Dow Loses 21 Points; Tech Shares Have a Mixed Day
The stock market ended mixed Wednesday amid some stunning corporate earnings disappointments and widely divergent performances among leading technology shares.
Meanwhile, bond yields continued to fall on more data indicating that the U.S. economy remains weak overall.
On Wall Street, the Dow Jones industrials dropped 21.32 points to 5,066.90. The blue-chip index was dragged down by a steep fall in 3M shares after the conglomerate warned of lower-than-expected fourth-quarter earnings.
3M, which sank 3 1/2 to 63 3/4, joined the recent chorus of companies reporting or projecting disappointing fourth-quarter results.
Computer chip giant Intel, which announced unexpectedly weak earnings late Tuesday, saw its shares plunge 5 3/4 to 50 on Wednesday in the heaviest volume ever for a Nasdaq-traded stock: more than 68 million shares.
Retail titan Wal-Mart also contributed to the gloom with its warning that fourth-quarter earnings will be below year-ago results. Wal-Mart sank 2 1/8 to 20 3/8 in heavy trading.
Despite those prominent announcements, rising stocks narrowly outnumbered falling issues on the New York Stock Exchange, and winners and losers were almost evenly matched on Nasdaq. The Nasdaq composite index closed up 2.43 points at 998.30.
In the technology sector in particular, many well-known stocks finished the day higher even though Intel’s quarterly results and its first-quarter outlook raised fears about a sharp slowdown in personal computer sales. Intel forecast no sales growth for its microchip business in the first quarter.
Even so, Philip Orlando, chief investment officer at $5.1-billion Value Line Asset Management, noted that several big tech issues responded positively to their own strong earnings reports Wednesday.
Those winners included software firm Computer Associates, which soared 2 3/8 to 59 after reporting record earnings, and Parametric Technology, another software firm, which rocketed 5 1/4 to 59 3/4 on its earnings report.
“Good numbers are being rewarded in technology for the first time in a long time,” said Orlando. “The market has finally decided to make a differentiation among sectors within technology.”
In the broad market, despite some highly visible earnings disappointments, “things don’t look as bad as they’re painted,” said Jack Baker, head of trading at Furman Selz. “You still have a lot of big earnings coming.”
The stock market also was helped by the bond market Wednesday: Yields fell for a second day on the heels of economic reports confirming the sluggish pace of business. That raised fresh hopes that the Federal Reserve Board will cut short-term rates again when it meets Jan. 30.
The yield on the 30-year Treasury bond closed at 6.01%, down from 6.05% on Tuesday and the lowest since Jan. 3. Shorter-term yields also fell.
“It appears we’re not going to get a [federal balanced-] budget deal, but the crucial thing is what’s going on with the economy,” said John Burgess, who helps manage $70 billion of bonds at Bankers Trust Global Investment Management in New York.
Among the market highlights:
* Tech stocks rallying despite Intel’s plunge included National Semiconductor, up 7/8 to 16 3/8; Sun Microsystems, up 3 to 44 7/8; Digital Equipment, up 1 to 59 3/4; Motorola, up 7/8 to 49 1/2; and Ascend Communications, up 3 1/4 to 39 1/2.
But Microsoft, which is due to report earnings today, fell 1 1/2 to 84 7/8. Also, Compaq lost 2 3/4 to 44 and Dell Computer dropped 3 9/32 to 23 15/32.
Traders said tech stocks in general rallied about midday after Barton Biggs, influential market strategist at Morgan Stanley & Co. and a tech bear since summer, said the stocks are ending the first stage of a bear market and may not drop further until the market overall does.
* Many retail stocks slid with Wal-Mart. Dillard lost 1 to 28, Dayton Hudson sank 2 5/8 to 70 1/2, J.C. Penney dropped 7/8 to 45 1/8 and Sears tumbled 2 1/2 to 40.
* On the plus side, financial-related stocks were broadly higher. Citicorp gained 1 1/8 to 69 3/8, First USA surged 2 to 46 1/8, J.P. Morgan added 1 1/4 to 79 1/8; Merrill Lynch leaped 1 7/8 to 54 7/8 and T. Rowe Price rose 2 3/4 to 46.
* USAir rocketed 1 7/8 to 14 1/2 after the troubled airline named industry veteran Stephen Wolf as its new chairman.
* Helene Curtis soared 6 5/8 to 40 3/4 on takeover speculation, after Southland-based investment firm Shamrock Holdings, which owns 7.6% of the personal products company, suggested that the firm put itself up for sale. Helene Curtis’ chief executive said the company will consider the suggestion.
In currency trading, the dollar closed at 1.471 German marks in New York, up from 1.466 on Tuesday, setting a four-month high for a second straight day. It also rose to 106.23 Japanese yen in Asian trading overnight before running into selling pressure. It ended at 105.65 yen in New York.
Oil prices rebounded as Iraq said it was unwilling to meet U.N.-imposed conditions for the country’s first sale of oil since it was hit with an embargo after invading Kuwait in 1990. Crude oil futures for February rose 47 cents to $18.52 a barrel at the New York Merc.
