International Network rose $3 to $50.4375.

Cisco said after exchanges closed that it earned 21 cents a share before merger costs, matching some analysts' unpublished estimates, and its stock gained $1.50 to $60.25 in after-hours markets.

Nortel Networks Corp., another Lucent rival, fell $1.0625 to $82.1875.

America Online Inc. dropped 56.25 cents to $85 yesterday, and Intel Corp. declined $1.6875 to $71.75.

Yahoo!, the No. 1 Internet search service, gained $6.3125 to $127.50. The company is teaming with Hewlett-Packard Co. to offer services to create corporate Web sites that employees can use to find job-related information.

eBay jumped $9.625 to $89.25. Several analysts made positive comments about the company after meeting with its executives Monday, when eBay detailed plans to auction cars over the Internet. eBay's Internet site has suffered system failures, and its stock price has fallen about 57 percent from a high of $209.25 on April 27.

Wal-Mart Stores Inc. rose $2.6875 to $42.875. The world's largest retailer said fiscal second-quarter profit rose 21 percent as the company added groceries and clamped down on costs.

AMR Corp., the parent of American Airlines, fell $2.0625 to $59.3125; Delta Air Lines Inc. lost $2.625 to $53.625; US Airways Group fell $1.4375 to $31.0625; and UAL Corp., the parent of United Airlines, dropped 93.75 cents to $59.

Overseas, Japan's Nikkei stock average fell 0.07 percent. European indexes fared worse. Germany's DAX index fell 1.7 percent, Britain's FT-SE 100 fell 2.4 percent, and France's CAC-40 fell 1.1 percent.

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