Blue-chip stocks fell for a fifth consecutive session Friday as technology shares again sank after several companies’ warnings raised investor worries about upcoming quarterly earnings reports.
A second day of lower interest rates--the long bond yield fell to 7.03% from 7.12% on Thursday--failed to stimulate stocks.
This week saw the first five-session slide in the Dow Jones industrial average in nearly a year.
“We had a rash of negative pre-announcements--I counted 10 today, mostly in technology--and this will continue for a couple of weeks,” said Larry Wachtel, a market analyst at Prudential Securities.
The Dow slid 8.50 points Friday to 5,649.45. It lost 47.66 points for the week.
In the broader market, losing issues beat gainers by a margin of 1,303 to 1,003 on moderately heavy volume of 385.9 million shares on the New York Stock Exchange.
The technology-laden Nasdaq composite index tumbled 12.47 points, or 1.02%, to 1,213.18, after falling 9.82 points Thursday. It was down 16.58 on the week.
Wachtel said earnings warnings from Madge Networks, Quarterdeck and Exar fueled selling in technology shares, a day after an earnings warning from Quantum put pressure on the sector. Madge lost 6 3/8 to 17 1/8; Quarterdeck shed 3 1/16 to 9 13/16; Exar fell 7/8 to 14 3/8. Hambrecht & Quist downgraded its rating on Quarterdeck to “hold” from “buy.”
Analysts said investors were also shying away from aggressive buying ahead of the Russian election on Sunday, uncertainty over interest rates and Friday’s so-called triple-witching expiration of stock index futures contracts, stock index options and options on individual stocks.
Bond traders were encouraged by a Federal Reserve Board report saying that U.S. industrial production rose 0.7% in May, in line with market expectations. Capacity utilization was at 83.2%. Analysts attributed a large part of the rise in production to a 3.1% jump in utilities output in May.
“Stocks are discounting a better tone in bonds and positioning for next week’s triple-witching hour,” said Peter Cardillo, director of research at Westfalia Investments.
Among Friday’s highlights:
* Copper stocks were downgraded after news broke late Thursday that Sumitomo Corp. had lost an estimated $1.8 billion from unauthorized copper trades over a 10-year period. CS First Boston and PaineWebber downgraded Phelps Dodge and Asarco, but other industry analysts said they would take a more cautious approach, because most copper companies are well-hedged against near-term price volatility. Phelps Dodge fell 1/2 to 65 and Asarco fell 3/4 to 28 3/8.
* General Mills fell 1 1/4 to 54 1/8 on expectations that it will cut cereal prices. Rivals Post and Kellogg have cut theirs recently. General Mills declined to comment.
* Expectations of a slowing economy benefited shares of steady-earning drug and consumer product companies. Pfizer rose 3 1/8 to 75 3/4 and American Home Products rose 3/4 to 59 1/2.
Overseas, Tokyo’s Nikkei-225 stock average rose 0.9%, Frankfurt’s DAX index fell 0.7% and London’s FTSE-100 fell 0.2%.
Crude oil prices rose on Friday, boosted by news of another confrontation between Iraq and United Nations inspectors, raising doubts about plans for Iraq to sell oil. The U.N. said that Iraq had prevented a U.N. helicopter from flying over a military site on Thursday.
July crude on the New York Mercantile Exchange ended up 33 cents at $20.34 a barrel, July heating oil was up 0.60 cent at 51.55 cents a gallon and July gasoline was 0.61 cent fhigher at 59.50 cents a gallon.
Market Roundup, D4