Earnings Fears Slam Stocks; Gold Tumbles
Stocks closed broadly lower Tuesday as earnings worries took center stage again.
In other trading, gold prices fell again, this time to 18-year lows.
On Wall Street, technology stocks were hit the hardest, dragged down by software firm Oracle Corp.’s plunge of $9.44 to $22.94 after it reported nearly flat earnings in its recent quarter.
The tech plunge sent the Nasdaq composite index down 30.99 points, or 1.9%, to 1,620.55, and the Morgan Stanley index of high-tech stocks down 4%.
Blue chips held up better. But the Dow industrials still lost 61.18 points, or 0.8%, to 8,049.66, and the Standard & Poor’s 500 dropped 0.7% to 975.78.
Losers topped winners 18 to 11 on the New York Stock Exchange and 26 to 16 on Nasdaq, though Big Board trading was only moderate.
Nasdaq volume was boosted by Oracle’s 171.8 million shares that traded, a record for any stock.
“ ‘Below expectations’ are the most horrendous words on Wall Street,” said John Bogle, chairman of mutual fund giant Vanguard Group, referring to Oracle’s earnings disappointment.
Noting that Oracle cited, in part, weaker sales in troubled Asia, Bogle said, “I don’t think anyone knows how big a problem Asia is.”
Other stocks that have fallen in recent sessions on concerns about fallout from Asia include Coca-Cola and Boeing. What’s more, last week a host of tech firms, including chip maker Altera and computer networker Cabletron Systems, foreshadowed Oracle’s announcement with weak earnings projections of their own.
“Oracle isn’t as much a bellwether as Compaq or Cisco [Systems], but there’s still a lot of nervousness about the tech sector and the impact of the tumult in Asia,” said James Solloway, head of the equity management group at Barnett Capital Advisors, which oversees about $3 billion in stocks in Jacksonville, Fla.
The bond market might have provided some support for blue chips Tuesday, with a modest rally. The yield on the 30-year Treasury bond slipped to 6.11% from 6.13% on Monday. Then again, analysts said, money coming out of stocks might have been going into bonds.
Elsewhere, the dollar fell against the Japanese yen amid expectations that Tokyo might stabilize its banking system. But the dollar rose against the mark as Germany’s jobless level reached another postwar high.
The stock market’s woes, meanwhile, can’t compare with gold’s. In commodities trading, gold prices slid further as gold miners sought to protect themselves from more price falls by hedging even more of their expected output, traders said.
Near-term gold futures in New York plunged $5.10 to $282.80 an ounce. Earlier, in London, gold for immediate delivery dropped as much as $6.20 to $281.35 an ounce, the lowest since July 3, 1979.
Among Tuesday’s U.S. market highlights:
* Tech stocks falling with Oracle included Intel, down $2.81 to $75.63; IBM, down $2.50 to $110.38; National Semiconductor, down $3.63 to $27; Compaq, off $2.13 to $63.38; and Computer Sciences, down $4.19 to $79.31.
* In the telecom sector, Qualcomm plunged $3.44 to $65.13 and Newbridge Networks sank $3.06 to $39.63.
But cable TV stocks rallied on rumors that AT&T; might bid for a cable company. Tele-Communications jumped $2 to $26.38, Cablevision Systems gained $3.50 to $88.63 and Comcast rose $1.31 to $29.25. AT&T; rose 19 cents to $58.
* Gold stocks slid, with ASA down $1.13 to $19.25, Newmont Gold down 69 cents to $26.81 and Barrick Gold off 31 cents to $15.44.
In foreign trading, South Korea’s market dove again, with the main index down 6.5%. But Tokyo shares rebounded. The Nikkei-225 index rose 3.4%.
